Cos and Effect

Slate ^ | Jan. 11, 2008 | Ray Fisman

[forkinsocket]

A few years ago, Bill Cosby set off a firestorm with a speech excoriating his fellow African-Americans for, among other things, buying $500 sneakers instead of educational toys for their children. In a recent book, Come On People, he repeats his argument that black Americans spend too much money on designer clothes and fancy cars, and don't invest sufficiently in their futures.

Many in the black community have been critical of Cosby for blaming poor people rather than poor public policies. Others have defended Cosby's comments as an honest expression of uncomfortable truths. But notably absent from the Cosby affair have been the underlying economic facts. Do blacks actually spend more on consumerist indulgences than whites? And if so, what, exactly, makes black Americans more vulnerable to the allure of these luxury goods?

Economists Kerwin Charles, Erik Hurst, and Nikolai Roussanov have taken up this rather sensitive question in a recent unpublished study, "Conspicuous Consumption and Race." Using data from the Consumer Expenditure Survey for 1986-2002, they find that blacks and Hispanics indeed spend more than whites with comparable incomes on what the authors classify as "visible goods" (clothes, cars, and jewelry). A lot more, in fact—up to an additional 30 percent. The authors provide evidence, however, that this is not because of some inherent weakness on the part of blacks and Hispanics. The disparity, they suggest, is related to the way that all people—black, Hispanic, and white—strive for social status within their respective communities.

Every society has had its equivalent of the $150 Zoom LeBron IV basketball sneaker, and thanks to Thorstein Veblen, we have a pretty good idea why.

[forkinsocket]

.

[PeteB570]

“fifty percent less on health care” and “twenty percent less on education”

No worries mon - we’ll just get the government to fill in the gap so we can get that new set of rims and some more bling.

[kipita]

And if so, what, exactly, makes black Americans more vulnerable to the allure of these luxury goods?

One word--"IDENTITY". When your identity in life is being an African ex-slave living on American soil then you need drugs, music 24 hours a day, street hustles, many women/men, government assistance and to know your place within the black hierarchy who know their place on the Liberal plantation.

[sportutegrl]

But because poor blacks are more likely to live among other poor blacks than poor whites are to live among other poor whites, . . .

The writer never offers any proof of this point, yet the rest of the article hinges on it.

[marktwain]

“The authors provide evidence, however, that this is not because of some inherent weakness on the part of blacks and Hispanics. The disparity, they suggest, is related to the way that all people—black, Hispanic, and white—strive for social status within their respective communities.”

---

In other words, they found that Bill Cosby was telling the exact truth. It is the “culture”. Only a few cultures on the planet value saving and investment.

[Lonesome in Massachussets]

Ok, I made considerably more than $100,000 last year, have no mortgage or car loan. My net worth is about a million. I drive a 2001 Corolla and wear a $20 watch from Target. How am I striving for “status”? I’m saving $100 a week for my grandkids college.

Gimme a break. If my coworker, regardless of race, feels he “needs” a Beemer or an Omega, that should be his problem, not mine.

If my neighbor doesn’t want to acquire skills, doesn’t work hard or save, same deal: his problem, please don’t use the ballot box to make it mine.

[valkyrieanne]

Fascinating. But unfortunately probably true.

[marktwain]

From the article:

“conspicuous consumption of valuable goods is a means of reputability to the gentleman of leisure,” and “failure to consume a mark of demerit.” To consume is to flaunt our financial success; it’s how we keep score in life.”

This clearly *only* applies to people who are consumed with image and status, which does not apply to a great many people who generate a lot of wealth, or who are good at saving. One needs only to read “The Millionaire Next Door” to understand how the need to advertise and flaunt wealth is a pretty good way to avoid being wealthy.

In fact, this reinforces Cosby’s point. Worrying about keeping up with the Jones is an actual cultural impediment to the creation of wealth, as is covetousness.