The economic effects of Facebook

  • Roberto Mosquera
  • Mofioluwasademi Odunowo
  • Trent McNamara
  • Xiongfei Guo
  • Ragan PetrieEmail author
Original Paper


Social media permeates many aspects of our lives, including how we connect with others, where we get our news and how we spend our time. Yet, we know little about the economic effects for users. In 2017, we ran a large field experiment with over 1765 individuals to document the value of Facebook to users and its causal effect on news, well-being and daily activities. Participants reveal how much they value one week of Facebook usage and are then randomly assigned to a validated Facebook restriction or normal use. One week of Facebook is worth $67. Those who are off Facebook for one week reduce news consumption, are less likely to recognize politically-skewed news stories, report being less depressed and engage in healthier activities. These results are strongest for men. Our results further suggest that, after the restriction, Facebook’s value increases, consistent with information loss or that using Facebook may be addictive.


Social media Field experiment Value of Facebook News awareness Well-being Gender 

JEL Classification

C93 D91 D83 I31 


Supplementary material

10683_2019_9625_MOESM1_ESM.pdf (2.6 mb)
Supplementary material 1 (pdf 2644 KB)


  1. Abadie, A. (2002). Bootstrap tests for distributional treatment effects in instrumental variable models. Journal of the American Statistical Association, 97(457), 284–292.CrossRefGoogle Scholar
  2. Allcott, H., Braghieri, L., Eichmeyer, S., & Gentzkow, M. (2019). The welfare effects of social media. Technical report, National Bureau of Economic Research.Google Scholar
  3. Allcott, H., & Gentzkow, M. (2017). Social media and fake news in the 2016 election. Journal of Economic Perspectives, 31(2), 211–36.CrossRefGoogle Scholar
  4. Anderson, M. L. (2008). Multiple inference and gender differences in the effects of early intervention: A reevaluation of the Abecedarian, Perry Preschool, and Early Training Projects. Journal of the American Statistical Association, 103(484), 1481–1495.CrossRefGoogle Scholar
  5. Ashley, C., & Tuten, T. (2015). Creative strategies in social media marketing: An exploratory study of branded social content and consumer engagement. Psychology & Marketing, 32(1), 15–27.CrossRefGoogle Scholar
  6. Bailey, M., Cao, R., Kuchler, T., & Stroebel, J. (2017). The economic effects of social networks: Evidence from the housing market. Journal of Political Economy, 126(6), 2224–2276.CrossRefGoogle Scholar
  7. Bailey, M., Cao, R., Kuchler, T., Stroebel, J., & Wong, A. (2018). Social connectedness: Measurement, determinants, and effects. Journal of Economic Perspectives, 32(3), 259–80.CrossRefGoogle Scholar
  8. Becker, G. M., Degroot, M. H., & Marschak, J. (1964). Measuring utility by a single-response sequential method. Behavioral Science, 9(3), 226–232.CrossRefGoogle Scholar
  9. Becker, G. S., & Murphy, K. M. (1988). A theory of rational addiction. Journal of Political Economy, 96(4), 675–700.CrossRefGoogle Scholar
  10. Benjamini, Y., & Hochberg, Y. (1995). Controlling the false discovery rate: A practical and powerful approach to multiple testing. Journal of the Royal Statistical Society: Series B (Methodological), 57(1), 289–300.Google Scholar
  11. Benjamini, Y., Krieger, A. M., & Yekutieli, D. (2006). Adaptive linear step-up procedures that control the false discovery rate. Biometrika, 93(3), 491–507.CrossRefGoogle Scholar
  12. Blake, H., Mo, P., Malik, S., & Thomas, S. (2009). How effective are physical activity interventions for alleviating depressive symptoms in older people? A systematic review. Clinical Rehabilitation, 23(10), 873–887.CrossRefGoogle Scholar
  13. Bohm, P., Lindén, J., & Sonnegåd, J. (1997). Eliciting reservation prices: Becker–Degroot–Marschak mechanisms versus markets. The Economic Journal, 107(443), 1079–1089.CrossRefGoogle Scholar
