expenditure cascade


expenditure cascade
n.
A cascade of spending that results from consumption by the wealthy, which triggers emulative spending by the next lower class, which triggers spending by the class below that, and so on.
Example Citations:
The United States has experienced a four decade long "expenditure cascade". An expenditure cascade occurs when the rapid income growth of top earners fuels additional spending by the lower earner wannabes. The cascade begins among top earners, which encourages the middle class to spend more which, in turn, encourages the lower class to spend more. Ultimately, these expenditure cascades reduce the amount that each family saves, as there is less money available to save due to extra spending on frivolous discretionary items. Expenditure cascades are triggered by consumption. The consumption of the wealthy triggers increased spending in the class directly below them and the chain continues down to the bottom.
—Jim Quinn, " Peacock Syndrome — America's Fatal Disease: http://www.nolanchart.com/article8845-peacock-syndrome-americas-fatal-disease.html," Nolan Chart, July 24, 2011
The increase in two-earner households explains only part of it. The climb in the toil index was also driven by the easy credit that fueled the housing bubble, as well as by an expenditure cascade in housing caused by growing income disparities.
—Richard H. Thaler, " I Just Got Here, but I Know Trouble When I See It: http://www.nytimes.com/2012/01/01/business/from-6-economists-6-ways-to-face-2012-economic-view.html?pagewanted=3&scp=1sq=i%20just%20got%20here%20but%20st=cse," The New York Times, December 31, 2011
Earliest Citation:
Increased expenditures by top earners may thus launch what I call an "expenditure cascade" that results in increased expenditures even among those whose incomes have not risen.
—Robert Frank, " Are Positional Externalities Different from Other Externalities?: http://www.brookings.edu/gs/events/externalities.pdf," The Brookings Institution, June 4, 2003
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