May 3, 1998
Keeping Up With the Gateses?
The Life and Times of the Father of Ma Bell The New York Times: Your Money
By LOUIS UCHITELLE
AMBRIDGE, Mass. -- Her car is a second-hand 1989 Acura, a bit of resistance on the part of Juliet B. Schor to the "competitive consumption" that she describes so vividly in her new book, "The Overspent American."
The television set is in the coldest, least inviting room of her house -- another bit of resistance. But the well-dressed Ms. Schor gives ground on clothing, participating despite herself in the new consumerism that has been reshaping behavior since the 1980s.
Ms. Schor, an economist at Harvard University, argues that the vast majority of Americans aspire in their spending to the life styles of the wealthiest 20 percent. They go into debt trying to acquire the trappings of that world, or the portrayal of it offered incessantly on TV. For tens of millions of Americans, consumption has become the route to a sense of well-being and identity. But that route always seems to require more purchases, which in turn become new status markers in an endless "ratcheting up."
"The comparisons we make are no longer restricted to those in our general earnings category, or even to those one rung above us on the ladder," Ms. Schor writes. "Today, a person is more likely to be making comparisons with, or choose as a reference group, people whose incomes are three, four or five times his or her own. The result is that millions of us have become participants in a national culture of upscale spending."
In an age of income inequality, that is not easy. The incomes of the top 20 percent, which start at $75,000 a year and reside mostly above $90,000, have been growing faster than the incomes of everyone else, so keeping up means going deeper into debt.
That, in fact, has been happening, particularly among households in the $25,000-to-$75,000 income range, the group that is trying hardest, in Ms. Schor's view, to rise in status. Simply having all the basics -- being comfortable -- now fails to be sufficient.
"While politicians continue to tout the middle class as the heart and soul of American society," she writes, "for far too many of us, being solidly middle class is no longer good enough."
Only determined "downshifters" -- and they are growing in number, Ms. Schor reports -- manage to immunize themselves, by altering their lives, working less and spending less.
Ms. Schor is with them in spirit, if not always in practice. The black nylon shoulder bag that she tosses on the floor behind her as she settles into the driver's seat of her car is smart-looking and bears a designer label. Her black, knitted European suit is similarly upscale; not high couture -- she got it on sale for $200, marked down from $1,200 -- but certainly stylish.
Two findings stood out in a lecture about the book that Ms. Schor gave last week to 50 students at Brandeis University, 20 minutes by used car from her Harvard office. Television is a big driver of consumer aspirations, she said -- not just the commercials, but the stylish clothing worn by actors and the affluent settings of so many shows, particularly soap operas.
Tabulating a survey of employees at a big, unnamed telecommunications company, Ms. Schor found that for every hour of television watched weekly, spending rose by $208 a year. This group watched enough TV to cost each person more than $2,200 a year.
"People from really opulent families use TV as a reality check," Ms. Schor said. "But for the vast majority of Americans, TV upscales their perceptions."
And their aspirations. Another poll asked where people wanted to end up. Eighty-five percent said they wanted to be rich or upper middle class; only 15 percent sought to "live a comfortable life" -- a code phrase for middle class. The Brandeis students, in a show of hands, fit this pattern. Only one saw herself as becoming middle class, and she raised her hand meekly.
Ms. Schor -- 42, director of studies at Harvard's Women's Studies program, married to another economist, raising two children in a recently purchased three-bedroom suburban home -- wrote a best-seller in 1991 entitled "The Overworked American."
Instead of working fewer hours and having more leisure, which had been everyone's expectation, Americans were actually spending more time at work, she reported. It was a finding that struck a public chord and that government data later confirmed. Among the reasons she gave for the trend: People needed the extra income to pay for their consumption.
And now, in the midst of a stock market boom and an outburst of consumption, "The Overspent American" (Basic Books) tries to explain what makes people such driven consumers. Ms. Schor, in effect, has written a modern-day version of "The Theory of the Leisure Class," in which Thorstein Veblen chronicled the "conspicuous consumption" of America's wealthy at the turn of the century, noting their spending on luxury goods (gold-handled walking sticks, for example) to call attention to their wealth and thus gain social esteem.
Half century later, after World War II, James Duesenberry, another Harvard economist, updated Veblen. Neighborhood life flourished then. Incomes were much more evenly distributed than in Veblen's day -- or now -- and Duesenberry popularized the phrase "keeping up with the Joneses" in his classic description of neighbors matching neighbors in the purchase of dishwashers, televisions, second cars and the like.
