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Graph: How Americans Spend Their Money

nytimes.com — Looking at a far more direct measure of American families’ economic status — household consumption — indicates that the gap between rich and poor is far less than most assume, and that the abstract, income-based way in which we measure the so-called poverty rate no longer applies to our society.

Who dugg this? Made popular Feb 13, 2008

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  • oreonblade, on 02/13/2008, -5/+112For each class, entertainment is double that of education. We really got our priorities straight.
  • lsatkins, on 02/13/2008, -1/+101So the lower 5th of the incomes spend twice as much as they make?
  • bsegovia, on 02/13/2008, -7/+106that's a gorgeous display of quantitative information.
  • sparkrainfir, on 02/13/2008, -7/+84you're brave. to submit such a comment on digg.

    Yes, it was very complex, They could have graphed it out much better.
  • inactive, on 02/13/2008, -2/+58strippers > education
  • chicagobiker, on 02/13/2008, -4/+60Yup, welcome to America's slavery/dependance on credit card debt.

    You'll find those lower 5th families are carrying $5,000-$25,000 worth of revolving consumer credit card debt spread over multiple accounts which they'll never be able to pay off.

    The top 5th never carries a balance and earns interest on the money they have, the bottom 5th are charged interest on money they don't have and will never earn.
  • inactive, on 02/13/2008, -11/+55Those that make the most money, spend the most money. Fantastic.
  • JAVandiver, on 02/13/2008, -20/+60What I find entertaining is that Middle America and the working poor spend the almost the exact same amount on education, yet it is the only working poor who complain about the lack of educational opportunities.
  • inactive, on 02/13/2008, -3/+41i don't see what you did there
  • SpaceMonkeyZero, on 02/13/2008, -2/+36Neither did Ray Charles.
  • dannyapplesauce, on 02/13/2008, -1/+33proportionally, they do not. You see what they are doing there?
  • cptshamrock, on 02/13/2008, -4/+34Welfare , etc is not counted as income.
  • Nougat, on 02/13/2008, -3/+30The issue of poverty is that as income decreases, the possibility of complete individual economic failure increases exponentially. Furthermore, as income decreases, the less money one has available to them as credit or liquifiable assets.

    I know that if I lose my job, my family will be in for some really crappy times. However, I also know that we have two cars and a nice house. Selling the brand new minivan and buying an older used one (the other car is paid off), selling the house and moving to a smaller one for 2/3 the price, even selling some of the furniture in the house - these things will keep us afloat for a while, and by reducing our mortgage payment, make it so that I need to earn less money to pay the bills.

    The gap between the rich and poor is about comfort vs. worry. The top fifth has about $80K "to spare" every year. That's enough to cover the middle and lowest fifths with about $25K left over. And the lowest fifth is spending twice as much on "household consumption" than they earn. Those people are already in complete financial collapse.
  • zeiben, on 02/13/2008, -2/+29Middle america goes to decent public schools, while the working poor go to that school in "the wire". neither of them pay for it except from taxes
  • Jenadae, on 02/13/2008, -1/+25Information.
  • jcounterman, on 02/13/2008, -1/+24Education is something you use and pay for only about 12 to 18 years of your life. Entertainment is something we use and pay for throughout your entire life. It seems logical that entertainment would be higher when you average everybody's spending, as not everybody is sitll in school.
  • Jenadae, on 02/13/2008, -1/+23Churches.
  • samdu, on 02/13/2008, -9/+30Which, when you look at the taxes spent by the Upper Fifth, means that those people are pretty much paying for the middle and lower fifths' educations. :)
  • CeeAyy, on 02/13/2008, -0/+20Where is that represented on the graph? I see more computers than internet users.
  • bjornski, on 02/13/2008, -3/+23Have you seen the difference between the schools attended by the middle class and the ones attended by the working poor?

    Same cost, ***** neighborhood, lower scores, older books.........

    Paying just as much for ***** services. I'd bitch too.
  • zeiben, on 02/13/2008, -3/+23it's a difference of 4 percentage points over the middle class. I wouldn't haul out FEMA trailers to the Hamptons just yet
  • addysonclark, on 02/13/2008, -4/+24Are they supposed to burn it?
  • inactive, on 02/13/2008, -10/+30So the rich do pay out the wazzoo for taxes... ty NYT
  • PhantomRogue, on 02/13/2008, -1/+19It was somewhat complex, the only thing I would have liked to have seen... instead of the top part in Thousands of dollars Spent on each Aspect would be a Percentage of their Total Income. That way you would get a real representation of how much each group spends on each compared to their total income...
  • zeiben, on 02/13/2008, -18/+35Curious about the 15% of americans who have internet but no computer. Boy, are they an easy sale....
  • chicagobiker, on 02/13/2008, -7/+24The poor loves themselves some God! Because if they just give the invisible man $20 every Sunday one day he'll magically transport them into the top 5th.
  • ani625, on 02/13/2008, -51/+68Am i the only one who found it rather too complex?
  • nezroy, on 02/13/2008, -1/+17Because kids go to local public schools, paid for by local property taxes. And the working poor generally can't afford to live in the areas with the nice schools. It's expensive to "commute" to a school that's not in your neighborhood, and many school districts don't allow it anyway.
  • biw314, on 02/13/2008, -5/+21I have been below the poverty level for for most of my life but have never felt poor. Our (American) standard of living is ridiculously high.
  • InferiorWang, on 02/13/2008, -1/+16area of a triangle equals base * height / 2. let b = base (a constant here) and h = height and H = 2h.
    b*H/2 = b*(2h)/2 = 2* (b*h/2).
    So a triangle with height 2 *IS* twice the area of a triangle of height 1. Stop confusing people with your fuzzy math.
  • manig, on 02/13/2008, -0/+15Scary how lower income classes are spending more than they make, by a wide margin.

