Social Media’s Spin on the Economy

Wake up. Open TikTok. Scroll. Ad. Scroll. Like. Comment. Add to wishlist. Buy. Scroll.

This is the morning ritual for many. Purchasing and consuming materials that don't serve any purpose. Increasingly, people are starting their days by purchasing things they don’t need, driven by content that glorifies material excess. The concept of maximisation has been gaining momentum in recent years. Trends like “Amazon Must-Haves,” “10 Things Every Girl Needs,” and “Perfumes That Actually Work” push a mindset where owning more equals having more value. Spending has become second nature for Gen Z—and shockingly, that might be a good thing.

Let’s take a look at TikTok’s influence: In 2023, TikTok generated $14.7 billion for small and medium-sized businesses (SMBs), with an additional $24.2 billion in total economic activity. This means the 7 million business accounts on TikTok are able to employ 28 million workers, which is more than the population of the UAE! The Pink Sauce, a viral condiment in 2022 that rose to fame solely due to marketing by TikTok users, generated more than $17 million in a year. Similarly, Glow Recipe, a skincare brand, gained traction through influencer promotions, transforming it into a global sensation. These examples demonstrate how social media contributes to the multiplier effect, where increased consumer demand leads to job creation, supply chain expansion, and greater GDP contribution.

Additionally, the rise of micro-entrepreneurship also translates into higher tax revenue for governments. The US government received $7.3B from TikTok’s own operation and SMB activity supported by TikTok. Through increased VAT collections and income taxes from digital entrepreneurs, governments benefit financially from the platform’s economic ripple effects.

However, the influence of social media on economic perception comes with serious consequences. Algorithms tend to prioritise content that generates engagement, often at the expense of accuracy. For instance, Russia-backed Facebook posts reached 126M Americans during the 2016 US election. A Kremlin-linked group called the Internet Research Agency spread misinformation by using fake accounts and pages to post political content over a two-year period. The manipulation favored Trump by boosting his image, undermining Clinton, and trying to suppress turnout among likely Clinton voters. And we all saw how that presidency played out.

Governments frequently become the target of misinformation. Economic policies like tax reforms, fuel subsidies, or minimum wage adjustments are often taken out of context, weakening institutional trust. An archetype occurred during the COVID-19 vaccine rollout, when viral misinformation on platforms like Facebook, Instagram, and TikTok falsely claimed that vaccines caused infertility, altered DNA, or contained microchips. These baseless narratives spread rapidly, especially among the younger and less scientifically literate audiences, despite efforts by the WHO and national governments to debunk them. As a result, vaccine hesitancy surged in countries like the U.S., Brazil, and parts of Europe, delaying herd immunity and increasing public distrust in both health and economic policies tied to pandemic recovery. The speed and scale of misinformation dissemination highlight how social media can disrupt even life-saving national strategies.

To eliminate the dangers of social media, a multifaceted solution is needed. First, governments should integrate digital and media literacy into school curriculums, teaching students to evaluate online economic content critically. Second, social media platforms must be held accountable for misinformation: by flagging misleading economic posts or elevating verified expert content, much like they did for COVID-19 updates.

Lastly, governments must learn to communicate within the medium, not outside of it. Ministries should use short-form video content and visually engaging graphics to clarify economic policy, budget decisions, and tax regulations. For example, the WHO could utilise Instagram reels to break down vaccine benefits, reaching young audiences more effectively than traditional press conferences.

Social media is no longer just a space to do the Renegade dance—it is a powerful economic engine and a double-edged sword. While it fuels entrepreneurship, drives tax revenue, and empowers small businesses, it also distorts truth and misguides public perception. The solution isn’t to abandon these platforms, but to master them. If platforms can shape what we buy, they can also shape how we think.

Bibliography

https://cepr.org/voxeu/columns/economics-social-media

https://www.anscamobile.com/chef-pii-net-worth/

https://www.businessdasher.com/tiktok-statistics/

https://www.oxfordeconomics.com/resource/measuring-the-number-of-jobs-that-benefit-from-us-businesses-using-tiktok/

https://newsroom.tiktok.com/en-us/oxford-economics-us-jobs-impact-report