Many recent digital innovations (like video games) augment the value of leisure time, which is not captured by GDP. Therefore, the productivity impact of such innovations may be understated. I develop the theoretical foundations for measuring the value of leisure when it is produced using the household’s leisure time and recreational durable goods. I apply this framework to estimate the value of U.S. leisure from 1948 to 2016. While the value of leisure is large, it has become less important over time. I find that productivity growth of leisure time has slowed in the digital era. Household stocks of digital goods are small, so have relatively little impact on leisure value. I conclude that mismeasurement due to household digital goods is not a first order cause of the recent productivity slowdown.
JEL Code(s) D13 O33 Published