  14. Bond, R. M., Fariss, C. J., Jones, J. J., Kramer, A. D., Marlow, C., Settle, J. E., et al. (2012). A 61-million-person experiment in social influence and political mobilization. Nature, 489(7415), 295.CrossRefGoogle Scholar
  15. Brynjolfsson, E., Eggers, F., & Gannamaneni, A. (2018). Using massive online chohice experiments to measure changes in well-being. NBER Working Paper 24514.Google Scholar
  16. Corrigan, J. R., Alhabash, S., Rousu, M., & Cash, S. B. (2018). How much is social media worth? Estimating the value of Facebook by paying users to stop using it. PloS One, 13(12), e0207101.CrossRefGoogle Scholar
  17. Cramer, S., & Inkster, B. (2017). Status of mind social media and young people’s mental health and wellbeing. Royal Society for Public Health.Google Scholar
  18. De Vries, L., Gensler, S., & Leeflang, P. S. (2012). Popularity of brand posts on brand fan pages: An investigation of the effects of social media marketing. Journal of Interactive Marketing, 26(2), 83–91.CrossRefGoogle Scholar
  19. DellaVigna, S., & Kaplan, E. (2007). The fox news effect: Media bias and voting. The Quarterly Journal of Economics, 122(3), 1187–1234.CrossRefGoogle Scholar
  20. Deloitte. (2015). Facebook’s global economic impact: A report for facebook.Google Scholar
  21. Deters, Fg, & Mehl, M. R. (2013). Does posting facebook status updates increase or decrease loneliness? An online social networking experiment. Social Psychological and Personality Science, 4(5), 579–586.CrossRefGoogle Scholar
  22. Ellison, N. B., Steinfield, C., & Lampe, C. (2007). The benefits of facebook ”friends”: Social capital and college students’ use of online social network sites. Journal of Computer-Mediated Communication, 12(4), 1143–1168.CrossRefGoogle Scholar
  23. EMarketeer. (2015). College students still spend most social time with facebook. Retrieved December 25, 2017 from
  24. Enikolopov, R., Makarin, A., & Petrova, M. (2016). Social media and protest participation: Evidence from Russia. Universitat Pompeu Fabra.Google Scholar
  25. Facebook. (2016). Facebook reports first quarter 2016 results.Google Scholar
  26. Facebook. (2017). Facebook reports third quarter 2017 results.Google Scholar
  27. Feinstein, B. A., Hershenberg, R., Bhatia, V., Latack, J. A., Meuwly, N., & Davila, J. (2013). Negative social comparison on facebook and depressive symptoms: Rumination as a mechanism. Psychology of Popular Media Culture, 2(3), 161.CrossRefGoogle Scholar
  28. Flood, S., King, M., Ruggles, S., & Warren, J. R. (2017). Integrated public use microdata series, current population survey: Version 5.0. dataset, University of Minnesota, Minneapolis, MN.
  29. Fredrickson, B. L., & Joiner, T. (2002). Positive emotions trigger upward spirals toward emotional well-being. Psychological Science, 13(2), 172–175.CrossRefGoogle Scholar
  30. Gentzkow, M., & Shapiro, J. M. (2011). Ideological segregation online and offline. The Quarterly Journal of Economics, 126(4), 1799–1839.CrossRefGoogle Scholar
  31. Gonzales, A. L., & Hancock, J. T. (2011). Mirror, mirror on my facebook wall: Effects of exposure to facebook on self-esteem. Cyberpsychology, Behavior, and Social Networking, 14(1–2), 79–83.CrossRefGoogle Scholar
  32. Gottfried, J., & Shearer, E. (2016). News use across social media platforms 2016.Google Scholar
  33. Gruber, J., & Köszegi, B. (2001). Is addiction ”Rational”? Theory and evidence. The Quarterly Journal of Economics, 116(4), 1261–1303.CrossRefGoogle Scholar
  34. Herzog, B. (2018). Valuation of digital platforms: Experimental evidence for google and facebook. International Journal of Financial Studies, 6(4), 87.CrossRefGoogle Scholar
  35. Horowitz, J. K. (2006). The Becker–DeGroot–Marschak mechanism is not necessarily incentive compatible, even for non-random goods. Economics Letters, 93(1), 6–11.CrossRefGoogle Scholar
  36. Jelenchick, L. A., Eickho, J. C., & Moreno, M. A. (2013). Facebook depression? Social networking site use and depression in older adolescents. Journal of Adolescent Health, 52(1), 128–130.CrossRefGoogle Scholar