Another 50 years have passed and people today hardly know their neighbors. Civic activity, a potential substitute for spending, has declined. Income inequality has dissipated the egalitarian ethos. Religious and social taboos against excessive consumption have deteriorated.
And the new view of life, Ms. Schor argues, is not through the kitchen window, but through the television screen or in catalogues and advertisements that endlessly promote luxury products, or in office settings where lower-level workers are often in contact with wealthier colleagues who lead fancier lives.
Ms. Schor's book describes this new milieu. The story she tells may be the most eye-catching so far, but she is not alone. Robert Frank, a Cornell University labor economist who recently co-wrote a book entitled "The Winner-Take-All Society" (Free Press), is completing a new book, "Luxury Fever," in which he shares several of Ms. Schor's views, though not her finding that most Americans are trying to mimic the lives of the upper 20 percent on the income ladder.
In Frank's analysis, the goal may be the top rung, but the mimicking is mainly a process of trying to keep up with those only a little higher in income. And since income inequality has created many rungs, starting at the top with Frank's big winners, it is a busy process.
"If you read about someone high on the ladder buying a $50,000 wristwatch, then you don't feel like such a spendthrift if you buy a $1,000 watch," Frank said. "That is what is happening."
Both Frank and Ms. Schor would curb the spending through a consumption tax that bit hardest at the biggest spenders. A goal would be to push more spending into investment, public and private. But the solutions, particularly in Ms. Schor's case, are less interesting than the sociology and the economics.
Criticism of Ms. Schor's book is already coming from some traditional economists. The mainstream view is that consumers act rationally, buying what they need or value and can afford -- if not right away, then with earnings that they expect to receive later in life.
Ms. Schor accepts this thesis, but she argues -- as did Veblen -- that such theorizing fails to recognize that spending takes place in a social framework.
"People have choice; they can opt out of the game," she said. "What I am saying is that opting out is a socially costly thing to do. It is very difficult."
A $30,000 outlay for a Volvo or a sport utility vehicle may buy true value in the eyes of the purchaser, specifically crash protection and durability. But the payment is also made to buy status, which Ms. Schor argues is often a waste of national resources and an unnecessary invasion of savings.
Her thinking helps to explain the 1989 Acura, and the decision to run her family with only one car, not two or three -- another bit of American spending in which the line between utility and social pressure is often obscure.
The red-brick colonial home that Ms. Schor and her husband, Prasannan Parthasarathi, bought in Newton is ideal for this one-car family -- within walking distance of Parthasarathi's new teaching job at Boston College, and also a short walk to the playground and the neighborhood elementary school.
The family resists, too, the home improvements so dear to Ms. Schor's new consumer. The bathrooms, never updated since the house was built in 1929, are just fine, she declares. So is the kitchen, last remodeled in the 1960s. "People say we have to change the cabinets," she said. "But we don't."
When it comes to clothing, though, sorting out value and status is not so easy.
'For most women, clothing is an area of conflict," she said. "You need an upscale wardrobe for your job. But we are also socialized in a culture that generates a lot of desire for apparel and accessories. I have that. One year, it was 1985 or 1986, I sat down and totaled up what I had spent on clothes, and I was horrified to find that I had spent $8,000 and I had only earned in the $30,000s."
The nuances of the new consumerism are noteworthy. The college-educated, Ms. Schor found in her polling, are bigger consumers than the less educated, perhaps because college raises their aspirations. Gift-giving for weddings, birthdays, bar mitzvahs and the like requires ever-more expensive presents, sucking an age-old practice "into the larger vortex of consumerism."
Less noticeable spending -- expensive vacation travel abroad, say, or having children at Ivy League schools -- also plays a growing role in establishing status, and people find ways to advertise these invisibles, with school decals, for example, on the family car.
Contrary to mainstream economic thinking, Ms. Schor found, people pass up practical purchases that add value, like aluminum siding. Siding reduces home maintenance and improves insulation, but is often rejected as declasse. So are high-quality drugstore lipsticks, lacking only the high sticker prices of the high-fashion brands.
"In fact, with lipsticks, the higher the price, the more consumers tend to purchase them," she writes, summarizing her research. "This finding flies in the face of the received wisdom that a higher price discourages buyers."