The article has been automatically translated into English by Google Translate from Russian and has not been edited.

American elite: what modern rich people spend money on


Source: with the BBC

Фото: Depositphotos

In the last decade, the richest people in the United States (this is 1% of the population earning around 300 thousands of dollars a year or more) began to spend significantly less on wealth. This is evidenced by data from the US consumer spending research, starting with the 2007 year.

Modern rich people prefer not to strum with jewelry, they now have other ways to show their belonging to a new class of ambitious elite. And for the most part, these are very expensive methods that are not available to everyone, writes with the BBC.

In 1899, the American economist and sociologist Thorstein Bunde Veblen called silver spoons and corsets indicators of elite status in society. In his now famous work "The Theory of Leisure Classes" he introduced the concept of "conspicuous consumption", thus designating a way to show one's wealth and social position through the consumption of material goods and the accumulation of luxury goods.

After more than 100 years, conspicuous consumption still plays a role in modern capitalism, although today many luxuries are much more affordable than in the times of Veblen.

Фото: Depositphotos

Huge volumes of goods available to the middle class are one of the features of the mass-production economy that emerged in the XNUMXth century, with an emphasis on developing countries (with cheap labor and cheap materials) and the transfer of production to China. In the emerging consumer market, the middle class demands more and more, but at lower prices. This democratization of the consumption of luxury goods has led to the fact that they can hardly be considered a sign of high status.

As inequality in society grows, both elite and middle classes buy the same TVs and designer handbags. Both those, and others fly by planes, go to cruises and drive expensive off-road cars. And at first glance, the luxuries that the representatives of these two groups now own do not belong to different universes. Since now anyone can buy a designer handbag and a new car, the modern rich differently designate their social status.

Of course, oligarchs and billionaires still own expensive yachts, posh Bentleys and luxurious mansions. But the dramatic changes in how and what the elite spend their money on has come about thanks to a new, educated and ambitious class of the wealthy.

Фото: Depositphotos

This new elite is consolidating its status using knowledge and building cultural capital. Her shopping habits have changed accordingly, with the new rich choosing to spend money less on luxury goods than on services, education, and investments in human development. This is what is called “non-demonstrative consumption”. The choice within this mode of consumption is not so obvious and not so material, but, without a doubt, exclusive.

This trend is perhaps most visible in the United States. While very rich people start spending significantly less on material goods, the middle class (who earn about $ 70 thousand a year) spend as much as before, and moreover, their spending on luxury goods is gradually increasing.

Avoiding outright materialism, the rich invest in education, health and their future life in retirement - all this seems to be impossible to touch with your hands, but it costs many times more than any designer handbag that the middle class can buy.

Фото: Depositphotos

The “non-demonstrative consumption” of the new class of the rich implies significant spending on education. This accounts for nearly 6% of the spending of the richest Americans. For comparison, the middle class has a slightly more than one percent share of these expenses. Since 1996, spending by the American elite on education has grown 3,5 times, while that of the middle class has not changed at all. The rift between the elite and the middle classes in education spending is particularly troubling for today's America, because, unlike material goods, the cost of education has been rising in recent decades.

According to the 2003-2013 household expenditure survey, college tuition increased by 80%, while over the same period, women's clothing prices rose only by 6%. The fact that representatives of the middle classes do not invest enough funds in education does not mean at all that they do not value its advantages. For many middle-income families (from 40-th to 60-th income quintile), studying at colleges and universities has become so financially unaffordable that they just gave up on it.

The costs of non-demonstrative consumption, as a rule, are unusually high, but there are also less expensive signals about belonging to the elite. Such a signal could be, for example, a subscription to a magazine. Economist or buying eggs from free range chickens. In other words, non-demonstrative consumption has become a conditional language through which the elites communicate to each other about their belonging to the class of the new rich.

In a single package with the need to pay for a private kindergarten, there is the knowledge that a child must put vegetarian cookies and an organic apple with him.

Фото: Depositphotos

Someone might think that in modern American families such a choice of food for a child is something completely common. But drive away from Los Angeles, San Francisco or New York further into the hinterland, and you will be faced with completely different norms: processed snack food and no fruit.

Another example. If in the three metropolitan areas mentioned above, breastfeeding a child in the first year of his life (this goal is set by the American Academy of Pediatrics) may look normal, nationwide statistics show that only 27% of American mothers do it (and in Alabama they are 11% ). The mere knowledge of such social norms can indicate that you have passed the ritual of initiation into the members of an ambitious class.

Although subscribing to Economist - it's only $ 100, going public with this magazine sticking out of your bag speaks for itself. It means that you are in the elite and have received an expensive education that gives you the opportunity to evaluate the publications in this magazine and discuss them with others like you.

Perhaps the most important thing here is that investments in non-demonstrative consumption make it possible to achieve something that during the times of demonstrative consumption it was impossible to even dream of.

If you know which article from New Yorker to refer, or are able to chat about the benefits of organic farming products, it will be much easier for you to get into the circle of the elite, make professional connections there, arrange your child in a closed private school, and so on.

Фото: Depositphotos

In short, non-demonstrative consumption provides you with a social ladder. More deeply, investing in education, health care and retirement significantly affects the quality of life of the person who does it. It also increases the chances of life success for the children of the new elite.

Today's non-demonstrative consumption is a much more pernicious form of status spending than the conspicuous consumption of Veblen's time. The latter was just bragging, ostentatious luxury. Non-demonstrative consumption for the current ambitious class of the rich is a way to preserve and protect their exclusive social status. Even if this status is not shown, as before, for show.

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