How Fast Do Personal Computers Depreciate? Concepts and New Estimates

This paper provides new estimates of depreciation rates for personal computers (PCs) using an extensive database on prices of used PCs. Our results show that PCs lose roughly half their remaining value, on average, with each additional year of use. We decompose that decline into age-related deprecia...

Full description

Saved in:
Bibliographic Details
Published in:Tax policy and the economy 2004-01, Vol.18, p.37-79
Main Authors: Doms, Mark E., Dunn, Wendy E., Oliner, Stephen D., Sichel, Daniel E.
Format: Article
Language:English
Subjects:
Capital depreciation
Capital goods
Capital investments
Depreciation
Income taxes
Inflation rates
National income and product accounts
NIPA
Personal computers
Regression analysis
Revaluation
Studies
Technological planning
User costs
Wealth
Citations: Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper provides new estimates of depreciation rates for personal computers (PCs) using an extensive database on prices of used PCs. Our results show that PCs lose roughly half their remaining value, on average, with each additional year of use. We decompose that decline into age-related depreciation and a revaluation effect driven by the steep ongoing drop in the constant-quality prices of newly introduced PCs. Our results are directly applicable for measuring the depreciation of PCs in the National Income and Product Accounts (NIPAs) and were incorporated into the December 2003 comprehensive NIPA revision. Regarding tax policy, our estimates suggest that the current tax depreciation schedule for PCs closely tracks their actual loss of value in a zero-inflation environment. However, because the tax code is not indexed for inflation, the tax allowances would be too small in present value for inflation rates above the very low level now prevailing.
ISSN:0892-8649
1537-2650
DOI:10.1086/tpe.18.20061886