Non-materialistic millennials and the Great Stagnation
When I was a teenager in the early 1970s, I looked forward to getting a nice stereo system, with a receiver, amp, turntable and big set of speakers. My 17-year old daughter also likes music, but has no interest in those things. I have no idea why. And I notice this pattern in lots of other areas. I dreamed of a nice Canon single lens reflex camera. She also likes taking pictures, but has no camera. She has no typewriter. She has no pocket calculator. When I look at her lifestyle, it seems shockingly unmaterialistic. (Or maybe she has all these things embedded in her iPhone.)
This is just one anecdote, so let’s think about this more systematically. Start with two types of “stuff”. George Carlin used to talk about how a house was a place to put your “stuff” (recommended). One recent trend in America is a much lower level of residential investment than usual, even after the recovery. That also means less of lots of the new stuff that goes into houses, like carpets and dishwashers. Even where stuff hasn’t declined, it often has not increased. And recall that it is increases that you need to get economic growth (per capita). I see very few people who want to own two washing machines.
Indeed there seems to be a move toward smaller urban dwellings, while the McMansion becomes less trendy. Yes, ever-bigger homes are still being built, but total housing construction is down sharply. So maybe the millennials have shifted from indoor stuff to outdoor stuff, like cars, boats, swimming pools, golfing equipment, hunting supplies, etc. They no longer wish to spend as much time indoors.
In fact, just the opposite seems to be true. Total miles driven have suddenly turned lower, a development few would have foreseen 20 years ago.
[Update: In the comments, John Thacker pointed out that miles driven have recently turned up again–perhaps due to lower gas prices.]
Boating is suddenly becoming less popular. Golfing was very trendy just a few decades ago, but is now in serious decline. (Ditto for bowling.) Hunting is also declining. These outdoor activities require lots of stuff, which people increasingly just don’t need or want. One exception is camping:
When did camping suddenly become cool again?
Have you noticed more and more of your friends on social media lately posting pictures from a campsite or musical festival as part of their vacations? Do you yourself have any outdoor wilderness getaways or nights under the stars planned for anytime soon?
It used to be that camping was that dreaded weekend trip your dad or uncles dragged you on at least once a summer where you had to leave behind your video games and air conditioning, eat food from a can and poop in the woods.
But now, thanks to a shift in consumer trends and mindsets, it seems like everybody’s camping — particularly millennials.
And recent retail figures seem to bear this out as well, according to a new consumer study by The NDP Group. Within the $19 billion family vacation and outdoor adventure category, sales of outdoor camping equipment and related products have risen markedly over the past 12 months, particularly sales of coolers, cargo racks, tents and tent accessories, hammocks, sleeping bags and inflatable mattresses.
And from the same article:
A recent report from Business Insider also came up with similar findings. The modern consumer seems to be shifting purchasing habits away from apparel or simply buying ever more “stuff” to purchasing “experiences” and “big-ticket items,” like vacations, swimming pools or a new car or boat.
Yikes, even apparel is becoming less popular? Is naturism on the rise? Seriously, there does seem to be a fairly widespread move away from a materialistic lifestyle.
My mom is 90, and just a couple days ago she told me something that I found really shocking, while we were discussing all the new types of restaurants. She told me that she only recalls going out to eat once while she was a child, and only recalls one standalone restaurant in her hometown (Lansing.) If people ate out, it was usually in a hotel or private club. And she grew up in a comfortable middle class family. I didn’t even ask her how many nail salons, tanning studios and spas there were in Lansing during the 1930s.
So let’s say I am right that millennials are rejecting materialism, why does this matter? It might influence the recent RGDP growth numbers, which are quite low. It’s true that services have been growing in importance for many decades, but in the 1950-2000 period we also saw a big increase in the consumption of stuff. My claim is that “stuff” is no longer growing a bit slower than services; in per capita terms it’s probably declining—especially in crude physical terms. If the government still says it’s still rising, it’s because of “hedonic adjustments” which treat an iPhone like it’s also a camera, stereo system, computer, clock, answering machine, calculator, etc.
Notice I have not talked about imported goods. Surprisingly, that’s not really the issue. The current account deficit as a share of GDP is almost unchanged in the past 30 years. Yes, we import more than we used to, but we also export more. You need to look at consumption patterns to figure out the more recent slowdown in growth. If some of the items described in this post are made overseas, that really has no bearing on my argument.
