How Does It Feel To Be Affluent In An Age Of Inequality?

How Does It Feel To Be Affluent In An Age Of Inequality?

Affluent consumers have enjoyed a post-recession bounce far greater than that experienced by their lower-income counterparts.  Between 2010 and 2016 the aggregate income of affluent households (defined as those with an income of $250,000 or higher) more than doubled, while aggregate income attributable to all other households was up just 19%.

So, what are the wealthy to do in an era marked by a widening gulf between them and everyone else?  One way they are dealing with the stigma of wealth in todays’ winner-take-all economy is through denial:  many simply refuse to think of themselves as being affluent or wealthy at all.  In researching her book Uneasy Street: The Anxieties of Affluence, Rachel Sherman interviewed 50 affluent New York City parents with children at home.  In an article adapted from her book (“Rich People’s Secrets,” The New York Times, September 10, 2017) she reports that her research subjects tended to describe themselves as “‘normal’ people who worked hard and spent prudently, distancing themselves from common stereotypes of the wealthy as ostentatious, selfish, snobby and entitled.”  Her interviewees never self-identified as “rich” or “upper class.”  Instead, they preferred terms like “comfortable” or “fortunate.”  Some even called themselves “middle class” or “in the middle,” especially in comparison to the uber-wealthy class of New York City.

A new Packaged Facts report (Affluent Consumers: Demographic Patterns and Spending Trends, 7th Edition, October 2017) reveals that an ongoing change in consumer values is another part of the evolving mindset of upper-income consumers in an age of inequality.  For an increasing number of affluent Americans, the endless, conspicuous accumulation of possessions has become less important than the purchase of meaningful experiences such as exotic travel.

In another shift, more and more upper-income consumers would rather achieve status by demonstrating to their peers that they have the right kind of social values as opposed to purchasing products and services that reflect mundane material values.  In her 2017 book entitled The Sum of Small Things: A Theory of the Aspirational Class, Elizabeth Currid-Halkett heralds the demise of the era of conspicuous consumption and the arrival of the age of inconspicuous, aspirational consumption.  As the author pointed out in a related article (“The New Subtle Ways the Rich Signal Their Wealth,” Aeon, June 14, 2017), the “democratization of consumer goods” has made luxury goods “far less useful as a means of displaying status.”  Instead, aspirational consumers focus on accumulating status through expenditures that “signal to others in their class that they are knowledgeable and moral, thus setting themselves apart from everyone else—which is why a $2 heirloom tomato purchased from a farmers market is so symbolically weighty of aspirational class consumption and a white Range Rover is not.”

Of course, opportunities for the pursuit of wretched excess still abound, especially among the ultra-rich.  For example, Stefano Ricci—portrayed by The New York Times (August 10, 2017) as “clothier to the 0.0001 percent”—continues to expand his chain of luxuriously appointed boutiques, which offer $25,000 custom suits, $5,000 crocodile sneakers and $120,000 crocodile shirts.

Yet, it is also telling that affluent shoppers are even more intent than the average consumer on searching for value and hunting for bargains.  Simmons national consumer survey data cited in the Packaged Facts report show that affluent households are more likely than households on average to use coupons to save money (65% vs. 57%) and to respond to money-saving incentive offers (58% vs. 46%), especially those offering a rebate with product purchase (54% vs. 38%).

-- by  Dr. Robert Brown and Ruth Washton