The Price of Computers Has Fallen More than Ten
Thousand-Fold in a Single Generation
The price of computers has fallen more than ten thousand-fold
in a single generation; the price of semiconductors has fallen
Such steep price declines produce enormous problems of measurement
in calculating the rate of economic growth.
How to resolve this index number problem? If we value computers
at today's (low) price, we grossly underestimate the value and
utility of the first expensive machines. If we value computers
at yesterday's (high) price, we grossly overestimate the value
and utility of machines that today are often used mostly to run
screen saver programs and play solitaire.
This is just one of the reasons that national income accountants
despair of ever producing a consensus estimate of the impact
of the computer revolution on GDP.