Crowd‐Out or Affordability? The Lifeline Expansion's Effect on Wireless Service Spending

Abstract

Public subsidization of private goods often leads to crowd‐out, reducing private spending. This effect is intended for a policy such as the 2008 Lifeline phone subsidy expansion, which aimed to increase affordable access to services. I examine the effects of this policy on households’ self‐reported wireless phone service spending in the Consumer Expenditure Survey. Using state‐level variation in policy implementation and triple‐differences event study methods, I estimate that the expansion reduced households’ wireless service spending by more than 100 percent of subsidy payments. I document that the expansion led to a separate, competitive market for providers catering to low‐income households. Consequently, higher‐quality subsidized services crowded out lower‐quality unsubsidized options, saving households more than an equivalent cash transfer. This highlights how market segmentation and competition can magnify a targeted subsidy's impact.

Rethinking the Digital Divide: Using an Internet Survey in a Flint Water Crisis Medicaid Population

“…9,10 This includes individuals and families who qualify for Medicaid, Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), and/or Public Housing Agency (PHA) programs. [10][11][12] While these programs address some access issues, barriers still exist in the form of internet related literacy and affordability of internet ready devices. 13 A study conducted by Deloitte 14 found that Medicaid enrollees have increased accessibility to smart phones and tablets, but at a significantly lower rate than employed medically insured persons.…”