Winter 1997
by Jane Katz

We live in a materialistic society. Our lives are crammed with a profusion of objects, from oatmeal cookies to off-road vehicles. Acquiring material goods and services is the endgame of the economy's vast productive capacity, purchases that provide us with the basics -- nourishment, clothing, and shelter. But what we buy does more than satisfy our "creature needs," in Harvard sociologist Lee Rainwater's felicitous phrase. Rising living standards have afforded even ordinary Americans the budgetary leeway to purchase objects of desire, comfort, and even luxury. High on American shopping lists are goods and services that expand time and extend the range of life's experiences. We install electric lights to extend the day, buy more and better medical care to prolong health, and depend on the car, telephone, and airplane to travel quickly and easily to places previously far out of reach.

Meanwhile, technological advance and innovative products have plunged the modern consumer into decisions about products that were unavailable eighty years ago. Polartec jackets, snow boards, programmable VCRs, and antidepressants are among the many new and improved goods made possible by technical progress. Modern stores are filled with products previously unknown or unobtainable. Supermarkets stock kiwis from New Zealand, coffee from Guatemala, four types of tomatoes, endless breakfast cereals, and a vast array of packaged goods. Products offer the promise of personal choice, of tailoring activities to individual desires, and of expressing and creating personal identity.

Our purchases are also how we take our place in society. Going to work, establishing a home, engaging in family and neighborhood activities, and enjoying leisure -- all the activities which secure membership in the modern world and its institutions -- require products for which we must pay. In traditional cultures, these objects and services were produced at home, or provided by the group according to kinship, age, or social status. In a market-centered society, they are bought from malls and catalogs.

But, rising incomes beget rising expectations, for fitting in means keeping up. Even with large increases in living standards, middle- and upper-middle-class families feel the pressure to keep pace with friends and neighbors. For the poorest families, the difficulties are much greater. Not only do they lack resources, but they live in a society organized around the convenience of those with the greatest buying power -- those in the mainstream.

THE BASICS AND BEYOND

The modern market economy, with its vast capacity to produce and move all manner of goods and services, has raised our consumption possibilities well beyond "creature needs" -- quite likely beyond our grandparents' and great-grandparents' wildest dreams. For material existence at the beginning of the century was rudimentary at best.

When our grandparents were starting out in life, most struggled just to cover the basics, according to University of California economist Clair Brown. In 1918, fully 40 percent of all spending by urban households was devoted to food, most of it prepared at home by the wife (only 9 percent of married women worked for pay). African-American families were even more constrained than other low-income families; almost half of their total spending went for food.

In spite of food's sizable budget share, the typical American consumed a monotonous diet of bread, hot cereal, potatoes, beans, and rice. Meat appeared only at dinner and vegetables tended toward the plain, typically cabbage, spinach, tomatoes, or string beans. Fresh fruit other than apples was a rare treat. Three-quarters of Americans labored on farms or at blue-collar jobs (only 12 percent of the labor force worked as professionals or managers), and simply obtaining sufficient calories was a prime objective. Yet not all households achieved even this consumption level.

Housing was our grandparents' second-largest budget item, accounting for an additional quarter of spending. The average white urban household consisted of five members, living in about as many rooms, often cramped and partly heated. Only half the homes had a bathroom, and not all bathrooms had hot water. Clothes took another 15 percent of the budget, leaving precious little for everything else -- transportation, education, medical care, leisure, gifts, and charity.

Over the past seventy years, increases in productivity and in physical and human capital have expanded the quantity and quality of goods, and have allowed most Americans to more easily acquire the basics. The relative prices of some goods have shifted. Medical care costs (and quality) have risen faster than average; clothing and electricity have climbed more slowly. Food prices have increased at the average rate. These prices changes have had an impact; but more significantly, rising incomes have let us satisfy our "creature needs."