Some of this can be passed off as unmeasured growth due to our new internet-oriented economy. But that doesn’t fully explain the move away from stuff. The iPhone has replaced the answering machine, but not the car, boat, swimming pool, golf equipment, hunting rifle, and lots of other stuff. (OK, uber sort of replaces the car, but it doesn’t explain the drop in miles driven.)
Suppose people have stopped doing all this outdoor stuff because they enjoy playing computer games more than stuff-intensive outdoor activities. In that case you could argue that growth (properly measured) has not slowed at all. If so, then our current ways of measuring growth may have reached their limits. We have to accept on faith that someone spending all day on the computer is happier than someone golfing or boating. Revealed preference suggests they are happier, but of course if you truly accept that criterion then you also must apply it to heroin use. I spend all my time on the internet, but deep down believe I’d be happier outside.
And I would argue that this move away from stuff is interesting, even if the output data is biased downwards by unmeasurable aspects of economic growth. Productivity in the services tends to grow much more slowly than productivity in making stuff. If the Fed targets inflation at 2%, then a slowdown in measured RGDP growth (whether accurate or not) will lead to lower NGDP growth, and therefore lower nominal interest rates. Thus the zero bound problem in monetary policy is partly due to the fact that young people prefer eating out and surfing the web, to the kind of auto-centered lifestyle once described by Bruce Springsteen or the Beach Boys. As a quantum theorist might say, “When you measure the economy, you change it”.
PS. This might be a stretch, but is the Trump phenomenon at some deep level a longing for the old stuff-oriented economy? And is Hillary the “services” candidate?
Oct 6 2016 at 7:46pm
“This might be a stretch, but is the Trump phenomenon at some deep level a longing for the old stuff-oriented economy? And is Hillary the “services” candidate?”
-Hillary, like McKinley, Gore, Kerry, and Obama, is the urban candidate. Trump is, like Bryan and Bush, the candidate of the farm, but also, like McKinley and McCain, the candidate of protection, and, consequently, West Virginia. Note, however, that the GOP constituency has not fundamentally changed since the election of 2000, when George W. Bush flipped West Virginia red. See the swing state primary Trump v. Clinton maps at my blog. It was from 2000 on that the GOP increasingly became the defender of the old economy, while the Dems became increasingly concentrated among the educated and in the inner city.
BTW, the last bastion of the traditional non-Hispanic-White Democratic Party is Elliott County, KY. I predict it will go Trump this year, as a lot of the neighboring counties were flipped by McCain and Romney.
Ultimately, Trump’s constituency isn’t very different from Mitt’s. From the primary results, Trump will probably underperform Mitt by 8 points in Delaware and Franklin counties, Ohio, but will make up for it by a superior performance in counties Mitt lost by less than 10 points, like Montgomery County, Ohio, which will be decided by less than two points in this general election (Mitt lost it by 4.6 points).
I’m currently trying to predict how Trump will perform in the general based on the primary, using 2000 and 2008 New Hampshire results as my main examples.
Tastes and preferences cannot explain the manufacturing productivity explosion of 2000-2007 in the U.S., as well as the manufacturing productivity stagnation of 2011-present. That’s probably due to some kind of weird technological changes.
Oct 6 2016 at 8:07pm
“We have to accept on faith that someone spending all day on the computer is happier than someone golfing or boating. Revealed preference suggests they are happier, but of course if you truly accept that criterion then you also must apply it to heroin use.”
Sure, both parts (although the negative long-run consequences of heroin makes it a bad long-term choice). I think that fundamentally the problem is that we’re getting a lot of goods/activities where the price is low relative to the consumer surplus generated by the inframarginal units. The low productivity numbers “seem wrong” because intuitively we think of average consumer surplus not consumption at the margin.
Oct 6 2016 at 8:14pm
As a college student I see these trends reflected in my own and friends personal consumption patterns. For example, the iPhone has dramatically changed consumption patterns versus even ten years ago, where the majority of my free time is spent consuming near zero marginal cost services on that computing devices. A part from being something that is very hard to quantify in productivity statistics, a greater percentage of my services consumption is being converted away from labor intensive goods to ones that can be easily automated. Possibly posing issues with Gordon’s great stagnation thesis.
