On Income, Race, and Consumer Behavior

Economists & sociologists are in general agreement that the consumer behavior of blacks differs from that of whites. However, there is not consensus as to the cause of this difference. Applying X2 analysis to Chicago Tribune data, L. P. Feldman & A. D. Star found that "...for the sample as a whole, there are statistically significant differences between whites & negroes" with respect to 11 aspects of nonfood shopping behavior. ("Racial Factors in Shopping Behavior," in A NEW MEASURE OF RESPONSIBILITY, Keith Cox & Ben M. Enis, Ed's, Chicago, Ill: American Marketing Assoc, Jun, 1968, 216-226). However, Feldman & Star found that "this substantial difference tends to disappear when income is considered," & thus they concluded that the differences in the consumer behavior of blacks & whites are a by-product of SE factors & not race per se. This conclusion is valid if one accepts the absolute income hypothesis--the notion that the fraction of current income a household devotes to consumption is determined by the absolute level of that income. If, however, one subscribes to a different consumption-income hypothesis, namely the relative income hypothesis, the conclusion does not stand. The relative income hypothesis emphasized the imitative aspect of consumer behavior, & its basic tenet is that the fraction of a family's income devoted to consumption depends on the level of its income relative to the income of the peer group with which it identifies. If the Tribune data are arranged according to relative & not absolute terms, it is again possible to compare the consumer behavior of blacks & whites by employing the same statistical procedure Feldman & Star used. The results of this comparison reveal that black-white differences do not tend to vanish as relative income changes, thereby implying that such differences are a by-product of cultural factors & not relative to SES. 2 Tables. AA.