Quantifying the Effects of Smartphone Adoption : Digital Device Substitution and Digital Consumption Expansion

Smartphones have revolutionized how individuals use consumer electronics and consume digital goods. I examine the extent to which smartphones have substituted other digital devices and expanded overall digital consumption. To do so, I use newly available Korean panel survey data on individuals' digital device ownership and detailed usage. During the 2010-2014 observation period, smartphone penetration in Korea grew from less than 10% to over 70%. I examine how device ownership and usage change within individuals who adopt smartphones relative to a time trend in the outcomes for individuals who do not adopt smartphones. The panel data is an important source of identification because it allows me to examine the same individuals before and after their smartphone adoption. I also use a propensity score estimator --- Inverse Probability of Treatment Weighted (IPTW) estimation --- to account for self-selection into smartphone adoption. I quantify how much of smartphone usage results from substitution---using a smartphone for activities previously done on other devices --- or expansion --- using a smartphone for digital activities that were previously inconvenient or difficult. I find that multi-functional smartphones have significantly reduced ownership and usage of other portable single-purpose devices. At the same time, the results show that the expansion effect is an important channel through which smartphones generate value because smartphones allow for an efficient use of time by enabling more digital consumption at times when digital consumption was difficult prior to smartphone adoption