Individuals might experience negative utility from not consuming a popular product. For
example, not using social media can lead to social exclusion or not owning luxury brands
can be associated with having a low social status. We show that, in the presence of such
spillovers to non-users, standard measures that take aggregate consumption as given fail
to appropriately capture welfare. We propose a new methodology to measure welfare
that accounts for these consumption spillovers, which we apply to estimate the consumer
surplus of two popular social media platforms, TikTok and Instagram. In large-scale,
incentivized experiments with college students, we show that, while the standard welfare
measure suggests a large and positive surplus, our measure accounting for consumption
spillovers indicates a negative surplus, with a large share of active users deriving negative
utility. We also shed light on the drivers of consumption spillovers to non-users in the case
of social media and show that, in this setting, the “fear of missing out” plays an important
role. Our framework and estimates highlight the possibility of product market traps, where
large shares of consumers are trapped in an inefficient equilibrium and would prefer the
product not to exist.