  37. Kahneman, D., & Krueger, A. B. (2006). Developments in the measurement of subjective well-being. The Journal of Economic Perspectives, 20(1), 3–24.CrossRefGoogle Scholar
  38. Kahneman, D., Krueger, A. B., Schkade, D. A., Schwarz, N., & Stone, A. A. (2004). A survey method for characterizing daily life experience: The day reconstruction method. Science, 306(5702), 1776–1780.CrossRefGoogle Scholar
  39. Kettunen, O. (2015). Effects of physical activity and fitness on the psychological wellbeing of young men and working adults: Associations with stress, mental resources, overweight and workability. Turku: Annales universitas turkuensis, medica-odontologica.Google Scholar
  40. Kim, J., & Lee, J. (2011). The facebook paths to happiness: Effects of the number of facebook friends and self-presentation on subjective well-being. Cyber Psychology, Behavior, and Social Networking, 14(6), 359–364.CrossRefGoogle Scholar
  41. Knetsch, J. L., Tang, F.-F., & Thaler, R. H. (2001). The endowment effect and repeated market trials: Is the Vickrey auction demand revealing? Experimental Economics, 4(3), 257–269.CrossRefGoogle Scholar
  42. Krueger, A. B., & Schkade, D. A. (2008). The reliability of subjective well-being measures. Journal of Public Economics, 92(8), 1833–1845.CrossRefGoogle Scholar
  43. Laroche, M., Habibi, M. R., Richard, M.-O., & Sankaranarayanan, R. (2012). The effects of social media based brand communities on brand community markers, value creation practices, brand trust and brand loyalty. Computers in Human Behavior, 28(5), 1755–1767.CrossRefGoogle Scholar
  44. Lee, C. S., & Ma, L. (2012). News sharing in social media: The effect of gratifications and prior experience. Computers in Human Behavior, 28(2), 331–339.CrossRefGoogle Scholar
  45. Martin, G. J., & Yurukoglu, A. (2017). Bias in cable news: Persuasion and polarization. American Economic Review, 107(9), 2565–99.CrossRefGoogle Scholar
  46. Mayer, A., & Puller, S. L. (2008). The old boy (and girl) network: Social network formation on university campuses. Journal of Public Economics, 92(1), 329–347.CrossRefGoogle Scholar
  47. Mazar, N., Koszegi, B., & Ariely, D. (2014). True context-dependent preferences? The causes of market-dependent valuations. Journal of Behavioral Decision Making, 27(3), 200–208.CrossRefGoogle Scholar
  48. Mullainathan, S., & Shleifer, A. (2005). The market for news. American Economic Review, 95(4), 1031–1053.CrossRefGoogle Scholar
  49. Muscanell, N. L., & Guadagno, R. E. (2012). Make new friends or keep the old: Gender and personality differences in social networking use. Computers in Human Behavior, 28(1), 107–112.CrossRefGoogle Scholar
  50. Newman, D. B., Tay, L., & Diener, E. (2014). Leisure and subjective well-being: A model of psychological mechanisms as mediating factors. Journal of Happiness Studies, 15(3), 555–578.CrossRefGoogle Scholar
  51. OECD Better Life Initiative. (2013). OECD guidelines on measuring subjective well-being.Google Scholar
  52. Ostir, G. V., Markides, K. S., Black, S. A., & Goodwin, J. S. (2000). Emotional well-being predicts subsequent functional independence and survival. Journal of the American Geriatrics Society, 48(5), 473–478.CrossRefGoogle Scholar
  53. O’Neil, A., Quirk, S. E., Housden, S., Brennan, S. L., Williams, L. J., Pasco, J. A., et al. (2014). Relationship between diet and mental health in children and adolescents: A systematic review. American Journal of Public Health, 104(10), e31–e42. PMID: 25208008.CrossRefGoogle Scholar
  54. Pew Research Center. (2016). Social media update 2016.Google Scholar
  55. Pew Research Center. (2018). Social media use 2018.Google Scholar
  56. Plott, C. R., & Zeiler, K. (2005). The willingness to pay-willingness to accept gap, the ”endowment effect”, subject misconceptions, and experimental procedures for eliciting valuations. The American Economic Review, 95(3), 530–545.CrossRefGoogle Scholar
  57. Rezaee, M., Hedayati, A., Naghizadeh, M. M., Farjam, M., Sabet, H. R., & Paknahad, M. (2016). Correlation between happiness and depression according to beck depression and oxford happiness inventory among university students. Galen Medical Journal, 5(2), 75–81.Google Scholar
