Posted on 07/26/2008 10:42:41 AM PDT by shrinkermd
About seven years ago, University of Chicago economists Kerwin Kofi Charles and Erik Hurst were researching the “wealth gap” between black and white Americans when they noticed something striking. African Americans not only had less wealth than whites with similar incomes, they also had significantly more of their assets tied up in cars. The statistic fit a stereotype reinforced by countless bling-filled hip-hop videos: that African Americans spend a lot on cars, clothes, and jewelry—highly visible goods that tell the world the owner has money.
But do they really? And, if so, why?
The two economists, along with Nikolai Roussanov of the University of Pennsylvania, have now attacked those questions. What they found not only provides insight into the economic differences between racial groups, it challenges common assumptions about luxury. Conspicuous consumption, this research suggests, is not an unambiguous signal of personal affluence. It’s a sign of belonging to a relatively poor group. Visible luxury thus serves less to establish the owner’s positive status as affluent than to fend off the negative perception that the owner is poor. The richer a society or peer group, the less important visible spending becomes.
On race, the folk wisdom turns out to be true. An African American family with the same income, family size, and other demographics as a white family will spend about 25 percent more of its income on jewelry, cars, personal care, and apparel. For the average black family, making about $40,000 a year, that amounts to $1,900 more a year than for a comparable white family. To make up the difference, African Americans spend much less on education, health care, entertainment, and home furnishings. (The same is true of Latinos.)
(Excerpt) Read more at theatlantic.com ...
Perhaps Bill Cosby could include,as part of his admirable "campaign",words about how nice it feels to have money "in the bank".But would this cause the cries of "Oreo" to get louder?
More time to do what I want, etc.
Love my old car, 233,000 and looking forward to 200,000 more, maybe more.
This gov/ecomo-me-mine is nuts, I'm not playin' wit'them no more.
I took my balls and went home!
It’s funny that it took “research” to establish what many of us have known all our lives-that conspicuous consumption, especially that geared towards labels and flashy name-brands, is more likely an indicator of someone attempting to project an image of being wealthy, than of someone who actually has wealth (this doesn’t count when you get into the highest reaches, because at least amongst the nouveau riche, they can afford to display labels-ie Paris Hilton-and still be wealthy. Even if it is still tacky). But amongst, say, upper-middle-class types, they wouldn’t have their wealth if they spent it all on trying to *look* rich. Rather, they invest their money, probably back into their business.
There used to be a very politically incorrect name for this kind of display, with no real money or security behind it.
Just drive along any MLK blvd and see rows of shantys but gold rims on their cars and a dry cleaner on every corner.
That’s how my husband and I feel. We do everything (legal!) that we can to stay “off the grid”. The more simply you live, the better you can do that. Because the government has a million ways to stick their noses into your life, if you give them an opening.
To me, it's a way of punishing them for going away from who "we" are.
I can only teach them by example . ., someone famous once said that (Tongue firmly in cheek).
It very well may be about not proving anything but it’s equally about enjoying your life. If you work hard and save, you shouldn’t deny yourself enjoyment that the finer things in life can provide. If only I had a million dollars, I know exactly how I would live.
Alternatively, there’s nothing more fake than putting yourself deep in debt to get the goodies early.
Oh well. I'm basically a happy person with a wonderful wife. It's enough for me.
FMCDH(BITS)
The saddest thing I ever saw in terms of “puttin’ on airs” with cars was a Ford Taurus with Mercedes-Benz three-pointed stars on the hood, trunk, and hubcaps. It was obviously a Ford Taurus, so no-one was being fooled.
It was being driven by a white guy, too (this was in Phoenix about 20 years ago).
There’s nothing wrong with driving a Taurus. If you have to have a Mercedes, go buy one! They are affordable used.
Cedric the Entertainer...”credit means get it.”
As we watched homes that were smaller than ours being built and sold for three and four times what we paid ($400K - $600K vs $160K) we saw that when minorities moved in then brand new MB’s, Lexus’, BMW's and such parked in the driveways and then delivery trucks would be seen unloading new furniture and stuff. All this while the non-minority homes would mostly have older or smaller cars and minivans and no delivery trucks arriving.
I told my wife to take note of this as almost every home with the new, expensive toys started getting For Sale signs in the yards starting at about the two year point and I found out many were being foreclosed.
We are grateful that we have lived our entire time here using no credit cards and pay cash for everything including our vehicles. We got our home for a song compared to now since we deliberately moved to a rural location and keep our bills to just our utilities. We are very happy too and even our children shake their heads at the people who spend huge sums on clothes and cars.
A car is one of the worst investments a person can make. Most depreciate thousands of dollars in value as soon as you drive them off the dealership’s lot. I always buy cars that are between two and five years old and in excellent condition. A car doesn’t have to be brand new to be a safe,dependable and nice looking form of transportation.
Hyundais are high quality cars at better prices than Toyota or Honda. But they are for people that intend to keep them for 5 years because the depreciation is upfront, so to speak. Since I keep my cars a long time, I have 2 Sonatas that cost me a lot less than a comparable Honda. So what if it’s worth less after 3 years. I’m keeping it (both) for the full 10 year warranty.
Even smarter, my daughter bought an 06 Sonata with 12K on it. Great price since the first owner paid for the depreciation. And it looked and smelled brand new & had 48K miles left on bumper to bumper warranty.
Cars are not investments, they are money pits.
