The Welfare Effects of Social Media

Innovation and Economic Growth, Networks, the Internet, and Cloud Computing, Internet and Media and Content

Article Snapshot


Hunt Allcott, Luca Braghieri, Sarah Eichmeyer and Matthew Gentzkow


American Economic Review, Vol. 110, No. 3, pp. 629-676, 2020


Observers are increasingly aware of the negative effects of social media, including political polarization. This study shows that deactivation of social media reduces political polarization and increases happiness.

Policy Relevance

Standard measures of the benefits of social media are too high.

Main Points

  • Observers describe both positive and negative effects of social media, including:
    • Reduced costs of connecting with others.
    • Facilitating protest and resistance in autocratic nations.
    • Encouraging political participation in democracies.
    • Higher rates of suicide and depression.
    • Easy spread of misinformation and coordinated disinformation campaigns.
  • In this study, 2743 Facebook users were asked to deactivate their Facebook accounts for four weeks, until just after the 2018 election.
  • Social media crowds out face-to-face interactions; deactivation gave participants one more hour per day, which they mainly spent with friends and family, or watching television alone.
  • Deactivation reduced participants' factual knowledge of the news and politics, but participants were no less likely to vote or click on email links relating to political causes.
  • Polarization might cause citizens to question democratic outcomes; social media increases polarization because it enables people to choose ideologically congenial news sources.
    • Deactivation reduced exposure to congenial news sources.
    • Deactivation decreased polarization on policy issues (such as whether free trade has been good or bad) by as much as 42 percent.
    • Deactivation did not reduce anger against the opposing political party.
  • Deactivation led participants to report increased life satisfaction and less depression and anxiety, an effect equivalent to about 40 percent of the effect of psychological treatment
  • Following the study, study participants reduced their social media usage by about 22 percent.
  • According to traditional measures of consumer welfare, 27 days of Facebook use creates $31 billion in consumer surplus, but standard welfare measures could be inaccurate if users do not correctly perceive that social media could make them unhappy or be addictive.
  • This study supports the theory that standard measures of social media consumer welfare are too high, because participants’ demand for Facebook at the end of the experiment was reduced by 14 percent, suggesting that users learned of the harms of social media through nonparticipation.

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