Wednesday, February 6, 2019

U.S. Household Spending on Communications is Quite Low

When assessing impact, it helps to focus on the few inputs that tend to drive most of the output. That is true for carbon footprint or household spending. The greatest portion of household spending in most countries comes in three categories: housing, food and transportation.

There are some outliers. Transportation is unusually high in Mexico. Healthcare spending is unusually high in the United States and food spending is above average in Russia.

Still, generally speaking, households can only make significant changes in those three areas, as those three areas might represent 65 percent of total spending.


All household communications added together rarely represent more than a couple of percent of total spending. The point is that no matter how much a consumer seeks deals in that area, it does not affect total spending very much.

Entertainment spending--which includes what people spend on their pets--is probably twice to three times as high as communications spending, depending on the size of the household.


The other obvious implication is that communications really does not cost too much. Prices are not “too high” when total communications spending represents such a low percentage of total spending.

In fact, communications spending is a small enough category that the U.S. government does not break it out when reporting household spending.  

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