There’s an argument that the value of these compute heavy goods will be captured by advertisement or some other means of monetization. But the inventory for ads is essentially infinite, meaning that it is much more difficult for a modern advertising platforms to actually make money. The ailing banner ad industry is justification enough that eyeballs are no longer adequate. The same can be held for services that are paid for directly by the consumer and are delivered over the internet. The low barrier to entry and zero marginal cost probably eats away at the majority of producer surplus.
Oct 6 2016 at 9:00pm
Jim, Yes, that’s plausible, but lots of other interpretations are as well.
Oct 6 2016 at 9:29pm
You did not just ascribe low residential investment to changing demand for shelter, did you? Do I have to go all Morgan Warstler on you, Scott?
Oct 6 2016 at 9:30pm
I will use all caps if I have to.
[Not on EconLog, you won’t.–Econlib Ed.]
Oct 6 2016 at 10:35pm
I’ve seen some social media posts that seem to be popular among millenials which blame the preceding generation and its materialism for the Great Recession and the lack of economic prospects for millenials. This could explain their lifestyle choices.
Oct 6 2016 at 10:47pm
Scott, it’s important to note that total VMT turned sharply upwards after 2014. It looks like it’s increasing slightly faster than the old trend line’s slope, though it will take a long time to reach the previous trend line. (Hmm, probably reminds you of NGDP, since everything reminds you of NGDP.)
It’s hard to know how much of that was higher and then lower gas prices.
Oct 6 2016 at 10:55pm
John, Thanks. I should add that I recall reading that millennials were less likely to get a drivers license and/or own cars then previous generations at the same age. Can anyone confirm?
Oct 6 2016 at 11:48pm
I think you’re on to something. I attribute it to Baby Boomers facing real material deprivation (relatively speaking) during their childhood, leading to a desire to buy “stuff.” Most millennials were not really deprived—if they wanted something, they got it for the most part. Hence less of a desire to seek self-actualization via the purchase of material goods.
Economic factors matter too. The parents of the Boomers were not rolling in dough, but a lot of Boomers became wealthy by their thirties (if not wealthy per se, then materially comfortable, regardless of the actual balance sheet). Whereas millennials’ boomer parents were “rich,” but Millennials are priced out of desirable real estate and burdened with student loans, and face way more job competition, hence a partially forced frugality.
Oct 7 2016 at 12:05am
Eating out. I am the same age as Sumner. My middle-class family ate out so rarely I can still remember the particular restaurants’ decor.
In Los Angeles of the 1950s through 1970s, there were a handful of recognized “good” restaurants (this was before Zagats, Yelp etc). An exotic restaurant was from Southern Europe. (I jest a little, there were Chinese restaurants).
Today, one could eat at a different and great restaurant in the L.A. area every day for a year, and often for not even that much money. But you can spend a lot too.
In that way and also with clean air now, L.A. is much more enjoyable than 50 years ago.
But people drive in dinkier cars, live in cramped quarters, and seem house and school-poor. Commutes are soul-draining. No one seems to know their neighbors. The ease and style of a 1959 convertible Impala is gone forever.
Young people live in clumps in shared homes, deferring adulthood to their 40s and beyond. The cheap housing by the beach has vanished.
Many leave the area to raise families.
Oct 7 2016 at 12:34am
I don’t understand the jargon but did Jim Dow just say that it is not that millennials have moved away from stuff, it is just that stuff has gotten smaller ?
Oct 7 2016 at 7:47am
Younger folks are much less likely to have a license and own cars. At least part of that is because many states passed graduated licensing laws in the past decade and a half, so where once full licenses at 16 were common, now it’s another year or two for a full license in most states. Then if someone doesn’t have a full license and a car by the time they go to college, there’s less reason to get one until graduation.
Oct 7 2016 at 8:15am
Popular music has really declined in quality. The source recordings for CDs and MP3s are heavily over-engineered to sound louder, everyone and his brother is auto-tuning their voices, and rap artists are shouting obscenities at us.
The music is so bad that people are buying single-speaker systems to listen to it. Think of it, single-speaker systems! No stereo separation.
I’m only a few years younger than Scott, and I also remember dreaming of really good stereo systems. In a PX in Korea in 1975 I fell in love with Pioneer receivers and Bose 601 Series II speakers. I couldn’t afford them until 25 years later, but I still love the way they sound. But my kids barely listen to music at all, and when they do it’s low-quality MP3s that sound no worse on cheap earbuds than they do on a real hi-fi.