My Dad,who grew up in the Irish ghetto in South Boston (aka: "Southie")during the Depression,rose to the top levels of a multi billion dollar,mult-national corporation.As this happened,he denied his kids and my Mom *nothing*.We kids never knew how successful our Dad was until toward the end of his life (and we were well into adulthood) so we didn't expect fancy stuff and I,for one,am grateful for that.But when it came to his own needs...throughout his life...he lived well below his means.He never drove anything fancier than a Buick and he never owned anything but Timex watches.Yes,he had several *very* nice suits (essential for his work) and he had a boat (his one real indulgence) but other than that....decidedly middle class in attitude.
The car I drive is fairly new.It's far from being among the cheapest ones available.And it doesn't have a lot of miles on it.My condo is nice,sturdy,roomy enough,and is located in a desirable town.But my car,my clothes,my home,my jewelry,etc are not to be mistaken for Salvation Army and aren't what you'd see the typical physician owning....and they're good enough for me.
Your mileage may vary.
.....Cars are not investments....
unless they’re hondas.
Having grown up dirt poor (you cannot imagine), I live within my means. But I do enjoy life. The accumulation of money or things has never been big with me. Now, the accumulation of experiences is a whole other deal. I never miss a chance to experience something new. Sometimes it is costly. Sometimes it is free. But the currency spent is not apparent in the way I dress, talk or walk. It may or may not be apparent in the way I think and perceive. I'll take it all to my grave. Selfish, eh?
Not having grown up poor...or having seen "poor" anywhere but on TV....I'm not sure that my attitude wouldn't be like yours had I grown up poor.Although I didn't read this entire piece carefully,I wonder if this might have been the basic point (or part of the basic point) of the piece.....that human nature causes one whose earliest experiences were connected to deprivation to have a "I must experience it all" or "I must announce that I've arrived" attitude with whatever money they earn in adulthood.
Wealth isn’t the only variable. It’s also environment. The corporate guy earning $150,000 a year will have a significantly different lifestyle and values than the owner of a chain of small grocery stores earning an equal amount.
Likewise, the millionaire living in a small rural community will have a different lifestyle than the millionaire living in the big city.
I’ll grant you they have good resale value, my brother has a 95 Accord that has an impressive Blue Book value. OTOH he pad a premium for it when he bought it. I think in the end, he’s not really any better off than I with my Sonata. In theory, I could put the $7K I did not spend on my Hyunda into a mutual fund and 10 years later (when my Hyundai has bottomed out in value) I’ll bet I have more money than the comparable Honda is worth in resale value.
In any case, in my mind, anything that goes down in value is not an investment.
If it is your money and you worked hard to earn it then you should spend it as you see fit. That said, a wise fellow once said this, “A penny saved is a penny earned”.
.” That’s why a diamond-crusted Rolex screams “nouveau riche.”
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
My response to this whole article is “DUH”! Uneducated “Rednecks” down south used to say the whole thing in two words,”Chigger Rich”. No, wait, that wasn’t it, how did that go now?
You are correct about the investment part but I couldn’t resist poking you with a Honda stick. :)
My next door neighbor has a metallic blue Ford Mustang coupe that he keeps in the garage. Every once in a while he pulls it out, washes it and drives it a little. It must be an investment.
Sorry, that has not been my experience. Those that were raised without, and gain a modest fortune through WORK, rarely show it. Those that are handed a fortune however, love to show it.
How about Rush Limbaugh? Two weeks ago the NYT ran an 8000 word piece on him. He has a number of luxury cars and the one he gave a ride to the reporter cost $450,000. His airplane costs 50 million and his living compound has multiple dwellings.
Rush was born wealthy. His family owned radio stations.
Almost no cars are “investments”. They are depreciating assets and should be viewed as such. It’s an important distinction.
I have a similar car buying model. Do almost all of my own maintenance as well.
I think he plays that up. He’s from a very prominent Missouri family — judges, lawyers, movers and shakers etc.
I’d add that he’s one of the last of the “radio nerds.” Like David Letterman, he seems obsessed with the medium and broadcasting.
This used to be very common. Today, not so much.
I spend money on things that make me happy-for instance, my collection of rare vintage perfume-but people other than my family would never know about it. It’s a matter of something that is for my own personal satisfaction, not things to impress “the public” who could really could care less anyway. Not ostentatious labels for display, but private, personal satisfaction. (Not saying that’s what you meant. Just saying, that I will spend money on something that makes me happy, but not on status labels that are “here today gone tomorrow” just to impress people that I don’t even know, who don’t know me. That’s a sucker’s game).
I'm on my second Toyota Corolla, but it will probably be my last. My first was a 1990, and I kept it for 10 years and 197,000 miles. It hit a "perfect storm" of maintenance that would have required about $5000 in repairs (new tires, new front end and suspension components, new exhaust, major tune-up & timing belt, new clutch, etc), though it was still in terrific shape, got 34mpg, and only burned about 1/2 a quart of oil every 3000 miles. So, in 2000, I bought a new one, and I've still got it: 158,000 miles so far, and it's running quite nicely. But for my 1990 Corolla, I paid $9,600. For my 2000, IIRC, it was $13,000. Basically, Toyota has priced it out of my reach. I supposed I could "afford" to pay the $16,000 or more that a Corolla will probably cost in 2010 (I have no intention of buying another car before that), but I refuse to do so.
I'm going to give a VERY serious look at the Hyundai.
Mark
IMO, you’d be much better off finding a nice used Honda........than buying a Hyundai
We bought a Hyundai Entourage last summer and I love it! We scraped and saved until we could pay cash. The dealership made a few mistakes in ordering parts to make a cosmetic change for us, and they gave us a free 10 year “We’ll take care of everything!” Makes it even nicer!!
I said "modest fortune through WORK", not billionaire. No offense to rush, but I doubt he has ever broken a sweat since his sports days.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.