NIRA OPINION PAPER
No.66 | May 2023

How Can We Quantify the Burgeoning
Digital Economy?
- The Limitations of GDP as a Measure and Efforts Towards theDevelopment of New Statistical MeasuresToshihiro Okubo

Adjunct Senior Fellow, Nippon Institute for Research Advancement(NIRA) / Professor, Faculty of Economics, Keio University

With the rapid spread of the digital economy, how can we gain a grasp of digital economic
activity? The measurement of the digital economy is a topic of discussion both
domestically and internationally. One particular focus is how to gain an overview of free
digital services, which are difficult to measure in terms of the existing representative
economic indicator GDP (the total value added of domestically-produced and provided
goods and services).
This paper examines the value of free digital services in terms of consumers' potential
willingness to pay. Based on the results of NIRA’s Questionnaire Survey on the Effects of
the Spread of COVID-19 on Telework-based Work Styles, Lifestyle, and Awareness, weestimated the size of the market if companies were to charge for digital services. Under
the assumption of monopoly prices, a variety of digital services would earn 84-95 billion
yen per year, and the total earnings of 10 types of digital services would be approximately
900 billion yen.
Without accurate statistics, the current status of a country cannot be determined; adecline in statistical accuracy will lead to the decline of a country. The creation of new
statistical measures that measure the digital economy in a multifaceted manner while
maintaining the use of existing measures is an urgent task. Data is scattered throughout
society, necessitating a variety of trial-and-error efforts by the public and private sectors,
including the use of private-sector data and the establishment of a data market to gain
an overview of data trading activities*.

This is a translation of a paper originally published in Japanese in May, 2023.

Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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1. The Digital Economy Now Encompasses a Wide Range of Fields
The digitalization of the economy has been steadily progressing, but the COVID-19 pandemic
which began in 2020 accelerated the speed of this progress. In terms of work styles, teleworkhas become widespread, and meetings using online conferencing tools such as Zoom havebecome routine. Companies are also shifting from paper media to a greater use of electronic data.
Online registration and reservation applications for administrative procedures and a range oflifestyle services are increasing; Internet banking is increasingly offered by financial institutions,and automated cash registers and electronic payments at supermarkets and other stores are
becoming the norm. Many people probably use a variety of services online, including theordering of food deliveries, the making of reservations at restaurants and beauty salons, daily
shopping, and reading books, listening to music, and watching videos.
Artificial intelligence (AI) is further accelerating this trend toward digitalization. Automatedappliances are rapidly becoming more sophisticated, and fully automated driving is projected to
be a reality in the near future. 2022 saw the arrival of ChatGPT, an AI-based chat service, which
has become popular throughout the world.
The digitalization of the economy has spread out through all aspects of society, dramaticallyincreasing the convenience of daily life. In order to grasp the actual status of the digital economy,
the Toshihiro Okubo Laboratory and NIRA have jointly conducted nine rounds of the“Questionnaire Survey on the Effects of the Spread of COVID-19 on Telework-based Work Styles,
Lifestyle, and Awareness” (Note 1). Figure 1 shows the results of this survey of the progress ofdigitalization in daily life in chronological order, showing the yearly change from December 2019,
before the pandemic, to December 2022. While there are no sudden changes, it can be seen thatthe economy as a whole is steadily becoming more digitalized.

Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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Figure 1: Spread of the digital economy(Note: The December 2022 and December 2021 results are from the 8th round of the “Questionnaire Survey on the
Effects of the Spread of COVID-19 on Telework-based Work Styles, Lifestyle, and Awareness” (conducted from
December 2022 to January 2023, n=9,804); the December 2020 and December 2019 results are from the 3rd roundof the Survey (conducted in December 2020, n=10,523).

