The Cost of Mobility — A Driver’s License or a Mobile Phone

Take teenagers 20 years ago and ask them would they rather have a car or a computer? And the answer would have been 100% of the time they’d rather have a car, because a car represents freedom, right? Today, ask kids if they’d rather have a smartphone or a car if they had to pick and 100% would say smartphones. Because smartphones represent freedom. There’s a huge social behavior reorientation that’s already happening. —Marc Andreessen, Fortune interview

What would you rather have — you get to pick only one — a driver’s license or a mobile phone? I’d take my phone without a second thought. It has an app to call a car (Uber), directions (Google), and public transportation maps and schedules for every major city (Embark). And the data is clear — the driver’s license is losing (i.e., ownership is steadily decreasing).

Drivers_Licenses

From an economic standpoint, the cost difference is dramatic. I just switched to T-mobile, which gives me unlimited voice and data for $70 a month (including internationally). That’s $840 a year in operating expense and maybe, if I bought the phone with no package, $500 in capital costs. Spread the phone cost over three years and call it $1,000 a year.

Compare that to a car: the average consumer spends $1,500 a year on gas alone. Plus, it’s a capital investment of tens of thousands of dollars. The all-in driving costs are probably close to $5,000 a year for most people, especially if you factor in the depreciation in the value of the car.

When I got my driver’s license, it was a big deal. There was no Internet (Marc Andreessen was working on Mosaic in Champaign, but it had yet to be launched), and mobile phones were by no means ubiquitous. The car thus was a form of freedom. Today, though, your friends, the news, and just about all other services are all available on your phone. As the graph from the Atlantic shows, there has been a fundamental shift regarding the number of people with driver’s licenses. With this shift, we as a society are driving far fewer miles and thus using less energy and importing less fuel. It’s amazing, the consequences of that little device in your pocket — the mobile phone has shifted consumer demand and literally affected the trade balance of the US (along with higher fuel efficiency standards).

The future is one of automated drivers and shared cars. It makes economic sense, it will be more efficient, and it will be safer. I never learned how to ride a horse growing up, and I’m guessing many kids in the near future will never learn to drive a car. And I for one cannot wait for the day that I can hop into a driverless car to head off to work. Looks like comedians will soon have to ditch all their jokes about the DMV (they were getting stale anyway).

Further Reading

Inside the Mind of Marc Andreessen, Fortune
The Dramatic 30-Year Decline of Young Drivers (In 1 Chart), Atlantic

2 replies
  1. Clark Kint says:

    1. Car over cell phone. Any day. Any time. Any land locked place (l am less than an olympic cycle away from being a teenager. so my opinion is relevant here….). Hopefully we can agree that the third dimension is much healthier, entertaining and educational than the second one. And on the subject of communication (the telephone’s original function), mood, context, body language, sarcasm, honesty, texture, trust, and transparency are all lost in the cold, dumb world of smart phones. People in my generation choose phones over cars because they crave connection, attention , and approval (3 successfully subversive ideals made possible by modern music, movies, advertisements, and the Jones’).
    2. Uber is nice, but doesn’t eliminate the “need” for a physical vehicle in travel (as opposed to teleportation). Uber and shared vehicle services like zipcar are incapable of matching the freedom and security of your own personal vehicle. “Freedom” and “security” are both invaluable inelastic demands, but still the R.O.I. for Uber approaches positives only for raging alcoholics (DUI’s on average cost 10K) , and beyond that, zip cars and Uber are not reliable nor viable for long or short term storage (My job requires me to carry 5k worth of equipment.).
    3. Correlation does not prove causality. Could just be something in the water for all we know…..
    4. Planned obsolesce. Once again, the R.O.I. on a used car is exponentially higher than that of a used cell phone (and infinitely higher than that of a shared or rented car…). Apple products are built to last exactly 1 year (capital costs shouldn’t be annual), and depreciate faster than milk ( Example, no one in my gen gives a F about the iPhone 4 once the iphone4S comes out..)..
    5. The future is uncertain. My money is on nuclear war making this whole debate moot, or teleportation.

    Anyway really liked the article. Got me thinking.

    Reply

Trackbacks & Pingbacks

  1. […] oil age will end, but not for a lack of oil.” So it is a demand issue — fewer miles driven, fewer drivers licenses, and greater fuel efficiency will mean less demand for oil. Oil may not be $77 in 2020, but […]

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