BU432 Chapter Notes - Chapter 12: Frugality, Old Money, Affluenza
BU432
Chapter 12 – Income, Social Class, and Family Structure
Income Patterns
• An ^ in income over time in Canada because of a larger proportion of the people of working age
are participating in the labour force
• Mothers with preschool children are the fastest-growing segment of working people
• Despite the + implications of an ^ # of females in the workforce, in Canada, the female-to-male
earnings ratio (based on hourly wage) is 0.855
• Education level also predicts income
To Spend or Not to Spend: That is the Question
• Consumer demand depends on both the ability and the willingness to buy
• Discretionary income is the money available to a household over and above that required for a
comfortable standard of living
Individual Attitudes toward Money
• Non-consumers = tightwads & frivolous spenders = spendthrifts
• Frugality is driven by a pleasure of saving, as compared with tightwaddism which is driven by a
pain of paying
• Shopper groups (according to Walmart):
o Brand aspirationals: people with low incomes who are obsessed with brand names
o Value-price shoppers: those who like low prices and cannot afford much more
o Price-sensitive affluents: wealthier shoppers who love deals
• Money as a social resource – links between our need for acceptance and our feelings about cash
Consumer Confidence
• The field of behavioural economics, or eooi psholog, is oered ith the hua
side of economic decision-making
• Cosuers’ eliefs aout hat the future holds are a idiator of consumer confidence, which
reflects the extent to which people are optimistic or pessimistic about the future health of the
eoo ad ho the predit the’ll fare down the road
o Influence how much money consumers will pump into the economy when making
discretionary purchases
• The savings rate is iflueed : 1 osuers’ pessiis or optiis aout their persoal
circumstances, (2) national and world events, & (3) cultural differences in attitudes toward
saving
Social Class
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• A osuer’s stadig i soiet, or social class, is determined by a complex set of variables
that include income, family background, education, and occupation
• The place a person occupies in the social structure is an important determinant not just of how
muchmoney is spent but also how it is spent
Picking a Pecking Order
• Just as marketers try to carve society into groups for segmentation purposes, sociologists have
deeloped as to desrie eaigful diisios of soiet i ters of people’s relatie soial
and economic resources
• Mar elieed oe’s position in society was determined by their relationship to the means od
production
• Weer raked people o a diesios, soe iolig prestige or soial hoour status
groups), power (or party), or wealth and property (class)
• We use the term social class to describe the overall rank of people in a society
• We tend to marry people similar in social class to ourselves, a tendency sociologists call
homogamy or assortatie atig
• The process of social stratification refers to the creation of artificial divisios, those proesses
in a social system by which scarce and valuable resources are distributed unequally to status
positions that become more or less permanently ranked in terms of the share of valuable
resoures eah reeies
o These distinctions occur both IRL & online as the reputation economy takes shape- this
refers to the urre people ear he the post oets olie ad others
recommend their comments
Achieved vs. Ascribed Status
• Resources earned through hard work or diligent study = achieved status
• Good fortune that one is born into reflects ascribed status
• Allocations are rarely = in a social group
• Most groups exhibit a structure, or status hierarchy, in which some members are somehow
better off than others
Social Mobility
• Income inequality – the extent to which resources are distributed unevenly within a population
o Cosuers orr ore aout fallig ehid if there is a fiaial issue jo loss
• Social mobility – the passage of individuals from one social class to another
o High in Canada, low in India
• Horizontal mobility occurs when a person moves from one position to another that is roughly
equivalent in social status
• Downward mobility is movement no one wants; displaced workers
• Upward mobility must exist in society
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• The middle and upper classes reproduce less than the lower classes (differential fertility)
o Therefore, positions of higher status must be filled by those of lower statuses over time
Class Structure in Canada
• Canadians tend to maintain a somewhat stable class structure in terms of income distribution
• The ethnic & religious groups that occupy different positions within this structure change at
different times
Class Structure around the World
• China- costs are low; love of brand names – highly sensitive to social standing cues
• Japan- highly brand conscious (luxury by single working women)
• Middle East- few women work; searching for the latest Western luxury brands a major leisure
activity for those with money; family and friends come on shopping sprees; religious modesty
• The UK- England is very class-conscious; fading supremacy of inherited wealth
o Chavs- young, lower-class men and women who mix track suits with flashy brands and
accessories from big names like Burberry
• India- booming economy with big brand competition
Blurring Social Class Lines
• Marketplace changes make it harder for the casual observer to accurately place a consumer in a
certain class merely on the basis of the products he/she buys
• Affordable luxuries driven by global income distribution
• Luxury brands are slashing prices to attract more customers, while mass-market brands are
moving upscale
• BRIC- Brazil, Russia, India, China; the biggest emerging markets accounting for 25% of the
orld’s gross atioal ioe
• The mass class segment comprises the hundreds of millions of global consumers who now enjoy
a level of purchasing power that enables them to afford high-quality products- except for big-
ticket items such as university educations, housing, or luxury cars
Components of Social Class
Occupational Prestige
• The notion that some occupations are more respected and held in higher regard than others
• Hierarchies tend to be stable over time and across cultures
• A perso’s oupatio teds to e liked strogl to his or her use of leisure time, allocation of
family resources, aesthetic preferences, and political orientation
Income
• Determines buying power and market potential
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