Oct 7 2016 at 9:05am
I am Gen X, not a millennial. Anecdotally, I was all about my stereo setup in the 1990s. Today I listen to just as much music, but I don’t have a stereo at all. It’s all MP3s, computer speakers, portable bluetooth gear, etc. The collection of MP3s on my phone probably rivals my entire physical music collection back then. It’s a wildly more convenient setup, and if the music fidelity perhaps isn’t quite as good as what I had at the peak of my gear, I never notice the difference at all.
Oct 7 2016 at 10:58am
Two anecdotes, one of which is perhaps born out by the data:
1. Fewer miles driven, declines in auto ownership, fewer driver’s licenses, etc: how much of this is attributable to the apparently widespread return to urban living? I keep reading about the massive influx of millennials into urban enclaves like New York and San Francisco and out of the suburbs. As a millennial who flocked to New York myself, I can attest to this – everyone’s dream growing up in New Jersey was to live in “the city”. Contrast with previous generations’ dreams of leaving “the city” for open spaces and the suburban utopia.
Additionally – and this leads to the second anecdote – I personally (and the social circles I traffic in) have a strong desire to live in cities for their positive externalities (culture, restaurants, nightlife, a more-or-less functioning public transit network, etc.). But we also love the idea of “escaping” the negative externalities – everyone I know, myself included, is always “escaping” to upstate or Yosemite or some other far-flung area of the globe where you don’t hear the sirens careening down the street and your neighbors shouting at each other over the television. And then, having suitably roughed it for a long weekend, we happily return to the land of Shakespeare shows every night, $15 cocktails, and pop-up restaurants next to the Frick.
2. I’ve noticed that it is decidedly “uncool” to own a lot of stuff and to use that stuff as a hallmark of one’s social capital. Perhaps this is because I live in New York where living space is at a steep premium, but owning a lot of stuff (other than hardcover books) comes with a lot of social baggage here: it signals “negative” things like materialism, shallowness, consumerism, inauthenticity, a “selling out” to the powers that be. Correct or not, I’ve noticed this attitude among my (admittedly well-educated, middle class, knowledge-economy peers). Having a souped up car with the big stereo is a signal of the uneducated class, for what’s it worth. Of course, no one will admit this because that would commit a different social sin: coming off as condescending and therefore not admitting your deep-seated guilt about your lifestyle. Remember: these are the people who will gladly pay thousands of dollars a month in rent and at the same time bemoan the gentrification of their newly “discovered” neighborhood. Rather, it’s a matter of owning the “right” stuff – handmade carpets, flea market flower pots, artisanal cast iron pans, etc.
Oct 7 2016 at 11:15am
Stuff ties you down. If you want to travel, move around a lot, change residences every few years, having lots of stuff makes that harder. Having a lot of stuff compels you to have the space to store the stuff and transport it with you, which costs you money in terms of rent. Especially in an era where housing prices are high, I’d rather have the square footage than the stuff.
I think a lot of people, millenials included, have come to realize that owning too much stuff negatively impacts your quality of life in these ways. Ideally, you should want to own as little as possible, while simultaneously having a high income so you can buy or rent whatever you need on the spot instead of keeping it in storage.
It could be that the internet makes it so much easier to rent or buy instantly that the benefits of owning stuff and keeping it in storage are drastically reduced. You can always get when you need as the need arises.
Oct 7 2016 at 11:22am
No, what I was thinking of is that certain technologies, such as computer games, are amazingly cheap compared with their use. I have friends’ kids who would sit in front of a computer game all day if they could. You can’t really value the game at the price it sells for since that underestimates the value of all the entertainment it provides. This isn’t really a new phenomena, TV was the same way. Both of these technologies dramatically changed how people spend their lives.
I took Scott’s point to be that we tend not to value these activities (watching TV, playing computer games) but if this is what people do, then it must be more valuable than what went before.
GDP and productivity measures are simply not very good at measuring this. Not their fault, they’re being asked to do something they aren’t really designed for.
But, as Scott says, this is not the only story about what’s going on.
Oct 7 2016 at 11:24am
So is spending on boats up or down? Different articles make opposite claims. Also, bowling is about the least expensive hobby one could have. For very little money one can purchase shoes and a ball and from there bowl at a cost of a few dollars a day. If there were a cultural preference for low cost activities then bowling should be doing much better.
I am also a child of the 1970s and my parents, despite having upper-middle class income, spent money as if we were on poverty’s door. Many adults thought this way and I believe this resulted in lower aggregate demand. The rise of the baby boomers into their peak spending years, which took place in the 1990s, had a huge cultural and economic impact.
But if this economic boom was a result of a demographic bubble then it may be that a return to lower AD is to be expected.
Oct 7 2016 at 12:54pm
My anecdotes are driven by living on the west side of Los Angeles, but I see the same thing, millennials are richer and spend more on experiences such as eating out. A part of this is that fewer young people are married with children so that you don’t have one person staying home who can specialize in cooking. One thing I’ve seen a lot of recently are services that will deliver food for a specific meal to you door along with instructions on how to cook it. It’s cheaper than going to a restaurant but designed for people who work outside the home all day and have limited experience with preparing food.
The other thing that millennials are spending more on (at least here) is housing. By proxy, children have become much more expensive and you’re seeing young people substitute out of spending on that. Whether that counts as goods or services I couldn’t say.
Oct 7 2016 at 1:28pm
It’s my impression that tattoos are way up among the last two crops of young adults. I’m not sure how that relates to the other trends. They don’t take up space. As they become more acceptable, we might see more practical uses for them, such as ways to unlock your phone, fiducials for biometric sensors, etc.
Oct 7 2016 at 1:50pm
I’ve always felt that Trump-consumerism is more about an economy geared towards some kind of old style of consumption as well. I was born in the early 80s, after globalism’s strong start, but my impression of generations before me, who grew up with American-manufactured goods, had fewer but higher-quality items around the house. For example, there was one TV in the house, one, maybe two radios, one couch for ten years, one car in the driveway, etc. All these items lasted longer, yet were more expensive due to higher American labor costs. These items lasting longer may have been a function of higher quality, or maybe people spent more time repairing worn items than they do now (tinkerers seem all but extinct). Today, if my mad-in-China phone starts acting up, I throw it out and buy a new one. I have two cars in my driveway, three TVs, and so on. In ten years, except for sentimental items, I’ll have replaced everything with new stuff, also made overseas. I see Trump supporters trying to go back to the old “made in America more expensively but better” kind of mentality.
Oct 7 2016 at 1:51pm
I’ve seen some social media posts that seem to be popular among millenials which blame the preceding generation and its materialism for the Great Recession and the lack of economic prospects for millenials. This could explain their lifestyle choices.
Yes. Consumption fueled by credit as an object lesson. I’ve also noticed a trend away from using credit cards and towards exclusively using debit cards for purchases. Or even cash-only, though that may be a local quirk.
Wouldn’t surprising me if not having a credit card was a point of pride for some millenials.
Oct 7 2016 at 1:51pm
I am just waiting for the invention of the floating chair.
Oct 7 2016 at 2:19pm
“Driving, hunting, and consumption are down and digging in the dirt with a stick is up. What an interesting shift away from materialistic preferences–it must be something to do with an increased preference for mobility, or maybe a desire for dense urban living. Clearly we must be measuring real GDP wrong.”
Cars are something like twice as expensive inflation-adjusted as they were in 1972. They’re better now, but only along axes nobody but a handful of Poindexters gives a damn about. “The working class guy of 1972 could take a girl for a ride a lot easier than the working class guy of 2010”, and things have not improved since 2010.
Or another example: my dad grew up shooting squirrels and riding dirt bikes in a San Diego suburb, with a stay-at-home mom and a dad who ran a halfway house and led convict fire crews. Now there’s nowhere within fifty miles of his childhood address where you can do either of those things legally, and a single-earner household of comparable SES couldn’t afford that kind of stuff for their kids, certainly not their kids and theirselves (no more cheap two-stroke dirt bikes, firearms much more expensive, no more lead hunting ammunition in CA,…), certainly not in San Diego County. (And his public high school had full wood, metal, and auto shops, a greenhouse, Latin, Greek, German, ….). It doesn’t take too much squinting to see a massive fall in living standards for Americans.
