The Spending Habits of the New Elite

—  BY  PROFESSOR  ELIZABETH CURRID-HALKETT  —

In the 1800s, walking sticks showed status. In the 1980s, it was fast cars and ostentatious watches. Today, there is a new elite in town, and they are more likely to reveal their status through organic heirloom tomatoes purchased from the farmers’ market, subscriptions to The New York Times, and violin lessons for their children. While many of these elites will be well-off (some even rich), the consumption choices they make are embedded in cultural acquisition and experiential consumption.

The spending of today’s elites reflects a shifting of values away from status-oriented material goods. These may all seem more laudable choices than previous elite practices, but paradoxically today’s elite spending contributes even more to inequality than did the silver spoons and designer handbags of their predecessors.

Not simply rich or upper middle class, these elites — what I call the “aspirational class” — are defined by their educational pedigree and cultural capital. The aspirational class, who might have eaten steak and caviar if they lived in the era of 1980s flash, will instead spend $5 for red chard and $20 a pound for sustainable salmon. They will read daily to their toddlers, breastfeed their babies for a year or more, and keep up with (and care about) current events. In short, this class is comprised of individuals who ostensibly “aspire” to be better, more socially conscious human beings and who acquire consumer goods that reflect this ethos and eschew overt materialism.

Inconspicuous Consumption

Using the government’s Consumer Expenditure Survey data, my USC Price School doctoral student Hyojung Lee and I studied hundreds of different types of consumer items, from coffee and cereal to gardeners and alimony. By looking at all the ways in which America spends, we were able to understand more deeply how these spending patterns cut across demography, socioeconomic status and geography, and their implications for inequality.

We found that the new elite’s spending patterns are directed towards inconspicuous consumption for the purpose of buying back time or acquiring cultural capital — not for the purpose of showing social position. But time and cultural capital are really expensive.

For example, today’s top 1 percent spends 20 times more on domestic services than the middle class does. As income goes up, time with children increases and housework decreases. According to Brookings Institute scholars Garey Ramney and Valerie Ramney, educated women spend two to three times more time with their preschoolers than their less educated counterparts. They are also the most likely to breastfeed their babies.* 

These statistics suggest that the new elite have and value the ability to buy back time through services. Someone else is mowing the grass or mopping the floor, thus freeing up time to play with the kids. These data also suggest job flexibility and a work culture that allows for time with young children or breastfeeding at work, good maternity leave or the luxury to be a stay-at-home parent. Such qualities are often found in knowledge-driven jobs of the aspirational class. These are not options for an hourly worker. According to the Consumer Expenditure Survey, wealthy households today also spend 50 times more on child care than does the middle class, which gives them more time to get ahead at work, which with young children can be impossible without help.

Part of this change in spending is due to the fact that today’s aspirational class are not aristocrats, plutocrats or versions of Thorstein Veblen’s fabled leisure class. Instead, many of them work many long hours as lawyers, editors, doctors and financiers. As a result, they use their spending power to relieve themselves of gardening, housekeeping and other home duties that cut into any spare time they might have. Their long hours make them dependent on services that make their lives easier.

The elite’s acquisition of cultural capital is a significant departure from the middle class, and the data show it. One of the biggest line items for today’s elites is education. They also pour money into musical instruments — 20 times more in absolute dollars than the middle class spends.

Simultaneously, today’s elites also devote significant financial resources to health care and retirement, or what I call “consumption that counts” — they spend three and a half times more on education, more than two times more on health care, and 14 percent more on insurance and pensions than they did 20 years ago.** Investing in these assets requires real financial firepower, and none of them can be bought on cheap credit.

Solutions for Cultural Capital Inequality

In all of these choices, the new elites are not broadcasting their social position explicitly, but that does not make them any less significant. In each of these decisions, they shore up the chances for their future and their children’s future. Elite consumption today entrenches intergenerational social mobility among the few. Others needn’t know about the violin lessons or the private school education, but both pave the way for Yale or Harvard, and the prized job in the knowledge economy thereafter. Many of these choices are so cost-prohibitive that most middle class families (let alone low-income ones) simply cannot afford to participate at all.

Cultural capital may not be materialistic, just as getting to spend time with your kids isn’t all about status, but both are extremely expensive in today’s economy. We need to find ways to make cultural capital accessible to all.

As Thomas Piketty has demonstrated, the only way to address intergenerational wealth transfer is through more aggressive inheritance taxation. That’s also handy because it can finance what’s really needed — which is far more complex and comprehensive.

Part of what has made cultural capital so rarefied is the privatization of public culture. As such, we must invest more in public schools and preschools and provide more and free access to cultural institutions including museums, libraries, newspapers and performance centers. Then the gatekeepers of life’s chances — private schools and universities — need to step up and use those endowments not simply for amenities and new buildings, but also to ensure access on merit, not financial ability. Employers ought to be mandated to provide more flexible work environments that allow for all parents to leave when the school day ends (to re-engage later, if need be).

The great thing is that no one loses. Cultural capital helps everyone, and providing it to one person does not take away from others. A level playing field and shared cultural experience are what once made America great. Bringing those back is really the only way to make America great again.

* Heck, K.E., Raveman, P., Cubbin, C., Chavez, G.F., & Kiely, J.L. (2006). Socioeconomic status and breastfeeding initiation among California mothers. Public Health reports 121(1): 51-59.
** Consumer Expenditure Survey.