Credit card payments were already used by more than 70% of respondents before the pandemic(this represents the sum of the responses "I frequently use this service" and "I sometimes use
this service"; similarly below). On the other hand, just under 15% of respondents used debit
cards, and this figure displayed no growth even during the pandemic. The largest growth rate
was in the area of fintech (cashless payment services such as PayPay), which rose from 38%
before the pandemic to 50% by the end of 2022. Thus, the use of digital payment grew, and theuse of cash declined from 81% to 70%. This indicates a shift from cash payments to digital
payments, in particular via fintech, due to the pandemic.
In the area of lifestyle services, shopping and delivery services using digital platforms seem to
Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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be steadily penetrating the market, but the sharing economy (lodging, bicycles and cars, etc.) isstill minuscule in the overall picture.
A closer examination of the survey results reveals that the percentage of respondents who
answered that they use these services “frequently” has increased over time. As Figure 1 shows,the increasing trend towards frequent use is evident in credit card payments, fintech use, online
shopping, internet banking, and the use of online entertainment services. When people begin touse digital services, they tend to use them frequently because of their convenience, ultimately
becoming locked into contracts.
However, the diffusion of digital services is not uniform. While some people are actively using
and benefiting from digital services, there are still many who are making almost no use of them.
The "digital divide" seems to be becoming more pronounced, not only in the use of digital devices,
but also in the use of services using those devices.

2. The Limitations of GDP as an Indicator and Alternative Statistical Indicators
How to gain an overview of this diverse digital economy in economic statistics (the System of
National Accounts, or SNA) has been a subject of debate both domestically and internationally.
As a measure of the total value-added of goods and services produced domestically, grossdomestic product (GDP) is the most common indicator employed to tell us about a country's
economy. It should be pointed out that there have been numerous criticisms of the supremacy
of GDP as a measure to date. For example, it has been indicated that GDP does not represent
the level of happiness and satisfaction among citizens, and that it does not reflect the effects ofexternal diseconomies, especially environmental problems. In addition, there are many
activities (e.g., household chores, trade in second-hand goods, etc.) that we cannot grasp theeffect of via GDP. Although there are indicators that GDP does not capture, these do not carry agreat deal of weight in terms of the overall economy, and economic policy has therefore
traditionally been based on GDP and similar economic statistics.
Over the past 20 years, however, a movement to realize alternative indicators to GDP has gained
ground internationally. For example, the report of the Commission on the Measurement of
Economic Performance and Social Progress (the Stiglitz Commission), launched in 2008,
explains the need to create a “dashboard” of multiple indicators in order to gain an overview ofthe social economy from multiple perspectives. In particular, the report proposed the importance

Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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No. 66 | May 2023
of measuring subjective well-being, the adoption of the “capability approach” (the concept ofusing human potential and possibilities as indicators to determine whether people are living
lives that they value), and the creation of a fair distribution system. Subsequently, the United
Nations' “World Happiness Report” and the OECD's “Better Life Index” were created. In Japan,
statistics on happiness and life satisfaction have been produced by the Cabinet Office. For
example, the "National Survey on Lifestyle Preferences" was conducted every three years from
FY1978 to FY2008. In recent years, the "Survey on Satisfaction and Quality of Life" has been
conducted, and there has been considerable discussion of dashboards focusing on satisfaction
and quality of life.
Currently, discussions are underway regarding Japan’s SNA, looking towards a revision of themethod employed in 2025. One aspect of these discussions is how to achieve a grasp of the
progress of the digital economy. A particular focus here is how to gain an overview of the extent
of free digital services. Because there is no market evaluation of the price of free services, theycannot be incorporated in market data; nevertheless, they are considered to be included incompany costs, for example in advertising costs. This approach has the advantage of not
requiring fundamental change to the SNA, but brings with it numerous inadequacies, such as
the inability to isolate the digital economy. How to measure the digital economy, with its many
free services, in the SNA is a major, and unavoidable, problem.

3. Existing Statistics Do Not Offer an Adequate Overview of the Reality of theDigital Economy
Typical indicators related to digitalization include the IMD’s World Digital CompetitivenessRanking, which indexes factors including digital technology and the ICT environment, and theUN’s E-Government Survey. These are country-level indicators formulated and ranked basedon a variety of data. They therefore do not directly measure the digital economy on a statisticalbasis.
In various countries throughout the world, there has been a movement toward the formulationof statistics that investigate the actual status of the digital economy itself. For example, in the
United Kingdom, the 2016 "Independent Review of UK Economic Statistics" discusses how thedigital economy can be understood statistically. In Japan also, the 2019 “White Paper on
Information and Communication” discussed this point extensively. The scale of the digital
economy has been growing at an unparalleled pace since the pandemic, which commenced in

Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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2020, making it an urgent issue to determine how to gain an overview of this economy in termsof GDP and existing economic statistics.
Why is it so difficult to grasp the reality of the digital economy? There are three main reasons:First, there are numerous free services. For example, Google, Twitter, and Facebook, all of whichhave a large number of users, are free. Prior to digitalization, content such as dictionaries, maps,
timetables, and information magazines were sold as goods. All sales of content sold in bookstores
were converted into GDP, but now all such content is available for free on the Web. The
circulation of print media has declined over recent years; an increasing number of publications
are going out of business, and the number of bookstores in Japan’s towns and cities has
plummeted. On the other hand, free digital content and tools have no price, no matter how muchis consumed. Because they are counted as zero in statistics, GDP appears to be reduced, which
does not reflect reality.
Second, exchanges on digital platforms are unclear. In recent years, there has been an increasein so-called "gig work," one-off work that is offered on digital platforms without employment
contracts. An example of this is earning income from one-off household help in one’s local
neighborhood. Gig workers may also, for example, use their spare time to do data entry work,
web development, delivery work, etc. This offers workers the opportunity to readily earn money,
and consumers are also able to benefit from a variety of services that were previously
unavailable at affordable prices. The gig economy is also difficult to grasp via current economic
statistics. In certain countries (e.g., Switzerland and other small European countries), there isa movement toward the government gaining an overview of platform company activity. In Japan,
however, it is difficult to grasp the actual situation because of the considerable scale of themarket, the existence of a variety of platforms and businesses, and the broad scope of gig work.
Third, how do we evaluate the sharing economy? A typical example of the sharing economy issubscription-based services, which can be used for any amount of time at a low monthly price.
Figure 2 shows the results of the 8th Questionnaire Survey on the Effects of the Spread of
COVID-19 on Telework-based Work Styles, Lifestyle, and Awareness. About 40% of all
respondents used some kind of subscription-based service, with music, videos, and e-books being
the most common (28% for videos, 12% for music streaming, 7% for e-books). Today, video, music
and game content is available for unlimited viewing and listening, and it is no longer necessary,for example, to purchase an entire series of manga.

Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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No. 66 | May 2023

Figure 2: Usage of subscription-based services

Subscription-based services are not limited to content distribution. Some services offer the useof watches, cars, furniture, children's toys, and more. For as little as ¥1,000 per month, a
subscriber can have access to brand-name goods each month. In addition, while in the past toys,
picture books, etc. were purchased one by one as children grew, subscription-based services
allow them to be exchanged depending on a child’s growth and changing preferences, and hence
Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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NIRA OPINION PAPER
No. 66 | May 2023
there is no waste. Consumption behavior has changed dramatically: from buying and owning
things to temporarily owning and sharing them.
Today, the market scale of subscription-based services has grown too large to ignore, but GDP
as a measure does not provide a picture of the economic scale of these sharing economies. Taking
music as an example, CDs are more rarely being purchased at CD stores, stores havedisappeared, and audio equipment that plays CDs has become a rarity. Although economic
statistics show that economic activity appears to be shrinking, in reality, not only is there nochange from the situation as it was previously, the consumption of content itself is increasing
dramatically.

4. How Can We Gain an Overview of the Digital Economy?
While we have indicated that there are three issues involved in measuring the digital economy,
the discussion in this paper will focus on the first point, how to evaluate free services. This isbecause free services are expanding in all sectors and are considered to introduce significant
statistical errors.
There are numerous arguments regarding how to interpret free services from the perspective of
economics. It is possible to consider that digital data can be provided free of charge because thecost of reproduction is close to zero, while it may also be seen that the strategy of some businesses
is to make the service temporarily free in order to capture users and charge for it later. A
business model that uses networking effects to register free users and gain advertising revenue
is also common, for example among social networking services. However, this paper will not
attempt to interpret or theorize using an economics-based approach, but will rather explore theactual situation based on data and present guidelines for the future of economic statistics.
First, how should we think about goods and services with no price? One solution is to evaluate
value by the degree of willingness to pay, by asking individuals to answer how much they would
be willing to pay for a free tool if it were later charged for. Because the price of the tool or service
is zero, the amount that people are willing to pay is entirely consumer surplus. This type ofquestion was asked in the 9th Questionnaire Survey on the Effects of the Spread of COVID-19
on Telework-based Work Styles, Lifestyle, and Awareness. For each of the various free services
considered, Figure 3 shows respondents’ usage rates, and Figure 4 shows how much they would
be willing to pay per month for each service if a fee was charged (the monthly fee was set forunlimited use, as in the case of subscription-based services. If the respondents did not originally
Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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No. 66 | May 2023
use the service, they were asked to select "Have not used the service," and this was not includedin the tabulation in Figure 4).
Figure 3: Usage rates for digital services

Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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NIRA OPINION PAPER
No. 66 | May 2023
Figure 4: Amount respondents are willing to pay for digital services

First, the use of various services is generally high in all categories (Figure 3), with search sites
such as Google and Yahoo at a very high 84%, followed by free email such as Gmail and Yahoo
Mail (80%) and shopping platforms such as Amazon (80%). These services are used by morethan 8 out of 10 users; SNS such as Facebook and Twitter showed the lowest percentage of
responses at 70%, but still hold a high percentage, with 7 out of 10 respondents using them.
Figure 4 shows results when users were asked how much they would be willing to pay. Only
between 20 and 30% of users would be willing to pay for the service if required to. The remaining
70-80% responded that they would not use the service if a fee was charged. In other words, theirdegree of willingness to pay is zero. This indicates that a very large number of people arehesitant to pay if they have become accustomed to free services that they are able to use as muchas they want. Alternatively, perhaps it is difficult for them to imagine the inconvenience theywould experience if they could no longer use something that had previously been free andunlimited.
Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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NIRA OPINION PAPER
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There are also differences by category with regard to willingness to pay. The largest percentagesof willingness to pay were in relation to video distribution platform sites such as YouTube,
software, communication and information-sharing tools such as Zoom, and search sites such as
Google, ranging from 28 to 31%. On the other hand, willingness to pay for SNS was 24%, andwas lower for information and reservation-related sites, Internet encyclopedias, free e-mail, andnews and information sites operated by media companies, at 20-22%.
Next, looking at willingness to pay itself, respondents’ willingness to pay was generally
concentrated around low amounts (100-1,000 yen/month or less); amounts above 1,000 yen wererarely selected, despite the fact that they were available as an option. The average amount
respondents were willing to pay was generally around 300-400 yen when zero was included asa choice, and 1,400-1,900 yen when zero was not included. For example, the average amount
respondents were willing to pay for search tools such as Google and Yahoo was 397 yen permonth, including zero yen (respondents who would not use them unless they were free); whenzero yen was not included, the average was 1,423 yen.

5. Estimation of the Market Scale of Free Digital Services: If Fees Were to Be
Charged, Digital Services Would Cost 2,000 to 10,000 Yen per Month, and theMarket Scale Would Be 84 to 95 Billion Yen
Under the willingness-to-pay concept, only those who indicate a willingness to pay a higher pricethan the price the company has set will consume the service; those who indicate a willingness
to pay only a price lower than that will not purchase the service. As the fee changes, the numberof people who consume the service also changes. For example, when fees are reduced, thenumber of people who consume a service increases, but the company earns less revenue because
the unit price is lower. On the other hand, when fees are increased, fewer people are willing topay.
Let us consider a case in which companies have a monopoly on each digital service. In this case,each company is free to set the price at which it can maximize its revenue. For example, in thecase of video distribution platform sites, the results of this survey show that 24.1% of workers
would be willing to pay 100 yen or more per month. According to the Ministry of Internal Affairs
and Communications' “Labor Force Survey (February 2023),” the number of workers in Japan
is 66.67 million. Therefore, if video streaming platform sites were priced at 100 yen per month,
the annual revenue would be 19.3 billion yen (1,200 yen per year x 66.67 million people x 24.1%).
If the company holding the monopoly were to price the service at 2,000 yen per month, annual
Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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revenue would be 90.2 billion yen (24,000 yen per year x 66.67 million people x 5.64%), giventhat 5.64% of respondents were willing to pay 2,000 yen per month or more.
Table 5 shows results for willingness to pay and an estimate of annual revenue (for 12 months)
if a company holding a monopoly were to charge a specific price for digital services based on afigure of 66.67 million workers. The figures are shown in millions of yen. In this case thecompany holding the monopoly chooses the price so as to maximize its annual revenue. For
example, for a video streaming platform site, the company would set the price at 2,000 yen permonth because annual revenue is maximized at this figure. In the case of Zoom and Amazon,
the price would be 10,000 yen per month for each service, and for search sites such as Google,
the price would be 5,000 yen per month to realize the maximum revenue.
Table 5 Estimates of Market Scale(Note) Figures in each cell show the value of annual sales of digital services at hypothetical prices based on
willingness to pay. The value for respondents who selected "I don’t use this service at all" and "Will not use unlessthe service is free" is assumed to be zero yen. Figures are calculated based on the results of the Ministry of Internal
Affairs and Communications' "Labor Force Survey" for February 2023, and assume 66.67 million workers. Unit:million yen. Colored cells indicate maximum earnings in the case of monopoly prices.