Oct 7 2016 at 2:22pm
One major thing that stands out to me is that while you might have wanted your own stereo, not all of your friends would have. In high school (if you were middle class) if you had a group of 4 or 5 friends one might have a stereo, one a car, one a camera, or a computer or a half finished basement you could hang out in. Now it is likely that your daughter’s circle of friends each has their own smartphone, computer and personal space at home at a minimum (some will also have a tablet, several video game systems, their own TV, DVD player and netflix subscription).
The other is that lots of consumption is now very quick. Craft beer is growing, and can cost substantial portions of your paycheck (my local distributor has multiple different cases for >$100 in their selection which is >$4 for a 12 oz beer, any of those drunk in a bar is $8-12 for 12 ounces). Artisanal cheeses and breads are popular as are farmers markets where you are allowed to pay $5 a pound for peaches that were grown closer to your house.
Lastly there seems to be a lot more selection now. I remember picking out a reading chair as a christmas gift in high school 20+ years ago, the store we went to was basically just couches and chairs, and their selection was probably 1/2 or less than the couch/chair section in IKEA these days. I am not sure how you figure this in, but consumption is far more personally tailored now, and perhaps satisfies wants better.
Oct 7 2016 at 2:36pm
“She has no typewriter.”
She is really destitute.
Oct 7 2016 at 3:06pm
I’m in my early thirties, and I see a lot of what you’re describing in my own life. I grew up in a suburb in the 90s. Mine and my friends houses had lots of stuff: big yards, home theaters with surround sound, hot tubs, basement bars, etc. Almost all of it never got used. Now my wife and I are in the market for a house. We’d prefer somewhere more urban, but we’ll end up in the suburbs just because at our price that’s where we can get something big enough with good schools. All that stuff from the 90s is a huge turn off in a house. Housing is expensive enough, why do I want to spend money and waste space on stuff that we’ll never use? Do I really want a huge yard and a riding lawn mower, when a I could have a small yard and a park within walking distance?
(Prediction: When my generation’s children are buying houses thirty years from now, they’ll say the exact same thing about all the gourmet kitchens with double ovens that are so popular with us millennials.)
I am a bit surprised to hear that interest in apparel is in decline, since in homes I see large walk in closets are still in demand, and my impression had been that in new construction (at least where I live) the trend was towards even larger closets. Perhaps its not everyday clothing, but athletic / outdoor clothing that’s being kept there.
However, at least for men, apparel can be much more of an “experience” than “stuff” now. Many men are completely disinterested in clothing, and a lot of them can get away with a small and basic wardrobe in our casual world. On the other hand, those who are interested in clothing are much freer to go full #menswear if they like than they would have been ~20 years ago.
Oct 7 2016 at 3:13pm
Citation? Even if it were true for new cars (I doubt it) the used car market is far more robust than it was even 20 years ago, let alone 40, which gives first time car buyers a ton more options.
Oct 7 2016 at 4:07pm
Everyone, Thanks, lots of interesting comments.
Kevin, It could be multiple factors, including tighter loans standards. In any case, the impact on growth is the same.
Ben, Houses being built today are much bigger than houses built in the 1950s.
John, Thanks for that info in why the young are driving less.
Jeff, I sometimes feel that way too, but didn’t want to sound like an out of touch boomer. 🙂
Lucian, Thanks for that info, I’m glad my initial impression about the move away from “stuff” has some basis in fact.
Dan, You said:
“Many adults thought this way and I believe this resulted in lower aggregate demand.”
Back then, the decision to save rather than spend had no impact on aggregate demand–monetary offset.
Psmith, I don’t agree about cars being unaffordable. I’ve never bought a new car, but used cars are just as affordable as in 1972, for a given quality. The CPI is up 5.5 fold, and an $11,000 used car today is just as good as a $2000 used car in 1972.
“It doesn’t take too much squinting to see a massive fall in living standards for Americans.”
It takes a lot of squinting–living standards are clearly much higher than in 1972–not even close.
Oct 7 2016 at 4:42pm
Enjoyment = benefit – cost
Cost of things like going to the ball game exceed the benefit but the benefit is still greater than the benefit of the alternative.
Oct 7 2016 at 5:27pm
A fair point.
I still strongly suspect that standards of living have fallen, but I think this has more to do with positional goods and less with the other kind than I suggested earlier.
Oct 7 2016 at 5:46pm
I think that are two kinds of consumption – consuption that requires more money than time (extreme cases could be clothes or forniture, who almost did not require time to be used), and consumption that requires more time than money (an extreme case could be a freeware videogame, who only requires time and – if you already have a computer – no money).
