The Free Web Has Economists Puzzled

Since completing a master’s degree in electrical engineering in 2009, Ti Zhao, a self-described education junkie, has continued to take classes. The price for the last eight: $0. “It’s hard for me to imagine ever paying for a class again,” says Zhao, who’s taken free courses from online education services EdX and Coursera. Before, the San Francisco resident spent about $500 per class at a local university’s continuing education program.For economists, Zhao’s embrace of the Internet’s free cornucopia poses two questions: Does the use of free Web-based goods and services constitute an economic transaction, just as a store owner and a shopper exchange goods for money? If so, how can economists capture these transactions in their calculations of gross domestic product, and should they? GDP is the value of all the goods and services produced in a country. If no money is exchanged when a student takes a free online course, it’s hard to value the service rendered.

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