Keeping up with the Joneses: Inequality, Indebtedness, and the Middle Class Struggle to Maintain Their Lifestyle

• In Event: 384 - Section on Economic Sociology Paper Session. Social Economies of Households

Abstract

Sociologists have conceptualized lifestyles as structured hierarchically where those in a lower group seek to emulate those higher up. Growing income inequality in the U.S. has meant that as those at the top are able bid up the price of valued goods like housing and access to good schools, those in lower groups have struggled to maintain their positions. We examine this process in the context of the U.S. housing market from 1999-2007. Through an analysis of residential moves, we show that upper-middle income households (71-90% in the income distribution) who were competing with those at the top tended to relocate to more expensive zip codes and move to larger houses in order to keep up with those with more income. Those in the bottom 40% of the income distribution found it difficult to compete and tended not to buy houses. When they did, rising prices pushed them to increase their share of expenditure on housing and their mortgage debt-to-income ratio even when they did not upgrade size or neighborhood. Those in the middle (41-70%) were stretched thin but kept up. Households who had children were particularly willing to heighten their housing expenditure share and indebtedness. This evidence implies differential success in maintaining their lifestyles for various parts of the income distribution. There is not just a middle class squeeze, but a real decline for the bottom 40% and difficult times for even those close to the top.

Authors

• Neil Fligstein, University of California

• Orestes 'Pat' Hastings, University of California-Berkeley

• Adam Goldstein, Harvard University