Does Wikipedia destroy wealth?

Question

Don't get me wrong. I'm a big fan. But economically speaking: Do the values generated by Wikipedia get lost because there is no money involved?

In other words, is that money missing from the GDP, whereas if Wikipedia would charge for their services, there would be a corresponding increase in GDP?

Answer 1

Since GDP measures economic activity any time we spend engaging in activities that involve neither producing or consuming from market activity it is a loss to GDP. If you care for your own children, clean your own house, or fix your own car, there is a loss to GDP. There is also a loss if you perform these services free of charge for friends or family. If there was a charge to use Wikipedia the money paid would still be spent on other goods, but not by the users, but by the people who received the money. So GDP would increase but the the value it provides would decrease, since many people would no longer use it. It is a good example of why GDP is a flawed method for measuring welfare.

Answer 2

I would compare to having a computer on your desk. If somehow the computer and Bill's software were free.

It is a productivity tool. Example: Someone asks me (an environmental engineer) about using hydrogen peroxide on a groundwater plume. I pull up wiki and - boom - I've got density and reactivity and catalysts for decomposition, etc. Without even rolling my desk chair across my office to my bookcase to struggle through 6 indices of 6 books to find less complete info. So I'm able to move on with my work more quickly, more intelligently. And I may even have some insight or clever idea because there was more info, more quickly, in front of me.

So I billed 3.5 hours on that task (research, calculate a few things, generate an email) instead of maybe 5 hours and I produced a better product. So the GDP took a little hit (as it always does from efficiencies), but it is GOOD if my industrial client can clean up their pollution more economically. If I'm more competitive compared to other consultants, my client is more competitive with other domestic and international firms. Consulting never put food on someone's table or a roof over their heads and it should be done as efficiently as possible.

Likewise, if my wife pulls up a weird medical condition on the web and makes a diagnosis two days or three months and 4 blood tests sooner. Her billings go down, but the patients health and pocketbook benefit. (and, like toxic waste sites, there is no shortage of sick people!).

Rereading your Q, I think I just answered a different Q. I think it is the bigger issue caused by e-information. Like the beneficial effect of email ISN'T that it saves you 39 cents. It is that it happens in 1.7 seconds. The big effect of wiki isn't out-of-work encyclopedia salesmen. It is both a leveling of the playing field for infoormation access and an over-all raising of everyone's info resources.

To answer your Q: Yes, some economic activity is lost. The GDP IS smaller if fewer people are publishing paper books and all research/publishing is done by volunteers. That is also true if I give a hitch-hiker a ride (no bus fare was paid), or I volunteer at a women's shelter. A thousand f-ing points of light and all that.

But for wiki, it is of the order of magnitude of a dollar lost to GDP is $20-100 gained in productivity gains. And more like a $1000 a decade from now.

And the bigger effect on GDP isn't to Encyclopedia Britanica. It is to entertainment outlets. If I'm surfing wiki and maybe contributing to an article, I'm not watching TV (with their commercials) nor renting from Blockbuster that night.

Answer 3

No it does not reduce GDP, and it most likely creates wealth by offering a free substitute to expensive alternatives.

First, no GDP is lost, because you can be sure that people will spend that available money in other ways which ARE counted. It's not like someone takes the money they would've spent on an Encyclopedia Britannica, and then flushes that money down the toilet when they discover Wikipedia. Of course not; they spend it.

Moreover they have the great benefit of now satisfying multiple needs with that money, instead of just the need for an encyclopedia resource. In this sense, any free Internet service greatly contributes to "consumer surplus" and to productivity in the truest sense: how well we use available resources to satisfy needs.

Answer 4

Interesting and insightful question. Once again, meg is is on the money. Of course Wiped is a valuable service that makes an important contribution and does no harm. Unfortunately, it's contribution will not show up in GDP figures because it does not charge.

Answer 5

I suppose wikipedia doesn't do much for the economy, there most likely a leakage of savings if anything because they accept donations. Of course there would be an increase in the GDP if they charged.....but then they'd have to hire staff and they'd lose a large percentage of their consumers because of competing information sources.

Answer 6

What is wrong with offering people free information? I believe we need more free sources of information sharing out there otherwise we're working on keeping Americans ignorant. I know you guys like your sheep to stay in check, but come one now, let some people get some information they deserve to share. (and no, I'm not a dem. or a liberal) We already ask for everyone to pay for way too much in this world. If it is hurting the GDP maybe we could ask some of the billionaires of our country to put in a little extra next year...

Answer 7

Having seen and read about the disgusting underbelly of Wikipedia and the negative light it has been portrayed by the Colbert Nation, I'd like to think that wikipedia is only serving to drive sales and ad revenue of 'real' encylopedias and verifiable sources of information.

So, in a roundabout way, I think wikipedia will never negatively affect the GDP, if that were even measureable.

Answer 8

Well as wikipedia isn't necessarily an accurate or valid source, especially for tertiary or scholarly studies it may not have the effect one would think.

Answer 9

No i think that it probably creates more wealth because of the free information.People can log on and get the information to help them in real life situations.