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Chapter 12

ADM 3321 Chapter Notes - Chapter 12: Disposable And Discretionary Income, Ascribed Status, Pickup Truck


Department
Administration
Course Code
ADM 3321
Professor
Michael Mulvey
Chapter
12

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Chapter 12
Income, Social Class, and Family Structure
IT’S NOT JUST MONEY
Income Patterns
Women’s Work
Yes, It Pays to Go to School
!Employment prospects increase with educational attainment.
To Spend or Not to Spend: That Is the Question
!Consumer demand for goods and services depends on both the
ability to buy and the willingness to buy.
!Discretionary income is the money available to a household over
and above that required for a comfortable standard living.
!As the population ages and income levels rise, the typical household
changes the way it spends its money.
!Individual Attitudes Toward Money
o!There are two types of frugal consumers:
!!Spendthrifts: who spend cautiously because they
enjoy saving money.
!!Tightwads: for whom spending money is an
unpleasant experience.
o!Many companies are incorporating consumer attitudes toward
money into their retailing practices in a practical way.
o!Clearly, money has many complex psychological meanings; it
can be equated with success or failure, social acceptability,
security, love, freedom, and yes, even sex appeal.
o!Canadian attitude towards money: those with more money
generally report higher levels of happiness than those with
less money.
o!However, it is not money per se or the buying power that
money supports that Canadians value, but the freedom (i.e.
personal autonomy) that money affords.
Consumer Confidence
!Behavioural economics (economic psychology) is concerned with
the “human” side of economic decisions.
!This discipline studies how consumers’ motives and their
expectations about the future affect current spending, and how

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these individual decisions add up to affect a society’s economic
well-being.
!Consumers’ beliefs about what the future holds are an indicator of
consumer confidence, which reflects the extent to which people
are optimistic or pessimistic about the future health of the economy
and how they predict they’ll fare down the road.
! These beliefs influence how much money consumers will pump into
economy when making discretionary purchases.
!When people are pessimistic about their prospects and about the
state of the economy, they tend to cut back their spending and take
on less debt.
!On the other hand, when they are optimistic about the future, they
tend to reduce the amount they save, take on more debt, and buy
discretionary items.
!Thus the overall savings rate is influenced by:
o!1. Consumers’ pessimism or optimism about their personal
circumstances.
o!2. National and world events.
o!3. Cultural differences in attitudes toward saving.
SOCIAL CLASS
!A consumer’s standing in society, or social class, is determined by
a complex set of variables that include income, family background,
education, and occupation.
!The place a person occupies in the social structure is an imp
determinant not just of how much money is spent but also how it is
spent.
Picking a Pecking Order
!People develop pecking order, in that they are ranked in terms of
their relative standing in society.
!This standing determines their access to resources such as
education, housing, and consumer goods.
!This desire to improve our lot in life, and often to let others know
we have done so, is at the core of many marketing strategies.
!Some of the social divisions involve political power, whereas others
revolve around purely economic distinctions.
!Karl Marx felt that position in a society was determined by a
person’s relationship to the means of production.
!The “haves” control resources use the labour of others to preserve
their privileged positions.

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!The “have nots” depend on their own labour for survival, so these
people have the most to gain by changing the system.
!The German sociologist Max Weber showed that the ranking people
develop are not 1-D; some rankings involve prestige or “social
honour” (status groups), some focus on power (party), and some
revolve around wealth and property (class).
!We use the term social class more generally to describe the overall
rank of people in a society.
!People who belong to the same social class have approximately
equal social standing in the community.
!We tend to marry people similar in social class to ourselves, a
tendency sociologists call homogamy or “assortative mating”.
!Social class is as much a state of being as it is of having.
!In virtually every context, some people rank higher than others.
!Patterns of social arrangements evolve whereby some members get
more resources than others by virtue of their relative standing,
power, or control in the group.
!The process of social stratification refers to this creation of
artificial division, “those processes in a social system by which
scarce and valuable resources are distributed unequally to status
positions that become more or less permanently ranked in terms of
the share of valuable resources each receives.”
!We see these distinctions both in real life and online as reputation
economy takes shape.
!Achieved Versus Ascribed Status
o!Some resources may have gone to people who earned them
through hard work or diligent study or achieved status.
o!Good fortune that one is born into reflects ascribed status.
o!Most groups exhibit a structure, or status hierarchy, in
which some members are somehow better off than others.
o!They may have more authority or power, or other members
simply like or respect them.
Social Mobility
!Social mobility refers to the passage of individuals from one social
class to another.
!Horizontal mobility occurs when a person moves from one
position to another that is roughly equivalent in social status; e.g. a
nurse becomes an elementary school teacher.
!Downward mobility is movement none of us wants, but
unfortunately we observe this pattern when displaced workers are
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