puter science. “We have to understand as economists,” commented Dr. Jorgenson, admitting that this was a “parochial” view, “what computer science is and what computer engineering is, and what the difference is, and how that is going to develop.” Economists like Dr. Varian were taking the lead in trying to understand the economics of this subject, which was both “very, very important” and, for economists, “very, very new.”

Quite a bit had been accomplished in the course of the day, as a “very firm story” had been laid out concerning the unbelievably rapid progress being made in the science and technology of the area. Drs. Berndt and White had provided guidance through the landscape of prepackaged software, discussing where to measure it: at the Microsoft gate as it leaves Redmond, Washington, or when it arrives where somebody is actually going to put it to use. Taking quality change into account was extremely important, Dr. Jorgenson observed, even if that might be objected to as a “pretty esoteric point.” While conceding that it was an example of economics jargon, he noted that taking quality change into account involved incorporating computer science and computer engineering into the economics of software. “That is our agenda,” he declared, praising Dr. Berndt and White for their elegant illustration of it.


Dr. Jorgenson then addressed the concern lest this enterprise be “just too complicated.” It may start out with a mere shrink-wrapped package, but how could measurements capture such associated costs as installation, business reorganization, and process reengineering? “Calmer heads prevailed,” he assured the audience, and the result had been “a thoroughly good-news story.” He recalled the discussion of accounting rules by Mr. Beams and Ms. Luisi, which had made clear that these problems had been thought through and that agreement had been reached on accounting rules and on how they were to be applied. “Admittedly, there are a lot of ambiguities,” he said, “but the accountants are the people we depend on, and they have delivered.”

There was more good news. As Mr. Wasshausen had mentioned, the U.S. Census Bureau, “in its wisdom” and “just in time,” was fielding a first-ever survey that would determine where investment in software was going, how much software was being produced in the United States, how much was being imported, and how much the country was exporting. The results of the survey were to become available in the first quarter of 2004. “Wait a minute!” Dr. Jorgenson exclaimed. “We discovered this problem in 1999, and only 5 years later we’re getting the data!” Furthermore, that data were to be certified by the Financial Accounting Standards Board.

The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement