The shopping thing

Jingle Bells…jingle profits. The U.S. retail establishment is happily tallying its take from the Christmas sales boom, during which increasingly affluent customers had plenty of jingle in their pockets to spread around.

Quite a contrast to the CNMI, eh? Half the time I head for the store I don’t know if it will still be in business by the time I get there. Heck, half the time I don’t even know if I’LL be in business by the time I get there.

But in the states the shoppers rushed home with their treasures (as the song goes) and Santa Claus had to work overtime. It’s no wonder that shopping has been called America’s favorite past time. Actually, television is America’s favorite past time, but shopping would rank as a solid second-favorite past time.

Well, for most Americans, that is.

But not for me. The fact is: I HATE shopping.

Some merchants have figured that out, though, and it’s now possible to shop without setting foot in a store. Amazon.com is a good example. Christmas shopping this year was a snap, since with a few mouse clicks I could have Amazon e-mail out gift certificates. I always thought gift certificates were a sleazy holiday cop-out, but
Amazon made it so easy that I couldn’t resist.

But many, if not most, Americans are recreational shoppers. A lot of people actually enjoy the process. I can’t, for the life of me, imagine a worse way to spend my time than wandering around a store lusting after “stuff.” How much “stuff” do we really need? It seems to me that the more stuff we have, the more effort and worry we put into keeping it and maintaining it, and eventually our stuff owns us more than we own it.

To steal a phrase from the fictional hero Travis McGee: “I am not sufficiently acquisitive.”

As you may have guessed, economists are keenly interested in just how “acquisitive” folks tend to be. Most consumer spending is characterized as “consumption,” and the amount of money people spend as a percentage of their income is known as the average propensity to consume.

Which is simple enough. Consider, further, what happens if somebody gets a raise. How much of this extra cash will be consumed, and how much will be saved? The amount consumed (as a percentage of the change in income) is known as the incremental, or “marginal,” propensity to consume.

As you might suspect, the marginal propensity to consume, as well as the average, often falls as someone earns more and more money. Looking at this same fact backwards, the more you earn, the higher the percentage of your earnings can be devoted to savings (as opposed to consumption).

One exercise in family budgeting can be to calculate and track your average and marginal propensities to consume as your income changes from year to year. Maybe you’re not doing it, but plenty of economists are doing it for you, and based on your age, income, and other such data they could give you a pretty good guess about how much you spend and how much you save.

Ah, the great American shopping frenzy. They’re making a lot, spending a lot, and they spread a lot of holiday cheer. Meanwhile, the CNMI merely waits for an economic Santa Claus to rescue it from its economic folly. We must have a high marginal propensity to screw things up.