Perhaps we are seeing a replacement of money-intensive consumption by time-intesive consumption?
Oct 7 2016 at 5:58pm
Of course life is much better today than in years gone by. The Indians are in the playoffs and the Yankees are not. How could any sane person ask for more?
Oct 7 2016 at 8:07pm
One more point. Most new tech comes with perpetual consumption, not one time purchase consumption. I shopped around for a good phone deal so I am (hopefully) on the low end, but my phone cost ~$180 after taxes, case and shipping, and I get 0.5 gigs a month for ~$24 (after taxes again), if my phone lasts 3 years then I’m a little under $400 a year just for the phone and service. If I buy ebooks, apps, or subscribe to netflix to get the maximum out of my phone I could easily get that to $700-800. Someone with a better phone and more data could break $1,000 a year on their “phone”, every year for life.
There are a lot of consumption goods now that fit this mold. When TVs came out it was just the cost of the TV, now a basic cable package costs more in the first year as a standard TV with a bunch of add on options (HBO, sports packages) that could double that cost per year. Less than 2 years of internet access costs as much as a new computer, and 1 year for a tablet, along with the little add ons (anti virus, amazon prime subscription, pandora, etc).
If you spent $1,000 on a computer that lasted 10 years (and no upgrades, just to make things easy), over that time you would probably spend ~$5,000 on the connection and another $2-4,000 on subscription services, plus another (this very person dependent) $1-2,000 in downloads an other purchases. That computer starts to look more like a big ticket item.
Oct 8 2016 at 3:25am
The ultimate end of this will be that people live in small perspex pods, with their brains hooked up to perfect VR where the computer will be continually feeding them experiences that absolutely maximise their utility. Food will be delivered via IV. The whole thing maintained by self managing robots. Measured GDP in that scenario would be almost zero, since nothing would be traded, and people would have no “stuff” whatsoever. This is one end of the Laffer curve, where the beginning was pre-stone age, where again there was no “stuff” since the concept of property didn’t exist and there was no trade. Somewhere along this Laffer curve we reached peak stuff, perhaps the mid 1990’s? So its all downhill from here.
On the decline of active sports (like golf, or boating) it seems to me that most people only did these things for want of other alternatives, sort of like as kids we used to hang around the mall, not because we loved shopping but because it was really the only practical way to socialise. Now we have more alternatives and only the people who actually like those things for themselves are doing them.
Oct 8 2016 at 4:48am
Knick knacks, no one likes dusting. The kitchen is social where little prep is done, at best assembly, one step away from dining out… no, let’s get a caterer instead. On that note, few paint or garden, there’s services hence less stuff. Few bake and make, but all break, bread.
Crafts and hobbies? good for you, let me buy it on Etsy from my phone. Also, not in my phone, but not needed for my USB record player either is the rack of equipment: amp, equilizer, dual tape deck, unless an aficionado wants these things but I can’t tell the difference between the speakers (if not ceiling or wall mounted wireless) or the vertical fan. Smaller homes are great again with flat screen TVs not being furniture oh I wish the closets were bigger, the tIle updated, the windows newer and efficient but in 10 years can feel updated doing a few projects at a time via services via box stores. Housing stock in classic towns is just small again, but classic and hopefully not renovated… it’s like monty hall, please let there be a prize hardwood under the carpet. No longer also out dated to recent history, as the mcmansions seemed new and improved. Also toys are smaller, doll houses and basement wide train sets are out. Oh, and junk for the front lawn is inflatable.
Oct 8 2016 at 6:13am
All of the above. Here are a few things that have not been mentioned yet, or only in a roundabout way.
Environmental, labour, and product safety regulations are consumption too. As countries develop, quality expectations for products go up as well. So my hunch is that a much larger amount of production is used for this kind of consumption – superficially making the same or less “stuff” but with much higher safety, environmentally friendlier etc, sometimes using costly regulations, sometimes as a result of costly lawsuits. Consequences includes the above mentioned change in what you can do cheaply in your neighborhood, such as riding a dirt bike or hunting squirrels.