Food, clothing, and shelter now account for about half of the typical family's expenditures compared to 80 percent in 1918. Housing's share has remained fairly stable, although the typical home now has at least one bathroom and is larger and far more comfortable than in 1918. The portion of spending devoted to food prepared at home has dropped dramatically from 40 percent in 1918 to less than 9 percent today. Clothing's share has also decreased substantially. All while the number and variety of items in the typical closet and typical larder have multiplied many times.

MORE LIFE

Early in the century, many observers assumed that with rising productivity and increasing incomes, Americans would satisfy their need for food, clothing, and shelter, and simply run out of things to buy. But consumption has risen step-for-step, along with income, despite the falling share swallowed by the basics.

What has taken up the slack? After "creature needs" are met, the ultimate human constraint is time. There are only twenty-four hours in a day, seven days in a week, and seventy-five years in the average lifetime. With more goods and services and an expanding range of experiences within our reach, time has become ever more valuable. Time is the indispensable input into work, play, and all of life's activities.

So we now devote much of our budget to items that expand time, extend life, and increase "diversified, worthwhile experience," argues Wesleyan University economist Stanley Lebergott. When technological advance gave us electric lighting, Americans lengthened their daylight hours by spending forty times on electricity in 1929 what they had spent in 1900 in constant dollars -- 265 times as much by 1990, even as electricity became relatively cheap. As Lebergott notes, the way we work, socialize, and spend our leisure time was changed forever when electricity "opened libraries, restaurants, bowling alleys, baseball parks, and clubs in the hours of darkness." By comparison, medical expenditures increased merely eight times between 1900 and 1929, Lebergott argues, because medicine was able to increase lifetime hours only modestly. Medical expenditures did eventually climb, but only after 1929, when penicillin and advanced surgical techniques began to significantly increase life expectancy.

Today, we spend much more on time-saving services, most notably store-bought clothing, processed foods, and restaurant meals. As women joined the paid labor force outside the home, cooking and, especially, sewing became lost arts. Expenditures on appliances, such as vacuum cleaners and washing machines that promise to save time and lighten the burdens of housework, increased. By 1987, 73 percent of American households had washing machines and 43 percent had dishwashers. Greater spending on environmental protection, and on safety in the home and workplace, also reflects our willingness to use resources to increase the amount of time that we are healthy.

Perhaps most significantly, we now spend a fifth of our budget on new modes of transportation and communication that stretch our ability to live and reach across long distances. The telephone allows us to talk without traveling; automobiles permit us to navigate distances forty times more quickly than the horse. Today, we can travel to California or Japan in a matter of hours, rather than weeks.

Thus, spending on transportation, which accounted for less than 5 percent of a household's budget in 1918, now commands a share approaching 20 percent, including 8 percent on vehicles alone. And the lure of many new products, such as the Internet, arises in part from a perpetual wish to extend our reach and expand our experience.

DISTINCTION

At the turn of the century, only the relatively well-to-do had the means to concern themselves with style and fashion. Thorstein Veblen coined the term "conspicuous consumption" in his 1899 book, The Theory of the Leisure Class, to describe the predilection of the elite to use public displays of wealth to secure and affirm their status.

As Americans' income rose beyond their "creature needs," the economy responded by offering up an abundance of goods in all the colors of the rainbow, and then some. The spending decisions of ordinary people came to be driven less by the demands of biology and more by matters of taste. "The furniture people buy, the type of housing they want, much of the food they consume, especially in restaurants, the type of leisure activities they choose, all are determined by considerations that have nothing to do with basic biological needs," observes University of Chicago economist Gary Becker.

The considerations to which Becker refers -- style, fashion, and taste -- are today within the reach of middle-class households and wield substantial influence on their purchases. The impact is partly personal and idiosyncratic. We tailor what we buy to our individual desires and dislikes. One person prefers green shirts, another favors blue. He likes oranges, she prefers tangerines. As producers supplied their wares in ever greater variety, consumption has become a way to create identity and a mode of personal expression. Levis, or Brooks Brothers, or Gucci -- the decision is part of how we express ourselves.