Pricing by companies holding monopolies would set the price at around 5,000 yen per month formany services. Depending on the service, this could be 10,000 yen, which would seem rather
high from the consumer's perspective. It is considerably higher than the abovementioned
Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
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presented here. Translated by Michael Faul.

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average willingness to pay (excluding zero) of 1,400-1,900 yen per month. Monopolisticcompanies charge high prices that winnow out their consumer base, and only a select few witha high degree of willingness to pay will be able to consume their services. In today's digital
economy, there are numerous monopolies and oligopolies held by platformers, and it is therefore
quite possible that such monopoly prices could be reached if fees were to be charged.
At such monopoly prices, sales in each service category would represent a market of 84-95 billion
yen per year. If we simplify our approach and assume that services can be replicated at zeromarginal cost and without any other cost, all sales become profit and value-added (Note 2).
Because this amount is directly included in GDP, the total for all 10 categories in the digital
economy would increase GDP by about 900 billion yen per year if services were charged for (Note3).
Let us now assume that instead of a uniform monopoly price, different prices can be charged toeach individual using a service (i.e., "perfect price discrimination"). In this case, we assume thatall users of the service up to the present have been able to purchase it at the price which they
were willing to pay for it, and that the cost of providing the service was zero; the sum of all users’
willingness to pay represents the company's profit. If this is the case, the sales for each service
category would be 220-280 billion yen, or 2,423.4 billion yen per year for the 10 categories
combined. Under conditions of monopoly pricing, only some willing payers could purchase, but
under conditions of perfect price discrimination, all willing payers could purchase, and as aresult more people would be able to purchase the service. Generally speaking, a certain degreeof price discrimination is possible in the market, but perfect price discrimination is not easy toachieve. In the digital world, however, this will be a simple matter to achieve. For example,
through the use of digital technology and big data, it would be possible to determine anindividual's willingness to pay and to offer targeted services and prices accordingly.
What we have discussed above is an estimation based on specific assumptions. If we were to
make different assumptions, the estimates would change. For example, even respondents who
indicated that they would not use a service unless it was free would face various difficulties intheir daily lives if the service was actually charged for, and it is therefore possible that many
people would pay a fee if a fee was charged. Although the number of employed people was usedin the estimation, the unemployed also use these digital services. The unemployed include
pensioners, homemakers, and students; the preferences of all these groups differ significantly,
and they also differ from those of the employed. As a result, their willingness to pay would also
be likely to differ from that of the employed respondents discussed above. Although restrictions
on the number of questions asked in the survey resulted in a focus on 10 categories, there are
Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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other free services in addition to these 10. The market is further segmented within each item,
because each category includes a number of different services, such as Facebook and Twitter.
Given this, it is highly likely that the economic activity from free services will be much larger
than the above estimates, by several to several tens of times. Nevertheless, although it is difficult
to grasp the economic scale of free services using the existing concept of GDP, hypothetical
calculations assuming a variety of conditions show that economic activity in this area is of asignificant scale.

