Association for Public Policy Analysis & Management

Social media permeates many aspects of our lives, including how we communicate with others, where we get our news and how we spend our time. Yet, we know little about the economic effects for users. This paper uses a field experiment to estimate the economic value of Facebook for users and usage effects on news awareness, well-being, consumption patterns and activities. We also explore possible mechanisms underlying these effects. Participants reveal their willingness to forgo using Facebook for one week and are then randomly assigned to a Facebook restriction or not. Participants who are off Facebook for a week consume less news, do not switch to other news sources, and are less aware of national events especially if they are conveyed from a politically-skewed source. Also, they are less likely to report feeling depressed, potentially driven by the adoption of more positive activities. Our study is the first to rigorously quantify the value of Facebook usage, estimated to be about $25 per week. This value increases after experiencing a Facebook restriction -- a reflection of the value of information participants lose or that using Facebook may be addictive.