But personal expression takes on social meaning, for our purchases are inevitably interpreted by others. One's choice of a home, car, even where one takes a vacation (Martha's Vineyard? Las Vegas?), sends a complicated set of signals to the people who see them, a fact of which we are not unaware. "People don't consume products, they wear them...," noted New England Consulting Group principal Gary Stibel, recently in The Wall Street Journal. Even consumers who appear indifferent by wearing old clothes or driving a beat-up old Volvo know they do not escape making an impression.

Some purchases are directed at gaining the good opinion of others. For example, professional families spend three to eight times as much as unskilled workers on furniture for the living and dining room, but spend only one-half more on less visible items such as bedroom furniture and bathroom linens, according to Clair Brown. And Stanley Lebergott finds that states where spending on clothing and shoes is highest also tend to have large urban populations. As he tartly observes, "Where else but in cities does one see the Joneses frequently, or the Trumps at all?"

As buyers, we become sophisticated senders and receivers of signals, making subtle adjustments for social context. Consumption's message is partly determined in the eye of the beholder. The inner-city kid wearing Calvin Klein signals that he is cool, although the white suburban kid in the same outfit merely looks preppy. Someone from an old-money family wears a jacket with threadbare elbows, and we attribute it to an effort to downplay social status or maybe charming eccentricity. When the same clothes are worn by someone less well off, we assume the person is simply sloppy. "Taste classifies, and it classifies the classifier," says French sociologist Pierre Bourdieu. Just ask any frustrated parent who is unable to detect the important differences between similar pairs of sneakers, only one of which will satisfy his or her teenage son or daughter.

Since tastes are cultivated over time, family background and personal history have a strong influence on what we buy. Someone who grew up in a family that listened to classical music (or opera, or blues) will be more familiar and, therefore, more likely to appreciate and buy classical music in the future. For items where enjoyment is deepened by prior acquisition of some skill or specific knowledge -- classical music, or skiing, or computer games -- past consumption raises the likelihood of future purchase. Childhood associations with foods, toys, and family activities may also affect our tastes and buying decisions far into the future.

Thus, we tend to buy similar goods and services as others with similar backgrounds. So say the demographic marketing companies who make it their business to predict who is most likely to buy all manner of goods, from imported beer to dance music to tax-exempt bonds. When faced with the vast selection supplied in the marketplace, we are likely to make the same choices as others who live in a similar neighborhood and match our income, education, ethnicity, and age. The social influences on consumption are strong. When we express ourselves through what we buy, we tend to do so just like our neighbors.

FITTING IN, KEEPING UP

Today, many Americans are able to achieve a level of comfort, even luxury, compared to their grandparents. Almost 85 percent of households have a color television set and 42 percent have two or more cars says Joshua Ostroff, president of Virtual Media Resources, a marketing research company in Natick, Massachusetts. More than one-third of American households took a domestic vacation last year, with 15 percent traveling to their destination by plane.

But today's luxury may become tomorrow's imperative. For fifty years, Gallup has regularly polled Americans, asking what they thought the smallest sum of money a family of four in their community would need each week to get along. Even though human biology did not change, the specified minimum sum, in real terms, grew over time along with (although less quickly than) median income. Likewise, budget experts have constructed prototype budgets over the years, for both low- and moderate-income families. These "standard budgets" also have not remained fixed in real terms, but have ascended along with the general rise in living standards and median consumption.

This reinforces the notion that consumption is partly a social phenomenon. We buy things so we can participate in activities that make us members of our community. As the budget share of homecooked meals and apparel declined, spending rose on goods and services that enhance social activities. Restaurant meals and other food prepared away from home now account for almost 40 percent of the total food budget and 5 percent of all spending. Gifts, charity, and religious and political contributions take 7 percent, even among lower-income households.

What someone needs to fit in depends, in part, on what everybody else has: The reasons for consumption are partly relative. We buy certain items because others in our social network have them. Modern suburban life seems to "require" two cars, a telephone and an answering machine, a television, and maybe even an e-mail address. Kids "need" camp and piano lessons, a bicycle and sneakers, and maybe even an encyclopedia on CD-ROM.

