

Consumption stats show the gap between rich and poor is less than most assume - kradic
http://www.nytimes.com/2008/02/10/opinion/10cox.html?em&ex=1202792400&en=70ee2b7f15cb7a79&ei=5070

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danteembermage
I think the point is that the utility curve for consumption flattens out a lot
faster than people think. The difference between starving and a good
cheeseburger is probably a lot bigger than the difference between the
cheeseburger and an immaculate dinner overlooking the Thames.

Granting that it seems pretty rational to just settle with the four-times
pricier television and leave the rest to the grandchildren or charity.

There are of course exceptions, e.g. someone really should have talked to Mike
Tyson about the diminishing marginal utility of Bengal tigers.

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sanj
I'm surprised no one has pointed out the giant negative spike in the last
column.

It effectively says that the poor are spending (ie, consuming) more than they
make to maintain their standard of living. So, yes, consumption is the same,
but the cost is a mortgaged future or a edifice that crumbles the first time
anyone is seriously sick.

Further, it seems strange that the values are absolute. I'd like to see them
as a percentage of income.

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sanj
I created a Google Spreadsheet with the data, and the pre/post-tax
percentages:

[http://spreadsheets.google.com/pub?key=p-dY8J8J_WREnyO8P_QLq...](http://spreadsheets.google.com/pub?key=p-dY8J8J_WREnyO8P_QLqBQ)

Interesting point: the lowest fifth use 60% of their post-tax income for
housing. Add in food, and you're up to 95%.

Add together the trio of "food, shelter and clothing" and you're over their
income.

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ks
And don't forget health care. I bet most would trade their DVD player for
better health care

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leelin
I think the article's thesis rests on two flawed assumptions:

1.) If rich people spend as much as poor people, then their happiness must be
equal because the excess income from the rich go into silly things like
investments and retirement savings.

Spending $30K a year and knowing your nest egg grew by $100K, and spending
$30K a year without health insurance living paycheck to paycheck in fear of
layoffs isn't exactly equal happiness.

2.) A family of 2 must spend 2X to be just as happy as a family of 1 spending
X.

At the very least, the Costco / BJs / Sam's Wholesale factor debunks that
assumption.

I'd model happiness in discrete buckets: "can retire", "can last a while
without a job", "must keep working to maintain lifestyle", and "must keep
working or risk pain and death" At the high end there might also be "looking
for ways to blow the money before getting too old"

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neilc
The article doesn't discuss happiness at all, so I don't think you can call
that "resting on a flawed assumption." The relationship between income and
happiness is highly non-linear -- the standard argument is that beyond a
certain level of income (satisfying the lower levels of Maslow's pyramid),
further income doesn't contribute much or at all to increased happiness.

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tx
His sentences of globalization were the critical element. By including 3rd
world countries in global trade, by "deepening capitalism" as he says, we
essentially outsourced the poor. Now the poorest Americans represent the upper
middle class of the world.

The world, especially the Muslim part, seems to object.

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anamax
The odd thing about this "outsourced the poor" is that we didn't make them
poorer in an absolute sense. We either left them where they were or gave them
options that many of them prefer, which is another word for "richer".

We haven't freed them from whatever despot got to them first, but they don't
seem to value that all that much. It's hard to see how their choice or
situation is our fault.

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andreyf
_...they don't seem to value that all that much. It's hard to see how their
choice or situation is our fault._

Although it would be nice if this were the case, history starkly disagrees.

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anamax
"history" disagrees with what?

Does "history" think that we have freed them from despotism? Does history
think that they'd like us to do something about their despot?

If so, history seems to have some problems with reality.

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andreyf
Sorry for being imprecise, trying to avoid a lengthy political debate. There
are many examples when American actions have helped put and keep despots in
power because of perceived American interests. If we expand the criteria to
include examples of American interests sustaining systems which keep despots
in power, we can find even more examples. Either way, America hasn't had a
non-interventionist foreign policy in a long time, and it's both frightening
and insane that some still see it as a mythical white night battling for good
in the world.

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anaphoric
The availability of easy credit has kept lower/middle class consumption so
high recently. It will not last. In fact as we speak this whole system is
unwinding. Watch credit card delinquencies...

But I take it that what this article is really arguing for is the maintenance
of free trade. And on that point I agree.

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utnick
the definition they use for rich is 150k household income.

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imgabe
Technically, the definition they were using is the top-fifth of income
earners. The average income of which was about 150k.

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Goladus
It was a somewhat sarcastic reply. Glossing over that detail was for the sake
of brevity, I think. Point being that people making $30 million a year are
lumped in the same category as people making $150,000.

Since this is a study about spending habits, it is an incredibly misleading
way to present the statistics. Not only does it hide the behavior of the very
top but it skews the results of the rest of the upper fifth (the top 18%-19%).

