Wednesday, September 26, 2012

The Opportunity Costs of Cell Phones---entertainment, movie, restaurant spending down. TANSTAAFL..Sigh...

Excellent example of Opportunity Costs---if you spend money on one thing you cannot spend it on something else.  Pretty elementary, but important to understand when you look at the "unseen" effects of those decisions on the industries that are potentially hurt:

Cell Phones Are Eating the Family Budget
"Government data show people have spent more on phone bills over the past four years, even as they have dialed back on dining out, clothes and entertainment—cutbacks that have been keenly felt in the restaurant, apparel and film industries."

"Melinda Tuers, an accounting clerk at a high school in Redlands, Calif., said she already pays close to $300 a month for her family's four smartphones. She and her husband have cut back on dining out, special events and concerts to make room for the bigger phone bill."

"But some question where the money for that data will come from. Americans spent $116 more a year on telephone services in 2011 than they did in 2007, according to the Labor Department, even as total household expenditures increased by just $67.

Meanwhile, spending on food away from home fell by $48, apparel spending declined by $141, and entertainment spending dropped by $126. The figures aren't adjusted for inflation."

Here is a nice graphic to illustrate the trade-offs, resulting in Opportunity Costs, people are making over time:

Source: Wall Street Journal


  1. Mr. Hayward,
    Very interesting, I believe that teenagers don't need the latest iPhone and unlimited data plan as much as they could benefit from the money being spent on something more productive, like an economics class! Haha, in all seriousness though, as a student, I would rather spend my money on a good education than the latest iDevice.
    Dakota L

  2. I owned an older phone, but was constantly being ridiculed for being a luddite (students and colleagues). I feel pressured, as a teacher, to stay current with technology to better serve my students (which I understand the argument). It seems that to stay connected, and up to date one needs to purchase a device like the Droid or IPhone. My phone bill increased by roughly 35%. Obviously, going out to eat, among other things, have been cut as a result.


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