Lowest-income families spend 40% of their money on what economists label luxuries

Market Watch ^ | July 9, 2017 | Leslie Albrecht

[2ndDivisionVet]

It turns out that all Americans, regardless of income, spend a large percentage of their income on what economists categorize as luxuries.

People who make the most money spend the biggest chunk of their incomes on luxury goods, but even the poorest households spend a significant amount on luxuries, according to an analysis released recently by Deutsche Bank Research.

The wealthiest families (the top fifth of earners) spend around 65% of their incomes on luxury goods and 35% on necessities, according to the study, which looked at spending habits between 1984 and 2014. Middle-income households weren’t far behind: They spend 50% on luxuries and 50% on necessities.

Even the lowest-income families (the bottom fifth of earners) spend 40% on luxuries and 60% on necessities, according to the study’s author, Torsten Slok, chief international economist for Deutsche Bank Securities.....

[TADSLOS]

FTA: Most Americans (86%) say it’s OK to go into credit-card debt to pay for necessities such as emergency purchases, medical expenses and expenses related to unemployment. But about even more people (87%) said they would be embarrassed to go into debt to pay for unnecessary purchases they can’t afford, nonemergency travel expenses or cash advances, NerdWallet found.

[Valpal1]

the Deutsche Bank report explicitly defined luxuries as goods or services consumed in greater proportions as a person’s income increases and necessities as those goods or services that make up a smaller proportion of spending as a person’s income increases.

Making the headline hyperbolic nonsense.

[mrsmith]

“(87%) said they would be embarrassed to go into debt to pay for unnecessary purchases they can’t afford, nonemergency travel expenses or cash advances, “

So... only 13% of Americans have the aptitude to serve in Congress.

[jeannineinsd]

For the poorest in the USA, many of the necessities are provided by someone else. Food Stamps keep people fed, Medicaid takes care of doctor bills and prescription costs, “Obamaphones” take care of cell phone costs, HUD Section 8 vouchers can pay rent, and there can be subsidies for utility costs.

If the “necessities” are provided for, money will be spent on “luxuries”

[PAR35]

SO, by their definition, I suppose ramen noodles are a necessity, but hamburgers are a luxury item.

[Sasparilla]

....Making the headline hyperbolic nonsense.....

Some Millenials at Deutsche Bank were actually paid to come up with this hyperbolic nonsense.

[TADSLOS]

Bingo. We are so screwed.

[Gideon7]

It’s worth noting that by the specialized nomenclature of the dismal science, even eating at McDonald’s is a luxury — that is, we do it more as our incomes rise — while smoking and lottery-ticket buying are categorized as necessities.

The headline is very misleading.

[elpadre]

It is hardly a safety net, is it?

[arthurus]

If the subsidies were counted in in figuring income levels, and hey should be, the charts would look quite different. I thought first that it would put a big chunk of the lower 2/5 into the middle group but that is not possible so it wuld change where the divisions are and many many of the poor would be rightfully seen as well off economically as those above them on the charts.

[arthurus]

If the subsidies were counted in in figuring income levels, and hey should be, the charts would look quite different. I thought first that it would put a big chunk of the lower 2/5 into the middle group but that is not possible so it would change where the divisions are and many many of the poor would be rightfully seen as well off economically as those above them on the charts.

[j. earl carter]

SO, by their definition, I suppose ramen noodles are a necessity, but hamburgers are a luxury item.

Indeed, the article is nonsense. I'm no expert on economics, but I do remember the basics. Economists don't use the term "needs": They only use the term "wants". All of your money is spent on luxuries. You don't need a smart phone, electricity, house, car, microwave, plumbing, etc. Humans survived just fine without any of those things in the past.

[AlaskaErik]

Any pizza delivery guy can tell you that even the poorest households have obese women with huge flat screen TVs and whose children have all the latest in video consoles and games.

[ConservativeMind]

Bump To The Top.

You win for the best post on the thread.

[sheana]

I swear I have cousins like that. I had another cousin from Arkansas visiting and he wanted to go see THOSE cousins. We got there and no one was home so I called her. They were at Taco Bell getting breakfast burritos. When they got back (4 of them live together. Brothers, sister, and a grown son) they said they had cashed cans to get $7 to go to Taco Bell. No food in the house. When we left Arkansas cousin was shaking his head. Said for that $7 I could’ve bought bologna, bread, cheese, etc and got more than 1 meal out of it. I said.....that’s why you have money and they’re poor.

[neefer]

And fireworks. Hundreds of dollars for fireworks every 4th of July.

[editor-surveyor]

.
That could be why they are stuck at the bottom.
.

[TruthWillWin]

Smoking and lottery ticket buying are necessities? I don’t think so!

[IronJack]

Lowest-income families spend 40% of their OUR money on what economists label luxuries

Fixed.