Faculty Scholarship 1994 - Present

Are Consumers Benefiting More Than Investors From Corporate Investments in Information Technology

Conflicting reports on the Return on Investment of Information Technology are often attributed to the inherent difficulty of defining and measuring value. One unique approach is to assess and investigate value from the consumers' perspective. The idea is that the benefits of technology investments are often passed on to consumers through quality improvements, enhanced product variety, and lower prices. Economists have defined consumer surplus to measure the difference between what consumers are willing to pay and the market-based price. In this paper we assess the change in consumer price index metric for various products and services between 1990 and 2005. Setting aside all concepts of value and not accounting for the benefits associated with quality improvements, we found that consumers are paying less for technology-oriented products and services and they are paying more for non-technology-oriented products and services.