The Heterogeneity of Consumer Behavior: Analyzing Entertainment Expenditures in Relation to Lifecycles, Business Cycles and Demographic Influences

Kivonat, rövid leírás

The current study moves beyond traditional assumptions of homogeneous consumer behavior to investigate the diverse factors that shape consumer choices. The dissertation specifically focuses on entertainment expenditures, a significant, but often underemphasized, component of household spending to demonstrate how consumers behave in relation to this discretionary spending category. The research employs a multifaceted approach, using quarterly household-level data from the U.S. Consumer Expenditure Survey (CEX) to explore how entertainment spending patterns differ across various income levels, lifecycle stages, and macroeconomic conditions and how these differences change through time. The first empirical part analyzes the income elasticity of entertainment expenditure during business cycles, particularly focusing on the impact of the Great Recession and comparing low- and high-income US households. Using panel regression models with household and time fixed effects for years 2005-2010, the findings reveal heterogeneous responses across income groups. Low-income households exhibit substantially lower income elasticity, which remains unchanged even during economic downturns, suggesting that entertainment may function more as a necessity for than a luxury. In contrast, high-income groups adjust their entertainment consumption more readily during recessions. Additionally, the time series analysis of this empirical part indicates a widening gap in the level of entertainment spending between the bottom and top income quintiles over the period of 1996 to 2019. The second empirical part broadens the scope to explore entertainment expenditure through a lifecycle perspective, employing a pseudo-panel methodology with CEX data (2000-2010) using synthetic cohorts. This section connects to the Life-Cycle Hypothesis while highlighting the significant role of demographic factors—such as age, marital status, and the presence of children—in shaping expenditure patterns throughout the lifecycle. This cohort-level analysis suggests that the positive effect of income on entertainment expenditure can be even stronger during recessionary periods, observed across total entertainment and Televisions, Radios, and Sound Equipment spending category, implying the occurrence of the lipstick effect. Beside the significant effect of demographic variables, such as marital status, urban residency and having children, seasonal variations in entertainment spending are also observed. Collectively, these findings show the importance of disaggregated consumption analysis to demonstrate heterogeneous consumer behavior. The dissertation presents empirical evidence that considering business cycles, lifecycle stages, and demographic characteristics is crucial for a comprehensive understanding of consumer behavior and consumption inequality, showing the heterogeneity of consumption behavior. The results of the dissertation might also be useful for more effective policymaking and business strategies in the analyzed sector.