The Economics of Web Logs

January 26, 2003

The Economics of Web Logs

EconLog is a Web Log, or Blog. My view is that some of the value of blogs comes from the collective filtering that they provide. I sketch a sort of economic model, in which everyone lives on a circle, with information needs similar to people who are closest on the circle.

I live in the economics neighborhood of the circle. My neighbor to the left is Brad, and my neighbor to the right is Virginia. All communication is via blog.

Every day, each of us receives new information. Think of this as news, or as a flash of inspiration. I post my new information to my blog...

I also read my neighbor's blogs. I evaluate each piece of information that I find on Virginia's blog. If its value to me exceeds some threshold value, then I link to it, which makes it available to Brad. If its value does not exceed the threshold, then I do not link to it. In this way, I act as a filter of information moving from right to left. I also do the same thing with information moving from left to right.

Based on this theory, EconLog should be most helpful to others who share my interest in teaching economics and observing the use of economics in everyday issues of individual choice and public policy.