Did online shopping help us save money?

Because of the way federal data was collected, it is easier to answer questions about the price of butter or industrial spraying equipment than about those we buy on the Internet.

A team of economists from Stanford University and Visa hopes to fill the gaps. The Stanford team negotiated with Visa secure access to approximately 400 billion debit and credit transactions anonymous between 2007 and 2017, a stock representing an economic activity of $ 21.2 billion. To put this in perspective, consider that the total economic output of the United States in 2017 was about $ 19.5 trillion.

The researchers compared online transactions to their physical counterparts and found that a typical household was earning around $ 1,150 in convenience and broadening the choice by making online purchases in 2017, while the Internet accounted for about 8% of all consumer spending. Their badysis was presented in a working paper recently published by the National Bureau of Economic Research.

Peter Klenow, an economist at Stanford, said that the team was surprised by the size of the online economy. "If it continues to grow in this way, then it should be on our radar," he said, as it could distort key indicators such as inflation and economic growth.

The rise of online shopping has also exacerbated income inequality, researchers said. High-income households earn about three times more than low-income households in relation to their expenditures. Households with annual incomes above $ 50,000 make about 9.7% of their expenses online. For low-income households, this figure is about 3.4%.

Catherine Tucker, an economist at MIT Sloan, who recently proposed in the Journal of Economic Literature a framework for badessing gains in digital commerce, said the Stanford team's measures were a valuable complement to government statistics. Tucker worked with Liran Einav of Stanford, a newspaper author, but did not participate in this project.

Einav said Visa's data was "one of the few options" for measuring online activity in all sectors and creating global measures at the same time. economy.

Economists have estimated how much time and convenience customers value by measuring the distance traveled by a person who is willing to drive before breaking down and shopping online at the same merchant.

When the company offers both online and offline options and the clbadic option is one kilometer away, a customer will choose online about 12% of the time. When is it 50 miles? The customer will choose the option online more than half the time.

Yet, contrary to expectations, Americans in remote areas have not turned more to online shopping. Rather, researchers found that people living in more densely populated areas were more likely to shop online, although this may also be related to levels of education and access to Internet connections and banking services.

There is no formal definition of e-commerce. In this case, the researchers chose to include online shopping trips and hotels, but excluding recurring payments and bills.

The challenge of measuring the impact of search engines or time-saving mapping applications has been widely debated. What Klenow called "the unmeasured growth of GDP" created by the provision of online access to goods has been less taken into account.

"This is an important component of the growth that is occurring but that is not emphasized in the standard extent," Klenow said.

In a separate working paper of 2018, Klenow used the Adobe Analytics prices to display online inflation lagging by 1.3 percentage points a year. If e-commerce is not properly weighted, the official measures of price growth, and therefore of real economic growth, could be wrong.

A bad measure of the online economy is not just an academic problem. This can give the impression that the economy is smaller or growing faster than it currently is. This misperception could lead policymakers to take unnecessary steps, such as cooling an economy that is not overheated or stimulating an already very hot economy.

This article was written by Andrew Van Dam, a Washington Post reporter.