Affluent Reveal Commitment to “Green” Lifestyle

ATLANTA, April 22 /PRNewswire/ — Evidence of “frugal fatigue” resulting from the past two years of reduced spending surfaced in a new survey by The American Affluence Research Center that shows plans for increased spending in 17 product categories by affluent and luxury consumers.

The Affluent Market Tracking Study #17, a survey of the wealthiest 10% of U.S. households, predicts slightly higher spending during the next 12 months despite their skeptical outlook for the economy and personal household income. Plans for changes in spending are well above historic lows established in the Spring 2009 survey but remain below pre-recession levels.

Consistent with the Fall 2009 survey, this new survey indicates the concepts of “new normal,” “stealth wealth,” and “luxury shame,” to the limited extent they existed, have been replaced by “frugal fatigue” among many luxury and affluent consumers.

Given the very negative rating of current business conditions by the affluent, their modest expectation of some improvement during the next 12 months is not particularly optimistic. They also show little enthusiasm for anticipated changes in the stock market and their personal household income.

Changes in spending plans for 8 major items and 17 different categories of products continued to build upon the strengthening first evident in the Fall 2009 survey, but plans remain soft compared to prior reports in this 8 year series of twice-yearly surveys. This reflects continuing caution and concern among some affluent.

About 56% believe they are doing their part to help the environment, while 30% feel they should be doing more.

A third currently own none of the 7 “green” products listed. The most commonly owned green items are compact fluorescent light bulbs (45%), low flow toilets or faucets (44%), and EnergyStar appliances (40%). Green cleaning products (27%) was the only other item owned by more than 10%.

Half of the affluent do not expect to buy any of the 7 listed green products during the next five years. The most frequently anticipated purchases are a hybrid automobile (24%) and EnergyStar appliances (22%).

The survey is based on a national sample of 525 respondents representative of the wealthiest 10% of Americans, over 11 million households that account for half of total consumer spending and a third of gross domestic product.

Survey highlights: http://affluenceresearch.org/most-recent-tracking-study/highlights-of-most-recent-survey/

Tags: Affluence Research, affluent market, luxury, luxury consumers, stealth wealth
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This is a post from The Wall Street Journal (http://online.wsj.com) where they used several of the AARC tracking studies to support their reasons for extending the Bush tax cuts.

Prozac for the Rich: The Bush Tax Cuts Should Be Extended, If Only to Avoid Withdrawal

Originally posted August 26, 2010

http://online.wsj.com/article/SB10001424052748703632304575451663295635780.html

Pity the rich. They are a fragile bunch.

Give them a sunny economic outlook and there’s no vacation home they won’t buy. Hint that the economy is in the tank and threaten a tax increase, and they’ll hoard and panic like a squirrel in an October snow.

Witness the trepidation of Blackstone Group LP co-founder Stephen Schwarzman. Asked about potential new taxes for the private-equity industry, Mr. Schwarzman lost a little perspective. A “war,” he called it. “It’s like when Hitler invaded Poland in 1939.”

Not everyone who’s affluent shares Mr. Schwarzman’s level of alarm, but the reality of our economic situation has as much to do with our psychology as it does with the raw numbers. And even the numbers point to extending the Bush tax cuts, at least until the economy is back on its feet.

Sure, there’s economic disparity. Yes, the deficit is a lingering issue. Certainly, the economic benefit of cutting taxes is debatable.

But as much as it irks our sense of fairness, the rich have the power when it comes to stimulating the economy. The affluent not only sit on a load of disposable income, they are decision makers in the corporate world. They’re the ones who have piled up cash in their companies, fearing the worst during the last three years. They’re the ones who have resisted hiring.

Did I mention the affluent are fragile?

They scare easily. Even before the financial crisis hit and the markets swooned, the richest Americans were cutting back. A survey by the American Affluence Research Center in early 2008 found that 55% of wealthy Americans, those earning more than $315,600 annually, were cutting spending.

Those results became progressively worse with each new survey the center conducted.

In its most recent poll this spring, respondents had negative ratings on business conditions and personal-income growth. A majority of respondents planned to hold spending at current levels, and one in four said they would cut spending.

Remember, the center conducted this study when economic data was at least mixed—not amid the steady parade of dire jobs, housing and trade data we’ve recently had to digest.

Tax Therapy

In many ways, the influence of the affluent is unchanged from the Great Depression. Then, “the economy was dependent on a high level of investment or a high level of consumer luxury spending or both,” wrote John Kenneth Galbraith in his book, “The Great Crash.”

“The rich cannot buy great quantities of bread,” Mr. Galbraith wrote. “If they are to dispose of what they receive it must be luxuries or by way of investments in new plants or projects.”

The stock-market crash, he argues, sent the affluent into a panic that helped fuel the depression. Mr. Galbraith wasn’t a proponent of trickle-down economics, but he acknowledged the importance of confidence among the rich and how it translates into the economy.

Though conditions may not be as dire today as they were then, they are perilously close. We are worried about a double dip, deflation and a myriad of potential terrors. But for all of these the prescription is clear: We need to get more money flowing into the economy.

Would extending the Bush tax cuts to the wealthy do that? No. But they would give the affluent one less horror about which to worry. For those of Mr. Schwarzman’s ilk, it would be akin to calling off the invasion.

Forget the debate about what economic impact the cuts had or have on the economy.

The reality is that despite the deficit, borrowing costs for the government are the lowest in history. Throwing $1 trillion at the problem during the next 10 years by eliminating the tax cuts for the wealthy is a long-term goal, but one that would be better tackled when the economy is growing. Low borrowing costs make the deficit a back-burner issue.

Stimulating private spending—or at least not curtailing it—is a short-term and necessary step. We’re talking about the fragile psyche of the affluent here.

Enacted in 2003, the tax cuts may have been Prozac for a sufferer who merely had a bad day. Seven years later, they’ve become dependent on them. Given the way things are, there couldn’t be a worse time for the patients to go off their meds.

Write to David Weidner at david.weidner@dowjones.com

Tags: Affluence Research, luxury, Spending
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A pointed question from the audience said that probability sampling was the theoretical basis for the projectability of survey research and asked what the scientific underpinnings were for assuming that Internet research was similarly representative.  Melanie [the presenter] answered that replicability is emerging as the standard instead of randomization and that the results from her research were replicable.

A new study led by Stanford University researchers raises doubts about the accuracy of one of the most common forms of survey research, polls done among people who sign up to fill in questionnaires via the internet in exchange for cash and gifts.

In the most extensive such analysis to date, David Yeager and Prof. Jon Krosnick compared seven non-random internet surveys with two surveys based instead on random or so-called probability samples. The non-probability internet surveys were less accurate, and customary adjustments did not uniformly improve them.

While the random-sample surveys were “consistently highly accurate,” the internet surveys based on self-selected or “opt-in” panels “were always less accurate, on average, than probability sample surveys, and were less consistent in their level of accuracy,” the researchers said. Further, they said, adjusting these samples to known population values had no effect on accuracy (and in one case even worsened it) as often as that process, known as weighting, improved it.

Tags: Affluence Research, survey of the affluent, survey of the wealthy
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