Valuing Diffuse Global Public Goods from Satellite Constellations: Evidence from GPS and Airline Delays

TL;DR

This paper quantifies the welfare benefits of improved GPS accuracy by analyzing airline delay data, estimating at least 268 million dollars in welfare gains from enhanced satellite-based public goods.

Contribution

It introduces a difference-in-differences approach to measure the economic impact of satellite public goods improvements using airline delay data.

Findings

At least $268 million in welfare gains from GPS accuracy improvements.

Significant time savings per flight due to GPS enhancements.

Economic losses from threats to satellite-based public goods estimated.

Abstract

This paper studies the welfare impact of discrete improvements to global public goods in the context of the Global Positioning System (GPS). Specifically, I find that by disabling Selective Availability in May, 2000, and thus significantly increasing the accuracy of GPS, the United States generated at least \$268 million (2000 dollars) of additional welfare gains. To quantify this welfare impact, I apply a difference-in-differences model to the Bureau of Transportation Statistics's Airline On-Time Performance Data in the years 1999 and 2000. I use this model to estimate the time saved per flight attributable to the improved GPS and multiply these time savings by the number of passengers in the ensuing year and their values of time. I conclude by estimating the economic loss from current threats to the provision of satellite-based global public goods.