The Overspent American 1998

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The Overspent American (1998)

• Main Themes

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Displaying what we own and acquire

• millionaire next door extremely rare
• For most, what is acquired and owned is bound to
  personal identity
• Usually comparing ourselves to a select group

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Thorstein Veblen

• Theory of the leisure class
• Spending becomes the means by which people
  establish their social position
• (However, Veblen dealing with the wealthy and the
  newly wealthy
• Historically, display less likely for modest
  income persons

4
Juliet Schor

• A new consumerism of the present time marks a
  change from any past example
• 1950speriod of rising prosperity
• Keeping up with the Joneses
• Reference group was the neighbors

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Today it is no longer the neighbors

• But more likely to be a group whose income is 3,4
  or 5 times as much
• The Resultparticipation in a national culture of
  upscale spending
• This is the New Consumerism

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New Reference Group

• Our friends in the media (TV families and other
  famous people)
• Reference groups stretched out vertically

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Looking Upward

• By early 1990s
• 35 of population would like to be part of the
  really made it group (upper 6)
• 50 identified with doing well group (next 12)
• 85 wanted to be in the upper 18
• Only 15 satisfied with a comfortable life

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Changing Standards

• 1960s
• Happy marriage
• Children
• Interesting job
• Job that contributes to welfare of society

• 1990s
• Vacation home
• Swimming pool
• Color TV, Flat Screen etc
• Travel abroad
• Second car

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Why long term changes in goals and standards?

• 1. New reference groups in the media (the
  friends on TV programs (the influence of
  popular culture images)
• 2. Changes in advertising targeting clusters
  in the selling of upscale selling to rich and
  poor alike
• 3. Wives in labor forcecomparison to others in
  work setting

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Why continued

• 3a. Single earner families at a disadvantage
• 4. Cultural changes movement towards individual
  expression and self actualization in 1970s
  (rather than belonging)
• 5. Belief in the winner take all society of the
  1980s

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Real Life Style Changes

• Average persons spending increase 30 between
  1979 and 1995
• Material level rising larger houses, more second
  homes, option-packed vehicles, doubling of travel
  expenditures, personal computers, private
  colleges, designer clothes, Michael Jordan shoes

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Upscale

• Lifestyle accessories of the upper 20 are the
  prototypes for the less expensive version at
  K-Mart, Macys, Wal Mart etc.
• Upscaletrendy shops, ratcheting up of standards
  (50s kitchen has to be redone, if no AC in car
  you need a new one, if havent been to Europe you
  owe it to yourself), flat screen TV etc.

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Target of upper 20 moves upward in 1990s

• SUVs, urban spas, personal trainers, limo rides,
  fancy computer equipment, professional quality
  everything, trophy house (4000-25,000 sq feet),
  granite countertops in kitchen, Jacuzzi, media
  rooms (home theater), fitness center

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More goods, less satisfaction

• People had more, but felt poor
• Feeling poor on 100,000 a year (national
  figures)
• Sometimes spend defensively, to not be left
  behind

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Rising Expectations, Declining Incomes

• Upper 20 rising or at least staying even
• Top 1 from 280,000 to 525,000 (1979-1989)
• Upper 5 254,000 year average
• Lower 80 falling in real income
• From mid 80s to mid 90s the dreams-fulfilling
  level of income rose from 50,000 to 102,000

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Which leads to The Quality of Life Squeeze

• Working wives
• More family members working
• Savings rate down
• Credit card debt
• 30 live paycheck to paycheck
• Support for public schools, social services eroded

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There must be some way out of here, said the
joker to the thief

• Going bankrupt
• Becoming a voluntary downshifter (a more
  realistic life style)