Measuring consumer well-being from using zero price digital services: The case of navigation apps and location-based services
JRC Digital Economy Working Paper 2021-04
Digital maps and navigation applications are considered an essential tool by 70% of smartphone users. As these apps come predominantly free of charge, their contribution to consumer well-being cannot be captured by the common economic measures, like GDP. This study demonstrates how a discrete choice experiment approach can be applied to measure, in an economically consistent way, consumer surplus from a navigation service. We elicit preferences for a satellite navigation with the two optional location-based functionalities: real-time traffic information and location-sensitive commercial information. In the experiment, the respondents are confronted with a range of location-sharing conditions set by a navigation provider. Finally, we estimate a demand model and derive welfare measures from the collected choices. Median consumer surplus from using basic satellite navigation without location-based functionalities is estimated at 8.06 EUR per month. Adding location-based services can increase this gain by 36% to 10.98 EUR, provided that users maintain control over location disclosure. Location-sharing terms set by a provider and privacy concerns of users both affect the size of the surplus from a navigation service.
SOBOLEWSKI Maciej;
2021-02-01
European Commission
JRC123535
https://publications.jrc.ec.europa.eu/repository/handle/JRC123535,
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