What are the biggest differences between what the rich and poor spend money on? (And what can that teach us?)

I saw this article the other day and I was interested; here’s why. I grew up in the 10128 zip code — one of America’s richest — then ended up teaching elementary school in 77013 — one of America’s poorest. When I went on play-dates as a kid, other families often had huge TVs and entertainment systems; when I did home visits with struggling students, those families often had huge TVs and entertainment systems. One family in 77013 (Northeast Houston, if you’re wondering) had a boat in the yard on blocks. Houston is, essentially, landlocked. I always found the similarities between rich white New York City and poor Hispanic Houston in terms of creature comforts to be interesting.

In reality, here’s the chart of note about what “the top 20 percent” (i.e. the rich) and “the bottom 20 percent” (i.e. the poor) actually spend money on, using gaps to compare the differences:


Realize this first: at basically every income level, we spend half our money on where we live + getting around; the difference is that less than 40 percent of the bottom quintile has a home, whereas about 90 percent of the top quintile does. That gap causes the top quintile to spend $21,000 more a year, which is substantial when you consider that an average family in the bottom quintile only spends about $22,000 a year in total. The health care gap is troubling too, as is the fact that entertainment/apparel are fairly close (apparel is almost dead even). That kinda goes to my point in the first paragraph.

Perhaps the most troubling thing is that the largest percentage increase in spending for the top quintile from 1984 to 2012 was … education. This goes back to the point that people often think education is a great equalizer, but in reality it may be doing more — at the high levels — to further the divide than anything else.

The third biggest change for the bottom quintile from ’84 to ’12 was … fruits and vegetables. That’s good. Problem is, the top two were “rent” and “health care,” both by a large margin. That’s not good.

These graphs don’t go as far as showing the complete dissolution of American society or anything, but they are a little bit telling about what’s happening at the poles (not the extreme poles, as the top 1 percent is a wholly different animal than even the top quintile).

Ted Bauer