Certainly, none of these goods and services are necessary in any biological sense. There are plausible substitutes for all of them and decent ways to survive in their absence. Nor will every person even want them. But we live in a social world where relationships matter, and having the right stuff facilitates fitting in. It is easier to work, play, and belong if you do the things that everyone else does. And that means having the things that everyone else has.

This might explain why, despite rising consumption standards, even well-off Americans continue to feel the pressure to keep up. The cost of dining out, taking vacations, and other forms of social activity can make it hard to maintain friendships among families with different incomes. If others are moving ahead, you must move with them or risk being left behind.

THE PRESSURE ON THE POOR

Rising middle-class standards of consumption may place extra burdens on the poor. Poor families surely have more buying power today than early in the century. Brown calculates that lower-income and poor households spend 50 to 60 percent of their budget on food, clothes, and housing, down from more than 84 percent in 1918. Sociologists Susan Mayer and Christopher Jencks found that 60 percent of households in the lowest income decile in 1980 had access to a car or truck, 80 percent had a phone, and 38 percent had some air conditioning.

Nevertheless, the difficulties poor families face in a rich country may shut them off from the mainstream. The prices of certain items, such as land, may be higher in a rich country, making housing relatively more expensive.

But more importantly, the poor must manage in a world geared to the large middle class. When only the well-to-do had cars, phones, or a refrigerator, social institutions and practices reflected that fact. Most everyone took the trolley to work, communicated in person or by mail, and bought ice for their icebox from the vendor who came to the street every week. A diet of starchy food and a limited wardrobe did not set you apart from neighbors and co-workers.

Today, those without car or phone are at a disadvantage in seeking information, arranging their social lives, and especially in looking for work. Those without the means or family resources to attend college will continue to be at a particular disadvantage, so long as the wage premium for those with a college education remains high. And although Americans have enjoyed extraordinary consumption gains over the entire century, David Cutler and Larry Katz find that average consumption declined 4.5 percent in real terms for the neediest Americans from 1980 to 1988, mirroring their decline in real wages during that period.

THE DESIRE FOR MORE

For all our stuff, are we any happier than we were in 1918? Americans are certainly better fed, better clothed, and better housed than their grandparents. We will live longer, healthier, more comfortable lives. Economic growth has allowed many of us to go places, see things, and consume at a level of luxury that our grandparents could hardly have imagined.

But as Coco Chanel once observed, "Luxury is the necessity that begins where necessity ends." Even as we consume well beyond our "creature needs," most of us still want more.

Partly, this reflects consumption's social character. Where one stands in relation to the neighbors matters. So rising incomes don't relieve the pressure on the middle-class to keep up, and may put extra burdens on the poor.

Then there is the nature of consumption itself. Consumption is connected to human desire, and human desire extends as far as our imagination. It is never completely satisfied.

The U.S. Family Spends a Declining Share on the Basics

The most dramatic drop in the family budget has been food and clothing's share of spending. Housing's share remained fairly stable, although the typical home is now larger, more comfortable, and far more elaborately appointed than in 1918. Transportation took the largest jump, as first one and then two vehicles per family became common. Gifts and contributions also rose significantly. Household out-of-pocket medical expenses did not grow nearly as quickly as total U.S. spending on health care, as employers and government picked up a rising share of costs.

1. 1918 data do not include non-English-speaking immigrants and blacks. 2. Working and nonworking. 3. Medical care includes out-of-pocket spending on hospitals, nursing homes, health insurance, professional services, drugs, tests, and supplies. 4. Insurance includes household out-of-pocket spending on pensions, retirement plans, and personal liability and burial insurance. 1988 includes employee social security deductions. 5. 1988 includes trucks and other vehicles. 6. Cash and near-cash family income before taxes in current dollars, including food stamps, public assistance and welfare, unemployment compensation, and supplemental security checks. 7. In current dollars. Differences between income and expenditure may be explained by dissaving, off-the-books earnings, gifts from friends and relatives, and reporting error.

Source: Clair Brown, American Standards of Living, 1918-1988.