Household Consumption of Financial Instruments and Wealth Inequality

• In Event: 545 - Section on Sociology of Culture Roundtable Session.
  In Refereed Roundtable: Section on Sociology of Culture Roundtables. Table 01. Consumer Studies Network

Abstract

Since the 1970s, American households dramatically increased consumption of financial products and services. During the same period, inequality in the United States skyrocketed, reaching levels not seen since the Great Depression. Trends in wealth inequality are especially alarming given extreme disparities in wealth holdings, rare upward wealth mobility, and profound importance of wealth for well-being. Dramatic increases in household consumption of financial instruments and rising inequality appear as two of the most profound economic developments of the past decades. The coincidence of these two trends suggests a causal relationship between household financial consumption and inequality. By its nature, consumption of financial instruments implies potentially profound consequences for wealth accumulation and ultimately wealth inequality. However, there is limited discussion linking these two processes. Therefore, this study examines the role of household financial consumption in wealth accumulation in the era of mass-participatory finance and growing inequality. Using the Survey of Consumer Finances, I show that consumption of a wide range of financial instruments cohere in meaningful patterns that reflect distinctive consumption styles; examine how styles of financial consumption vary by social location; and explore how socioeconomic differences in financial consumption contribute to the (re)production of (dis)advantage through wealth accumulation. Together, the results point to the importance of household consumption of financial instruments for wealth accumulation as a mechanism of inequality endurance in the era of financialization.

Author

• Angelina Grigoryeva, Princeton University