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TECHNOLOGY REVIEW march 2005
The Technology Budget Creep
Technology product spending trend
Spending on Internet services grew nearly 12-fold, to .25 percent of
household income—more than is spent on newspapers and magazines.
Overall technology spending trend
Increases in spending on computers and pharmaceuticals offset
decreases for consumer electronics and telephone services.
1 DATA FOR 1995 WAS GATHERED BETWEEN 1993 AND 1995 AND RELEASED IN 1997. DATA FOR 2002 WAS GATHERED IN 2001 AND 2002 AND RELEASED IN 2003. SOURCE: TECHNOLOGY
REVIEW, BASED ON CONSUMER PRICE INDEX DATA, BUREAU OF LABOR STATISTICS. 2 PRICES ADJUSTED FOR INFLATION TO 2004 DOLLARS. PRESCRIPTION DRUG ESTIMATES FOR 2003
AND 2004 ARE PROJECTIONS. PRESCRIPTION DRUG SPENDING ESTIMATE FOR 2004 BASED ON 2003 HOUSEHOLD COUNT. SOURCE: TECHNOLOGY REVIEW, BASED ON DATA FROM
CONSUMER ELECTRONICS ASSOCIATION, CENTERS FOR MEDICARE AND MEDICAID, FCC, AND BUREAU OF LABOR STATISTICS. 3 PRICES ADJUSTED FOR INFLATION TO 2003 DOLLARS.
SOURCE: TECHNOLOGY REVIEW, BASED ON CONSUMER PRICE INDEX DATA, BUREAU OF LABOR STATISTICS. 4 WHERE AVAILABLE.
Technology product spending history
In 1980, Americans spent more on telephone service than they did on
prescription drugs. Today, the opposite is true.
Average U.S. household spending2
Inﬂation-adjusted price compared to 2003 price3
Proportion of U.S. household expenditures 1
TECHNOLOGY PRODUCTS HAVE become a big part of consumers’
lives—and their bills. Of course, there are a lot more technology
products to choose from now than in decades past, but the prices
of many of those products have dropped drastically over the
years. Technology Review set out to discover what the net impact
of these factors has been on America’s pocketbook.
The Consumer Price Index database is the only data source
available that tracks the prices of all household expenditures
over a long period of time. But because a certain number of tech -
nology products were only added to the survey in the 1990s, the
earliest year with household budget data available on a broad
variety of technology products is 1995. And the most recent in -
formation of this kind comes from 2002.
One interesting challenge that arose was the question of how
to de�ne a “technology product.” While it might be argued that
a soybean is as technologically derived as any new wireless
handset, we included only product categories that depend on
high-technology research and development: consumer elec -
tronics, computers, telecommunications, and pharmaceuticals.
Our analysis found that from 1995 to 2002, technology
products gained 9 percent in their share of U.S. household ex-
penditures. Computer products and cellular services wit-
nessed the biggest increases in spending. Every year, U.S.
households now fork over an average of $1,200 for consumer
electronics, $1,868 for prescription drugs, and nearly $1,000
for telephone services.
MARYANN JONES THOMPSON
Historical product prices compared to 2003
This chart compares what things cost in past years to what they cost in
2003, adjusting for inﬂation. In 1980, for instance, televisions cost 569
percent more than they did in 2003.
Internet and information services
Cellular telephone service
Prescription drugs and supplies
Cable and satellite television service
PC software and accessories
Personal computer hardware
Video/DVD rental and purchase
Local telephone service
Audio discs, tapes, and other media
Long distance telephone service
products and services
2002 Percent change
1995 to 2002 change in proportion of U.S. household expenditures1
Consumer electronics Prescription drugs
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