Estimating Future Consumer Benefits from ATP-Funded Innovation: The Case ofDigital Data Storage

摘要

This report develops a method that uses a quality-adjusted cost index to estimateexpected returns to investments in new technologies. The index method addresses the problem of measuring social benefits from innovations in inputs in the service sector, where real output is not directly observable. This study forecasts consumer benefit gains from two innovations in digital data storage that were funded in part by the Advanced Technology Program (ATP): one innovation pioneers the use of optical tape, and the other replaces helical with linear scanning of magnetic tape. The estimated consumer benefit gain for the optical tape technology exceeds $1 billion, and for the linear scanning technology, $2 billion, taken over a five year period, when compared to the existing trend in current technologies. The model's probabilistic parameters reflect uncertainty about prospective outcomes and also in the hedonic estimates of shadow values for selected product attributes.