Books as Capital Assets

In 2007, authors and publishers released book manuscripts with a value of $9.1 billion. These books will continue to be sold for decades. Because of this long working life, the international guidelines for national accounts recommend that countries classify production of books and other entertainment, literary, and artistic originals as an investment activity and then depredate those books over time. However, the Bureau of Economic Analysis did not capitalize this category of intangible assets until the July 2013 benchmark revision. In order to change the national accounts, this paper collects data on production of book manuscripts from 1900 to 2010. The paper then calculates how GDP statistics change when book manuscripts are classified as capital assets.

The main empirical results are as follows: 1) Book manuscripts have a useful lifespan of at least fifty years with an annual depreciation rate of 12 per cent per year; 2) Nominal book investment has hovered around 0.06 per cent of nominal GDP from the 1930s until 2010. Therefore, nominal GDP growth does not change much when book production is classified as an investment activity; 3) After 1970, book investment prices rose faster than overall GDP prices. Accordingly, average inflation rises slightly when book production is classified as investment. Before 1970, book investment prices roughly track overall GDP prices.