TITLE:
Consumption Patterns in the Aftermath of the Financial Crisis: The Case of Baby Boomers
AUTHORS:
Rebecca Abraham, Charles W. Harrington
KEYWORDS:
Baby Boomer, Consumption, Housing, New Car, Used Car, Vacation Expense, Furniture, Appliances
JOURNAL NAME:
Modern Economy,
Vol.6 No.2,
February
11,
2015
ABSTRACT: This study examines the consumption decisions of baby boomers (40 - 64
year-old age cohort) with $75,000 - $140,000 in household income in the
immediate aftermath of the financial crisis of 2007-2008 using the Consumer
Expenditure Survey data of Bureau of Labor Statistics in 2009. Increasing
unemployment and foreclosures of primary homes led to variability of income,
which became a major consideration in evaluating consumption choices. In
addition, we draw on Weberian social class theory to identify social influence
on consumption decisions. Gender differences in processing information
pertaining to new product purchases provided yet another means of stratifying
the sample. By juxtaposing economic variables on social identification and
gender-based preferences, this study sets forth the explanatory variables
underlying eight separate product purchase decisions. Principal findings
included Variability of Income and Risk of Foreclosure determined the Rent or
Buy a home decision. The predictor of Expenditure on New Cars included the Cost
of a New Car. For Expenditure on Used Cars, Deviation from New Car Buyers and
Cost of a Used Car were the relevant predictors. For Lunch Brought from Home to
the workplace, Lunch Consumed at Restaurants and Conformity to Own Referent
Group were the most important explanatory variables. For Lunch Consumed at
Restaurants, Lunch at Home and Socialization Opportunities explained the
criterion. Conformity to the Referent Group explained Expenditure on Vacations,
Furniture and Appliances and Small Appliances.