The internet is (not just) for porn

One of the best musical songs ever written (in what I think is one of the best musicals ever) is the song “The internet is for porn” from Avenue Q, which sums up the manifold uses of this invention quite neatly:

Towards the end of the song, the puppets sing about the many serious things one can do on the internet, and one of them, I argue is to educate yourself in finance. By now there are thousands of websites and blogs dedicated to personal finance matters and if you want a well-curated selection of the best articles in your mailbox every day, I recommend you subscribe to Abnormalreturns.com.

But to get to that stage where you can learn about personal finance, you first have to have internet access – preferably broadband internet. The problem just is that while most households have some form of broadband access, the percentage of households that have fibreoptics access varies a lot. And that is what is increasingly needed to surf the web.

The chart below shows the miserable state of affairs in fibreoptics access across Europe. In the Baltics, Spain, Portugal, and even Romania and Bulgaria, more than 75% of households have fibreoptics broadband. In the UK, Germany, and Belgium, the situation is similar to Greece with less than 25% of households with access. And for those who are interested, in the US, some 43% of households have access to fibreoptics broadband, about the same as Italy but below the EU average.

Fibreoptics broadband access in Europe

Source: Eurostat

In Norway, Hans Hvide and his colleagues could use the rollout of broadband internet to trace how hi-speed internet access changes investment behaviour. With better internet access it becomes easier to invest in stocks, bonds, funds, etc. and it is easier to get the information needed to make good financial decisions.

And indeed, the researchers found that with better internet access, more people participated in the stock market. But the good news was that trading activity didn’t increase. Instead, people invested in the stock market primarily via funds, thus getting access to financial markets in a well-diversified way. The chart below shows that the effect is particularly pronounced for younger people and men who usually spend more time on the internet anyway (I wonder what they do there all day, but I have my suspicions). Women and older people tend to benefit less. But the net effect was always positive. Broadband access to the internet improved the investment habits of Norwegians. As if there weren’t enough good reasons to increase digital infrastructure investments, here we have another one.

Increase in investments after getting broadband access

Source: Hvide et al. (2022)