Look at some graphs of how families in different countries around the world spend their money and a few things stand out:
Two big ideas for the road: Houses and food. Everybody needs somewhere to live and something to eat. But you can learn a lot about a country by looking at housing and food spending. Here’s how the U.S., where middle-class families spend about a third of their income on housing, compare to the developing economies in this survey…
I don’t want to push this point too far, because these sort of surveys have obvious limitations. Tremendous income inequality in developing countries with hundreds of millions of people makes it impossible to tell the story of the frothy middle class *in one graph.* But the bigger picture is clear and uncontroversial. When families earn more income, they can afford to eat more and buy more clothes, but the real shift is from those essentials to bigger better houses, education, and health care.
Interesting. However, I wonder much of this differs by country based on political, economic, and cultural values. Clearly, items like food are necessary for survival. But once citizens reach a certain income threshold, I assume there are differences across countries in how they spend this more discretionary income. For example, in the United States, transportation is a relatively high cost because of a reliance on automobiles. Similarly, people in the US might spend relatively less on food but how much of this is due to policies that help keep food prices low? More broadly, don’t government policies affect whether people have to spend more in certain categories; for example, they might spend less out of their income for health care but if that is due to paying higher taxes which cover more health care costs, then such figures of discretionary spending might be misleading.
Perhaps this situation is ripe for a cross-cultural experiment. Go to different countries and give people a scenario: suppose you are given a decent sum of money (might differ by country) and then ask how people would spend that money. What emerges as a common need or want?