Consumption Patterns in the Aftermath of the Financial Crisis: The Case of Baby Boomers

Abstract

This study examines the consumption decisions of baby boomers (40 - 64 year-old age cohort) with $75,000 - $140,000 in household income in the immediate aftermath of the financial crisis of 2007-2008 using the Consumer Expenditure Survey data of Bureau of Labor Statistics in 2009. Increasing unemployment and foreclosures of primary homes led to variability of income, which became a major consideration in evaluating consumption choices. In addition, we draw on Weberian social class theory to identify social influence on consumption decisions. Gender differences in processing information pertaining to new product purchases provided yet another means of stratifying the sample. By juxtaposing economic variables on social identification and gender-based preferences, this study sets forth the explanatory variables underlying eight separate product purchase decisions. Principal findings included Variability of Income and Risk of Foreclosure determined the Rent or Buy a home decision. The predictor of Expenditure on New Cars included the Cost of a New Car. For Expenditure on Used Cars, Deviation from New Car Buyers and Cost of a Used Car were the relevant predictors. For Lunch Brought from Home to the workplace, Lunch Consumed at Restaurants and Conformity to Own Referent Group were the most important explanatory variables. For Lunch Consumed at Restaurants, Lunch at Home and Socialization Opportunities explained the criterion. Conformity to the Referent Group explained Expenditure on Vacations, Furniture and Appliances and Small Appliances.