American Psychology of Affluence Is Breaking Down

Article excerpt

The incomes of most American households have failed to gain ground on inflation since 1973. That much-repeated economic statistic is now common wisdom. What's just now coming to light is the impact that so many years of stagnant incomes is finally having on the American psyche. Broadly speaking, the old psychology of affluence _ the confidence that homeownership and high levels of consumer spending are birthrights _ is breaking down, social scientists and pollsters say. Materialism endures; young Americans still value the good life. But they pick their purchases to simulate affluence, not achieve it. Thus, purchasing a BMW or an Armani suit might be out of reach, but not other stylish clothing or compact disk players or elegant food, and that is where the money is going. "Consumers are learning to make lesser purchases and they are accepting the view that they cannot have it all," said Watts Wacker, executive vice president of Yankelovich Clancy Shulman, a market research company. "They seek control over their spending." The fallout from stagnant incomes came up repeatedly last week at an annual conference in New York sponsored by American Demographics, an organization tat explores American attitudes and behavior to help companies market their products. The impact is particularly noticeable in the under-30 generation, where stress and compromising personal goals are now commonplace, Wacker and other speakers said. The Roper Organization, for example, finds that the under-30 population increasingly wants to own homes and have children. But without the wherewithal, marriage and homeownership are postponed. Similarly, college students are more willing than the baby boomers were in the late 1970s to become involved in social causes. But despite their activism, young people more than ever seek jobs that pay well, while the baby boomers at the same age preferred work that interested them. "This is not greed, but simply a desire to deal with a cruel world and to seek a sense of self-sufficiency that earlier generations took for granted," said Bickley Townsend, a Roper vice president. The stagnant income problem also shows up as pent-up demand that remains pent up. In the past, as the American economy came out of recessions and jobs multiplied, restoring incomes, people no longer postponed the purchase of cars and homes, and sales rose sharply. But in the recovery now apparently getting under way, car and home sales are muted, in part because even jobholders often find these major purchases unaffordable. …