    There's a similar graph in one of my econ textbooks showing aggregate income and aggregate consumption versus time (1980-2005). Starting at 1980 income outweighed consumption by a very large margin, but this gap kept shrinking into insignificance by the end of the graph.

    Just by eyeballing it one could extrapolate that the consumption line would cross over the income line at around 2006. Interesting to note that this is the same year the subprime crisis developed, where people were funding their increasing consumption using the inflated value of their homes.
  • cptshamrock, on 02/13/2008, -0/+15It makes sense to me. for most people, they pay for education via taxes. What do you go out and have a job for aside for food and shelter and raising your family. You use it to have fun.
  • ryanonfire, on 02/13/2008, -2/+16it took about a minute but i got it in the end
  • chicagobiker, on 02/13/2008, -9/+23If I was taking home $160,000 a year I don't think I'd really mind giving $23,000 back and living on the remaining $137,000.
    But if I'm only making $10,000 a year. I think I'd be a little more upset about having to give 1 of those 10 thousand back.
    Especially since it appears my 10,000 doesn't even cover half of what I need/consume whereas the $160,000 covers more than double what I need/consume.
  • ScottMitchell, on 02/13/2008, -2/+16It's a small price to pay to keep the lower class educated and fed enough so that they don't revolt. Think of taxes that go to social programs as a form of insurance.
  • Jenadae, on 02/13/2008, -0/+14Ohhhh thats where I'm going wrong! Paying for a house, transportation, health care, education, taxes, and utilities. I better just turn all those off and go live on the streets.
  • DrDigg, on 02/13/2008, -0/+14praise the lord?
  • jcounterman, on 02/13/2008, -3/+17Let's be fair. There is a portion of the lower 5th that sincerely need to have that revolving debt for the basics such as food/shelter/clothing.

    There is also a significant portion who do not know how to manage their money and drive themselves into that position. I have several members of my family in that lower fifth, and at least half of them own plasma tv's.

    This doesn't represent a broken economic system, this represents the false sense of entitlement to "things" that Americans have.
  • bjornski, on 02/13/2008, -3/+17They're the most likely to have received them, and know just how important they are, and feel it's their duty to "pass it forward".

    You know. The "Christian" thing to do. 10% = tithe.
  • dualityim, on 02/13/2008, -4/+17Spending is only one side of the coin. Saving and investment is the other. Lower income families spend a higher proportion of their income than higher income families, which lead to them saving and investing less, leaving them vulnerable to debt problems, credit crunches, and retirement problems. (Incidentally this is the reason why Mike Huckabee's so-called Fair Tax is a regressive tax).
  • scamper22, on 02/13/2008, -0/+12You can say that again.
    My family immigrated to Canada about 20 years ago. I lived what I thought was a decent middle class life. We had good housing, even managed to buy a house. We always had food on the table. We didn't even know about 1/2 the government programs that would have made life easier for us (subsidized child care...). Heck, my parents didn't even get us a library card for our first 3 years because they thought it would cost too much. Little did we know it was free.
    The only time we ever used credit is to buy house and car. That's it.

    Only a few years ago, did I find out, we were technically living in poverty all those years. Go figure.
    Since then, I tend to dismiss any poverty statistics. If you have a roof on your head, food on the table...you're not living in poverty.
    Rims, iphones, Nike, Prada, are not necessities of life.
  • samdu, on 02/13/2008, -3/+15Then they should stop using credit cards. I got rid of mine after running up a huge balance in, and right after, college. It's a pain sometimes, as some places ONLY take credit cards, but the trade-off was well worth it.
  • covertbadger, on 02/13/2008, -0/+11Admirable sentiment, but paying for everything up-front and forgoing a line of interest-free credit is a mistake. When I make a large purchase, I take the same steps as you (i.e. make sure I have the money for it), then buy it on credit anyway. That way, my money sits in a bank account earning interest for a year, which I keep. In the highly unlikely circumstance that the lender calls the loan in, the money is there, so no risk.
  • RobsPages, on 02/13/2008, -0/+11This graph came from this http://www.nytimes.com/2008/02/10/opinion/10cox.ht ... op ed piece from Sunday, Feb. 10th 2008. My one reservation about its conclusion is that it puts both the working poor and retirees in the same catagory. The working poor typically do not have the resources such as property, stock, bonds or savings accounts that the article points to in order to justify the level of spending they see. For the most part, the working poor are spending more than they earn and using credit to do it. Not revenue from property sales.
  • Sippi, on 02/13/2008, -1/+12Its called college! They do not take out student loans or get grants since they can afford it. So they pay the full amount upfront.
  • kroft, on 02/13/2008, -3/+14Actually: the poor spend money they don't have on ***** they don't need.
    Conversely: the rich spend money on stuff they need, and the rest of their alloted disposable income on ***** they don't need.

    It's called money management, folks. Don't spend money you don't have, avoid debt, retire young.
  • SpaceMonkeyZero, on 02/13/2008, -0/+11Subsidize the strippers! Just make sure they're not Unionized. I don't want to get stuck with the stripper with the most Seniority.
  • addysonclark, on 02/13/2008, -6/+17Shhhhh......
  • samdu, on 02/13/2008, -2/+12I'd imagine that the "opinion" portion of it is in the editorial about the data. Not in the data itself.
  • cvelusc, on 02/13/2008, -1/+11Reading the axis titles beforehand quickens the process of understanding the graph. Take another peak. This time start with the axis titles and then move from left to right. I think you'll then be able to understand the graph just fine.
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