  58. Sagioglou, C., & Greitemeyer, T. (2014). Facebook’s emotional consequences: Why facebook causes a decrease in mood and why people still use it? Computers in Human Behavior, 35, 359–363.CrossRefGoogle Scholar
  59. Salovey, P., Rothman, A. J., Detweiler, J. B., & Steward, W. T. (2000). Emotional states and physical health. American Psychologist, 55(1), 110.CrossRefGoogle Scholar
  60. Seow, D. Y., Haaland, B., & Jafar, T. H. (2015). The association of prehypertension with meals eaten away from home in young adults in singapore. American Journal of Hypertension, 28(10), 1197–1200.CrossRefGoogle Scholar
  61. Shakya, H. B., & Christakis, N. A. (2017). Association of facebook use with compromised well-being: A longitudinal study. American Journal of Epidemiology, 185(3), 203–211.Google Scholar
  62. Sonnentag, S. (2001). Work, recovery activities, and individual well-being: A diary study. Journal of Occupational Health Psychology, 6(3), 196.CrossRefGoogle Scholar
  63. Statista. (2018). Frequency of facebook use in the united states as of february 2018 by gender. Retrieved June 23, 2018 from
  64. Steers, M.-L. N., Wickham, R. E., & Acitelli, L. K. (2014). Seeing everyone else’s highlight reels: How facebook usage is linked to depressive symptoms. Journal of Social and Clinical Psychology, 33(8), 701–731.CrossRefGoogle Scholar
  65. Sunstein, C. R. (2019). Valuing Facebook. Behavioural Public Policy. Scholar
  66. Tandoc, E. C., Ferrucci, P., & Duy, M. (2015). Facebook use, envy, and depression among college students: Is facebooking depressing? Computers in Human Behavior, 43, 139–146.CrossRefGoogle Scholar
  67. The Neilsen Company. (2016). 2016 neilsen social media report. The Neilsen Company.Google Scholar
  68. Tromholt, M. (2016). The facebook experiment: Quitting facebook leads to higher levels of well-being. Cyberpsychology, Behavior, and Social Networking, 19(11), 661–666.CrossRefGoogle Scholar
  69. Tuttle, B. (2012). How much you spend each year on Coffee, Gas, Christmas, Pets, Beer, and More. TIME Magazine. Retrieved December 25, 2017 from
  70. Urban, L. E., Weber, J. L., Heyman, M. B., Schichtl, R. L., Verstraete, S., Lowery, N. S., et al. (2016). Energy contents of frequently ordered restaurant meals and comparison with human energy requirements and us department of agriculture database information: A multisite randomized study. Journal of the Academy of Nutrition and Dietetics, 116(4), 590–598.CrossRefGoogle Scholar
  71. Valenzuela, S., Park, N., & Kee, K. F. (2009). Is there social capital in a social network site?: Facebook use and college students’ life satisfaction, trust, and participation. Journal of Computer-Mediated Communication, 14(4), 875–901.CrossRefGoogle Scholar
  72. Varshavsky, J. R., Morello-Frosch, R., Woodruff, T. J., & Zota, A. R. (2018). Dietary sources of cumulative phthalates exposure among the us general population in nhanes 2005–2014. Environment International, 115, 417–429.CrossRefGoogle Scholar
  73. Verduyn, P., Lee, D. S., Park, J., Shablack, H., Orvell, A., Bayer, J., et al. (2015). Passive facebook usage undermines affective well-being: Experimental and longitudinal evidence. Journal of Experimental Psychology: General, 144(2), 480.CrossRefGoogle Scholar
  74. Vogel, E. A., Rose, J. P., Okdie, B. M., Eckles, K., & Franz, B. (2015). Who compares and despairs? The effect of social comparison orientation on social media use and its outcomes. Personality and Individual Differences, 86, 249–256.CrossRefGoogle Scholar
  75. Wolfson, J. A., & Bleich, S. N. (2015). Is cooking at home associated with better diet quality or weight-loss intention? Public Health Nutrition, 18(8), 1397–1406.CrossRefGoogle Scholar

Copyright information

© Economic Science Association 2019

Authors and Affiliations

  1. 1.Department of EconomicsUniversidad de las AmericasQuitoEcuador
  2. 2.Department of EconomicsTexas A&M UniversityCollege StationUSA

Personalised recommendations