“Behind the Bling”

It sure has been a while! Sorry about the month between posts, people. I’ll try to not let that happen again.

A former Professor of mine, Erik Hurst, co-published an interesting paper concluding that:

  1. Blacks and Hispanics spend 30 percent more than whites on clothing, cars, and jewelry—an amount that averages out to around $2,000 per year per household.
  2. Blacks and Hispanics are spending less on education and health care and saving less money.

Why?
Signaling: Showing off this bling, in the form of nice clothes, nice cars, and so on shows that you have money and a job, something many members of these socioeconomic groups do not have.

Read the summary of the paper here.

3 thoughts on ““Behind the Bling”

  1. “For Hurst and Charles, the black and Hispanic spending habits they document can be explained by rational economic behavior about signaling and reference groups; additionally, the habits are independent of race.”

    Emphasis mine.

    This is not a racial difference, this was merely discovered in the context of racial segregation & reported in those terms.

    A similar culture-based finding I found interesting, is that a more collectivist culture will outspend an individualistic culture on luxury goods. For example, Japan’s per capita luxury good consumption is twice as much as the United States.

  2. Agreed, the habits are independent of race. But the magnitude of the effect is much greater for these demographics than for whites.

    Do you have a link for the Japan one, or other racial groups? This stuff fascinates me.

  3. Magnitude or incidence? If certain races inhabit areas that fit the criteria, they will show out of proportion in a study like this.
    So, if you see this behavior as a bad thing, how would you propose fixing it?

    Re: Communitarian societies and luxury consumption

    Japan Luxury Consumption

    China next?

    Generally, I’d say my current worldview is reluctant to use race or nationality lines when you can first look at culture and environment. People are people.

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