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PERMANENT LINK | NOVEMBER 14, 2005

Buying Habits, Race, and Income

Arnold Kling

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Alex Tabarrok writes,

Expenditures on footwear by whites and other races: $274
Expenditures on footwear by blacks: $440.

Chalk one up for the good Dr. Cosby.

Alex is defending Bill Cosby against an attack by a Washington Post financial columnist.

My guess is that Alex and many readers of this blog would be fascinated by this book, which uses "cluster analysis" to sort people into about 60 different consumer groups. I read the previous book, and I enjoyed it.

When I had my relocation web site, we approached Claritas, the company that produces the cluster analysis, about using their data. We eventually found it easier to deal with a competitor. The data is really fascinating. I remember doing a comprehensive search to find the product categories that seemed most correlated with income. If you have to pick a single consumer item to predict income, it would be hardback books. The zip codes that had the highest incomes also had the highest proportion of people who had purchased hardback books within the past year.

For the cost of an annual cable television subscription (which 90 percent of American families have), you could buy at least 10 hardback books a year. I buy more books than that, and I do not have cable TV. My guess is that many poor families make the opposite choice.

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CATEGORIES: Income Distribution

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The author at Jacqueline Mackie Paisley Passey in a related article titled Spending habits and poverty writes:

Alex Tabarrok finds some interesting numbers from the Consumer Expenditure Survey and concludes that Cosby was Correct when he criticized poor black parents for spending too much money on expensive brand name shoes:Average income of whites and other ra... [Tracked on November 14, 2005 7:02 PM]

COMMENTS (11 to date)

Latest Comment

Deb McAdams writes:

For the price of one hardcover book one can purchase about three softcover books.

You choose the hardcover books. My guess is many poor families make the opposite(?) choice.

I'm not sure how you became so virtuous, but I'd have to say you are a model for us all.

Posted November 14, 2005 12:26 PM

L. Skywalker writes:

I do not have cable TV

What kind of economist can't afford cable TV?

Posted November 14, 2005 12:35 PM

Ed Basta writes:

You were correct in not persuing the Claritas option. My company purchases some environmental data from them, and the more I try to validate it the worse it gets.

I agree that your hardback book would correlate with income, but I would be interested in determining if it predicted wealth. I think most wealthy people probably would rather use the library than purchase books.

Posted November 14, 2005 1:23 PM

Timothy writes:

L. Skywalker: There's a difference between can't afford and doesn't want.

Posted November 14, 2005 3:05 PM

Don Lloyd writes:

Ed,

Buying new hardback books instead of paperbacks, at least for fiction, is likely to reflect a strong time preference. This would also work against library use for the same titles due to delayed availability.

Regards, Don

Posted November 14, 2005 3:46 PM

Bernard Yomtov writes:

Actually, I don't think Arnold said he particularly bought hardback books, just that he bought books. He may have been using hardbacks as a sort of index of the opportunity cost, in books, of cable TV. Or not.

Do hardback prices vary less than paperback prices? Just guessing, I would think so.

Posted November 14, 2005 5:32 PM

John P. writes:

The effect of time in choosing between hardback and paperback is a good point.

Another cause may be that higher-income folks buy more books that are issued only in hardback, such as art books, specialized reference books, etc.

Posted November 14, 2005 6:05 PM

L. Skywalker writes:

Timothy,

Don't tell me you can't afford cable, either?!

Luke

Posted November 14, 2005 9:33 PM

phil writes:

Take a closer look; there might be no real difference:
Look at the average number of children under the age of 18 (kids still growing basically):
Whites and all other races had an average of .6 kids. Black families had an average of .9 kids. .6/.9 = .66. Also note that avg. amount that white and all other races spends on shoes is 274 and black families
is 440. 274/440 = .623. In other words, the added expenditure seems to be almost entirely explained by more kids, with maybe a little evidence (3.7%) showing a greater preference for shoes. But, what about
controlling for things like having to walk more, or not having as many computers, etc. so being more active and wearing shoes out faster? More importantly, who cares even if it is true? What about
video games and a bunch of other crap people buy? Why isn't anybody comparing stuff like this?
I may have missed something, but I didn't see anything indicating that the table was giving expenditures per person or per kid or anything.

Posted November 15, 2005 12:44 AM

dsquared writes:

I've seen a village in Africa where they didn't have clean water but they had saved money to buy a TV satellite dish. So what? I thought the whole point of being an economist (cf, Bryan's post, two posts above this one) was to get away from the irksome task of having to sit in judgement on everyone else's purchase decisions.

(on the subject of footwear, it was pretty clear from a minute's thought that average age and family size was going to explain this one)

Posted November 15, 2005 8:45 AM

Paul N writes:

Maybe poor people go to the library. I've checked out hundreds of hardcover books without ever buying one.

Posted November 15, 2005 1:18 PM

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