Then, social connectivity. People consume to a large extent to signal social position. Even though we all believe we buy stuff because we need it, we do know down inside it’s because we want it. And that want is a want for social communication. Hence the whole idea of relative poverty etc, none of this being controversial in sociology and economics. Now think of the effects on consumption: People who socialize mostly online, must be developing much different patterns of signaling. What it is I don’t know. It might be simply the time spent to find funny or inspirational videos to post on Facebook. But it’s not stuff you wear or drive or live in to show off because that kind of physical stuff, no one will ever see in this new world. Explains the driving license conundrum too – no one needs to drive anymore to socialize. And the propensity to have less and less sex, to not even desire it anymore (Japan is first here among rich nations, but it is happening everywhere). People who meet a lot less in person, also signal differently. Therefore they consume less for signalling purposes [And will eventually die out] [sarcasm off].
Oct 8 2016 at 6:31am
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Oct 8 2016 at 1:15pm
I own two washing machines: a large American and a smaller European which really gets the clothes clean.
Oct 8 2016 at 4:01pm
– Many young women measure their status by counting the number of likes they get, rather than by the size of their boyfriend’s truck.
– Communicating with friends/family used to require access to a scarce resource: a car, or a landline that others wanted. Now it’s basically free.
– Many people now don’t want to drive because it means they can’t be texting.
– On stereos: the ear is much less sensitive to quality than the eye. Back during hi-fi’s heyday, audio quality went from awful to pretty good. But the Beatles were still amazing on a tinny transistor radio. Now my earbuds have multiple drivers for not much money. We’re still dropping thousands on screens, however, because we notice the difference. That era will end when we get “eye buds” that are good enough. Bye bye another big piece of stuff.
– The biggest change will come with self-driving (battery) cars. They will demolish a big chunk of current GDP. Everything from emergency rooms to body shops to traffic cops to driver’s ed will see less business. And millions of (mostly male) jobs will go with them.
As Andreesen said “software [really tech] is eating the world”.
Oct 8 2016 at 6:07pm
I think this is basically plausible, and I claim that it would represent a fall, not an increase, in standards of living. This is a problem with the world, not a problem with measurement of GDP.
Mark V Anderson
Oct 8 2016 at 11:17pm
I have two twenty something kids. I don’t think they are less materialistic, they just want different things. Yes my kids aren’t as interested in cars or houses or audio equipment. But they spend a ton on constantly eating out and always must have the best phone out there and the most comprehensive phone service.
Oct 9 2016 at 10:36am
It appears that you have replaced Paul Krugman as the Professor Confirmation Bias of the Internet. Put up a graph that shows your conception of VMT to be absolutely wrong (FRED data are easy to get). You will not because it goes against your hope of what the world should be (but is not). Also, your daughter doesn’t use a typewriter or calculator? Neither does 99.999 percent of the rest of the world. Is she living in a grass hut? Millenials are just as materialistic as every other generation–go to a Starbucks and observe this obvious observation. Does she have an inkwell too? Jeez.
Oct 9 2016 at 12:26pm
Your daughter has no typewriter? Have you not received the memo that typewriters are long obsolete?
Oct 9 2016 at 2:04pm
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Oct 9 2016 at 6:27pm
As part of the scarred generation that graduated in 2008 with $100k in student debt and couldn’t find a job for 4 years I can assure you that we are making less money if we have found work or at least know someone who has had trouble finding work. All of that is a warning not to spend too much if you can help it.
That 4 year stint destroyed my life, I will not get out of debt in my lifetime. Marriage, and kids are out of the question. I don’t by anything or do anything and I can’t declare bankruptcy. I honestly don’t know why I haven’t killed myself yet.
Oct 10 2016 at 3:36am
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Oct 10 2016 at 9:06am
Is higher student debt not an obvious explainer?
Oct 10 2016 at 11:03am
I wonder if, as including the George Carlin quote suggests, that the chain of causation goes something like:
– Land use restrictions (zoning) artificially increase housing cost
– Young people can’t afford to buy homes
– Much less likelihood of buying expensive furnishings for a rented/shared apartment or home
– Money is redirected towards a combination of “experiences” (eating out, camping, etc), rent, and paying down student debt
Thus NIMBYs opposing every effort at development are forcing severe negative externalities on not just those millenials and others who don’t already own property, but also everyone who depends upon the consumption that property ownership generates (e.g. manufacturing), along with blocking sizable efficiencies gained from increasing urban density (e.g. lower energy use per capita).
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