Arnold Kling

Computers and Productivity

Arnold Kling, Great Questions of Economics
Previous Entry Next Entry

On his weblog, Brad DeLong mentioned work by William Nordhaus on computer productivity. I went to Nordhaus's site and found the paper, called The Progress of Computing.

Performance in constant dollars or in terms of labor units has improved since 1900 by a factor in the order of 1 trillion to 5 trillion...there were relatively small improvements in efficiency (perhaps a factor of ten) in the century before World War II...the growh in computer power from 1940 to 2001 has averaged 55 percent per year...The price declines using performance-based measures are markedly higher than those reported in the official statistics.

Discussion Question. If the statistical agencies under-estimate the decline in the price of computing, how would this affect national statistics for inflation, output, productivity, and investment?

Return to top