Do you know about the Colville Reservation in Washington state? Few do except locals, or those familiar with American Indian affairs. What Colville can teach the rest of the nation stems from its recent experience with broadband, which illustrates a great deal about who really gains from technological innovation.
A federal report found that in 2013, one third of those living on tribal lands lacked broadband access. A federal program was introduced, and the staggered expansion allows us to see the effects of broadband access on per-capita income, participation in the labor market, and employment rates. In 2026 Thomas Stratmann and Pradyot Sharma released new research that found income per person rose by $5,500 relative to reservations nearby. Employment rates and labor force participation also rose, 6.1 percentage points and 10.3 percentage points, respectively.
None of this implies that every government infrastructure project creates comparable value, or that public investment is the best way to expand access. The point is narrower: when people gain access to a genuinely valuable innovation, most of the resulting gains accrue to those who use it rather than those who provide it.
Once these communities were granted licenses for wireless data service, connectedness brought opportunity. Better information facilitated job searches and promoted better job matches. Lower prices and lower transaction costs extended household budgets and improved business margins just as e-commerce has elsewhere. As a result, costs fell.
Who gained, and how much, when broadband came to town?
In one sense, it’s almost the wrong question. The average cost of a US broadband internet package is between $35 and $150 per month. Colville gives us a rough indication of the economic value of that service — to consumers rather than providers.
Asked another way, how much would you need to be paid to never have internet access again? Students in my principles of economics course routinely claim they’d require $10,000 a month or more. By any measure, broadband looks to be a bargain.
The monthly bill for connectivity, in other words, vastly understates the social value of the internet. Broadband providers may charge a monthly fee, but the value created by connectivity shows up elsewhere: better job searches, better matches, easier access to forms and services, faster organizational coordination, and higher participation in wage work.
Many innovations that enter the market follow similar trajectories. In the nineteenth century, barbed wire sold for four cents a pound, but allowed farmers to prevent considerable losses from animal escapes and to protect high-value crops. By reducing the cost and increasing the utility of fencing, barbed wire is estimated to have increased the value of farmland by a full one percent of GDP. National food brands charge a few cents more by offering consumers the assurance of reputation. Others pioneered preservation methods, eliminating many costly problems of adulteration and food poisoning. The same logic applies to computers, cellphones, landline phones, telegraphs, meatpacking, pharmaceutical drugs, automobiles, fax machines, tractors, coal engines, electrical utilities and appliances, air conditioning, and hundreds more inventions.
Each of these innovations produced massive gains to society, and most of the value is captured by the consumer, not the inventor or even the producer. Nobel laureate William Nordhaus tried to calculate how much value is captured by innovators and producers, and relative to how much is passed on to consumers. Using different assumptions and approaches, he found that 1.3 to 2.2 percent of the total value generated is captured by innovators of the technology, and the rest is passed on to consumers. Buyers ultimately receive this value in lower costs, time savings, better quality goods and services, and entirely new opportunities.
What Nordhaus found tells us why the Colville microcosm shouldn’t surprise us — nor should the gains from barbed wire, branded, computers, and all the others. Innovations rarely benefit their inventors the most. Profit comes from the value created by those who adopt the innovation, though those outcomes may be quick and obvious or slow and subtle.
So, when someone sermonizes about free markets enriching only capitalists, remember that a reservation in Washington gave us yet another iteration of the rebuttal: profits make innovation worthwhile for entrepreneurs, but the largest gains usually flow to everyone else.
