Cellphone Economics: Free Markets Spread Wealth

New York Times — "It’s not quite the stuff of bragging rights, but Arkansas and Mississippi find themselves at the top of a new state ranking: They have the highest concentrations of people in the nation who have abandoned landlines in favor of cellular phones. At the other extreme? People in Rhode Island, Connecticut and New Jersey are still holding on to their landlines, and they have the lowest concentrations of people whose homes use only cellphones. 

According to Stephen Blumberg, the researcher who conducted the study, nearly 40 percent of all adults living in poverty use only cellphones, compared with about 21 percent of adults with higher incomes. There appear to be many reasons for this. Cellular phones have become more affordable. The barrier to owning one is lower with pay-as-you-go plans. Some states allow subsidies for low-income residents to be applied to wireless bills. And increasingly, those who cannot afford both types of phones choose their cellular phone."

James Taranto comments in the WSJ:

"Once again, a landline telephone--or, as it used to be called, "a telephone"--is a symbol of wealth. Between the olden days of 1990 and today, we've heard endless complaints, including in the Times, about rising "income inequality." In a strange twist, we've even ended up with a president who has said he would like to "spread the wealth around" by heavily taxing the "rich" and increasing handouts to the "poor." The story of the cellphone shows how a free economy spreads wealth. In actual material terms, the "poor" get richer as the rich also get richer."

MP: The chart above shows the dramatic 40% decline in the CPI for cell phone services that is the driving force in the significant increase in cell phone affordability, which was led to the widespread adoption of this new technology by America's poor.  Thanks to James Taranto for pointing to a great example of how competitive free markets help "spread the wealth."