6. The Importance of Formulating Statistics That Are Suited to the Realities of
the New Digital Economy and of Maintaining Existing Statistics
Measuring the digital economy is not an easy task, and it requires an unconventional approach.
At first glance, it may seem that it would be a simple task to measure this economy, because
data is aggregated through digitalization. However, the digital economy spans a wide range offields, and for this reason, its measurement presents difficulties.
To date, economic statistics have been based on the premise of “goods.” Manufacturers produce
goods in factories and sell them at a price that includes added value. Consumers pay for goods
at stores, and consume or own them. By contrast, in the digital economy, the focus is on "things,"
for example digital data. Unlike goods, digital data is inexpensive to reproduce, can be produced
in any quantity, and does not require inventory. From a consumption perspective, consumers
are able to consume online as much as time permits.
It is no longer possible to measure a country's overall economic activity only by its GDP, the sumof the value-added of goods and services. Supplementary statistics focusing on the digital
economy, encompassing free services, digital platforms, subscription-based services, the sharing
economy, and the gig economy, will be essential. Moving forward, there will be various attempts
to measure this economy in both the public and private sectors; the survey discussed in thispaper represents one such attempt.
It is important to note, however, that statistics must remain consistent. It would not be adesirable approach to alter or eliminate survey items from existing business surveys and alter
statistics such as GDP in order to gain an overview of the digital economy. "Evidence-based
policymaking," an approach in which policies are made based on the results of empirical studies(i.e., “evidence”) in economics and other fields, has recently been gaining momentum. What isneeded for this is accurate data. Among these data, panel data are particularly useful. Panel
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data is data that captures detailed changes in the behavior of individual people and companies
over time. If statistical surveys or individual survey items are simplified or modified, it will
become impossible to study data over a time series. This would impede empirical studies ofpolicy effects and halt the progress of evidence-based policymaking. In order to measure thedigital economy, we must adopt a new statistical approach, while maintaining existing
approaches.
Recent news reports indicate that statistics tend to be somewhat ignored in Japan. Nevertheless,statistics represent the status of a country. Without accurate statistics, the current status of acountry cannot be determined, and effective policies cannot be formulated. A decline in statistics
will lead to a decline in a nation. Budgetary and staffing constraints should never be used tojustify the simplification of existing statistics and the inclusion of digitalization-related survey
data.
How, then, should new statistics concerning the digital economy be created? As has been
discussed in this paper, the digital economy is so diverse that it is difficult to grasp its actual
status simply by conducting surveys of consumers and businesses as has been done in the past.
It will be necessary to go beyond preconceived notions and common sense and test new methods
through trial and error. The survey method described in this paper, which focuses on willingness
to pay, may be an effective method. The abovementioned Commission on the Measurement of
Economic Performance and Social Progress (the Stiglitz Commission) has proposed the creationof a “dashboard,” a group of indicators of happiness and satisfaction with life. It seems that it
will be essential to create data sets enabling us to understand the digital economy from multiple
perspectives.
With the progress of digitalization, a variety of information can be obtained as electronic data.
Digital platforms track user usage, and private companies, banks and insurance companies,
and research firms also have access to a variety of data. Various think tanks also conduct
innovative research that offer an overview of the digital economy that cannot be obtained
through government statistics. One approach would be to create statistics that survey the digital
economy using such private-sector data. Another effective measure would be to create a data
market in which data that is presently scattered throughout society could be bought and sold.

Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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Note
* In addition to the author, the survey and data analysis were conducted by Kiwamu Kato, Senior
Architect, Future Corporation, and Atsushi Inoue, Kozue Sekijima, and Sosuke Suzuki of the Nippon
Institute for Research Advancement (NIRA).
1 The survey has been conducted nine times to date, in April, June, and December 2020, April and
September 2021, February, June, and December 2022, and March 2023, targeting more than 20,000
workers throughout Japan, and has looked at employment status, living conditions, and awarenessfrom the perspective of workers in various industries, occupations, and regions. For details, pleaserefer to the survey reports. The results of the 9th Survey can be found here: Toshihiro Okubo and
NIRA (2023), Report on the Results of the 9th Questionnaire Survey on the Effects of the Spread of
COVID-19 on Telework-based Work Styles, Lifestyle, and Awareness2 Costs should actually be subtracted from market scale, but here costs are assumed to be zero, as
they are assumed to be reflected in prices and inputs for other goods and services.
3 Here, we simply assume that domestic firms supply digital services.

Toshihiro Okubo
Toshihiro Okubo is a Professor in Keio University’s Faculty of Economics, andan Adjunct Senior Fellow with the Nippon Institute for Research Advancement(NIRA). He holds a Master's degree from the University of Michigan and a
Ph.D. in International Relations and Economics from the University of Geneva
and the Graduate Institute of International and Development Studies.
Professor Okubo specializes in international economics and spatial economics.

Copyright Ⓒ 2023 by Nippon Institute for Research Advancement
This is a translation of a paper originally published in Japanese. NIRA bears full responsibility for the translation
presented here. Translated by Michael Faul.

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