How much is the Internet worth to society?  Indeed, how much is it worth to you?  I’ve been using the web now for around 15 years, and as it’s got better and better, it’s now difficult to recall just what life was like before the web became quite so ubiquitous, and quite so useful.

Can this be quantified though?  Traditional measures of utility such as GDP require monetary transactions, but with things like Wikipedia, Coursera, Google and YouTube all offering things for free, this becomes much harder with the web.  For instance whilst Google’s ad revenues count in GDP figures, they don’t even begin to tell the story of just how valuable the search engine is to society.

Consumer surplus is a common metric used for measuring the value we place on something.  It basically requires us to relate how much we would pay for something and compare that with how much we actually pay for it.  The difference in the two values is thus the consumer surplus and can be used to determine the value we get from that thing.

Research has been done in this area to determine the consumer surplus of broadband access.  The researchers used a demand curve to measure the surplus.  They looked at the price people paid for broadband in the past, and compared it to the present.  So say for instance broadband cost £30 in 2000, but only £20 today, that represents a surplus of £10.  Using this simple formula, the authors believe that broadband was generating around $6 billion in consumer surplus per year in 2006.  They could then use our browsing habits to divide this up amongst various sites, so that for instance Wikipedia was providing around $50 million of that surplus.

All of which seems to undersell things quite a bit.  Having access to fast Internet means so much more now than it did a decade ago, and all figures reveal that we use the web far more now than we did then.  It’s also possible that when we determine how much we pay for broadband we don’t fully take account of the many free services we’ll then have access to.

McKinsey did a study asking participants how much they would pay to use services that were currently ad-supported, and therefore free.  It found that people would typically pay around £35 a month for services they currently got for free.  If you add this up, McKinsey believe that free ad-supported services generated around £30 billion of consumer surplus in America, and around £60 billion in Europe.  They reasoned that email accounted for around 16% of this, search 15% and social networking 11%.

Some research by Google took a slightly different approach, by looking at how much time search engines saved people.  They assumed a value of $22 per hour (ie the average American wage), and found that search alone generates $500 of consumer surplus per year per person, or around $100 billion for the entire country.

Some go even further though.  Some MIT research looked instead at how we spend our leisure time.  They figured that we must value our leisure time, so therefore how we spend it can be construed to be on the most valuable things.  The average amount of time spent online (for leisure) rose from 3 hours per week to nearly 6 hours (in America).  Therefore they believed that the consumer surplus from the web was $2,600 per user per year, or $564 billion for the country as a whole.

So we can see, the web is seen as incredibly valuable by a variety of inspection methodologies.  How valuable is it to you?