Economy

Christmas Shopping for Rich and Poor

Paul Ausick

Published: December 21, 2015 1:20 pm

Last Updated: January 13, 2020 3:51 pm

It might go without saying that the richer people are, the more they spend on holiday season gifts. Is there any way to measure that objectively?

A start-up called Paribus decided to take a shot at measuring the difference between what gifts are likely to be under the Christmas tree in rich metro areas and what are likely to be under the tree in poor cities. Using a list prepared by 24/7 Wall Street of the 10 richest and 10 poorest U.S. cities, the researchers analyzed nearly a million purchases made in these cities in the three weeks following the Black Friday weekend.

The 10 richest metro areas in the United States are San Jose, Calif.; Washington, D.C.; California-Lexington Park, Md.; Bridgeport, Conn.; San Francisco, Calif.; Midland, Texas; Anchorage, Alaska; Boston, Mass.; Oxnard, Calif.; and Trenton, N.J.

The 10 poorest metro areas are Brownsville, Texas; Pine Bluff, Ark.; McAllen, Texas; Homosassa Springs, Fla.; Goldsboro, N.C.; Sebring, Fla.; Valdosta, Ga.; Sumter, S.C.; Grants Pass, Ore.; and Lake Havasu City, Ariz.

Median income in the richest metro area, San Jose, is $96,481. In Brownsville the median income is $32,093, about a third of San Jose’s median.

What did the Paribus researchers find? About what you’d expect:

Wealthy shoppers spend WAY more on luxury items. The wealthy are more likely to find expensive gift cards and electronics, like televisions and video games, under the X-mas tree.

In contrast, poorer shoppers tend to stick with essential items over the holidays. Poor shoppers are more likely to find old school gifts like toys and board games under the tree.

For example, a Monopoly board game costs about $15 at many retailers. The latest Star Wars Battlefront video game costs about $40, a discount of about a third from the regular price. The video game console needed to play the game costs around $350 ($299 on sale for the holidays).

In four specific spending areas the spending difference between rich and poor cities is stark: in rich cities spending on electronics is double (33% vs. 16%) and spending on gift cards is 12 times higher. In poor cities, spending on essentials like toiletries and food was double (40% vs. 20%) and spending on toys and games was 10 times higher.

That consumers in rich cities have more money to spend on expensive gifts should be no surprise, and the consumers in poor cities have to spend more on life’s essentials should also be no surprise. But seeing it objectively may sharpen the focus on class differences in the United States.