The effect of ethnicity on selected household expenditures

The Effect of Ethnicity on Selected Household Expenditures

JANET WAGNER* University of Maryland HORACIO SOBERON-FERRER University of Maryland

A subsample of expenditure data, collected from 3,481 households as part of the 1980-1981 Consumer Expenditure Survey, was used to analyze the effect of ethnicity on expenditures for clothing, food at home, and food away from home. Previous research has been criticized for failing to control for the effects of income and other socioeconomic and demographic variables on the behavior of ethnic consumers. The results of a multiple regression analysis in which the effects of those variables were controlled demonstrated that Hispanics spend more than other households on food at home, while Afro-Americans spend more on clothing and less on food away from home.

Consumer economists have studied the effects of income and a host of other socioeconomic and demographic characteristics on household expenditures for a wide range of goods and services. One demographic factor which has been ne- glected, however, is ethnicity. There are two explanations for this. First, the effect of ethnicity on household behavior did not emerge as an important research issue until the Civil Rights movement of the 1960s and the explosive growth of the Hispanic population during the 1970s. Second, expenditure data classified by ethnicity have only recently became available. Such data are now being collected on a continuing basis by the Bureau of Labor Statistics (B.L.S.), as part of the Consumer Expenditure Survey (CE). Information on the effect of ethnicity on expenditures is important to marketing practitioners in planning strategies to better meet the needs of ethnic consumers, and to economists in developing the economic theory of consumer behavior.

*Direct all correspondence to Janet Wagner, Department of Textiles and Consumer Economics, 2100 Marie Mount Hall, University of Maryland, College Park, Maryland 20742. Telephone 301-454-6486

The Social Science Journal, Volume 27, Number 2, pages 181-198. Copyright © 1990 by JA! Press Inc. All rights of reproduction in any form reserved. ISSN: 0035-7634.

182 THE SOCIAL SCIENCE JOURNAL Vol. 27/No. 2/1990

The marketing establishment has taken the lead in studying the expenditures of ethnic consumers at the individual product and brand levels. The effect of ethnicity on expenditures in broad categories of goods and services is, however, of more interest to economists. Previous research has been criticized for failing to control for the effects of socioeconomic and demographic variables on the behavior of ethnic consumers. Consequently, effects attributed to ethnicity may actually have been related to income, education, or other household characteristics. In this research, the effect of ethnicity on household expenditures in three broad categories of goods---clothing, food consumed at home, and food consumed away from home, was analyzed. The effects of socioeconomic and demographic variables on expenditures were controlled by including them in the estimating equation.

ETHNICITY

Most societies are pluralistic, consisting of segmented social groups with identifia- ble characteristics.' Among the largest of these are ethnic groups, which are salient because they are often associated with sets of symbols. 2 Many of these symbols include goods, such as clothing and food, which are consumed by the household?

In the United States, the two largest ethnic groups are Afro-Americans and Hispanics? Although there is an extensive body of marketing research on the attitudes and opinions of Hispanic consumers, there has been little or no economic research on their expenditure patterns. Research on the behavior of black consumers has been extensive in both marketing and economics. However, much of that research has been criticized for ignoring the effects of socioeconomic and demographic variables, including Afro-American ethnicity, on behavior?

Definitions of ethnicity fall into two categories--objective and subjective. Objec- tive definitions are based on phenotypical or cultural characteristics, while subjective definitions are based on self-identification.

Objective definitions of ethnicity have two major problems which lead many scholars to favor a subjective approach. First, the relationship between ethnicity and race is not clear. Some scholars argue that ethnic and racial groups should be treated as separate entities because differences in income are greater among racial groups than among ethnic groups. 6 Others argue that race and ethnicity are related. Baldave Singh, for example, defines a racial group as a collection of individuals with similar phenotypical characteristics, and an ethnic group as a collection of individuals who not only have similar phenotypical characteristics, but also identify with a distinct culture. 7

The relationship between race and ethnicity may vary by ethnic group. In the case of Afro-Americans, the phenotypical characteristics associated with race are thought to be an essential component of ethnic identity. ~ Scholars agree that ethnic identity is learned as a result of the American experience. 9 Therefore, many black Americans identify themselves as Afro-American because they not only are of the same race, but also share the heritage of American slavery.'° According to Marjorie Weiser, blacks are often assigned to a single ethnic group simply by reason of their racial characteristics."

The Effect of Ethnicity on Selected Household Expenditures 183

Hispanics are diverse in terms of both race and national origin. According to the U.S. Bureau of the Census, 56% of the Hispanic population consider themselves to be white, 2% consider themselves black, and the remaining 42% classify themselves as "other ''j2, presumably mixed races of Indian extraction.~3 With respect to national origin, Mexicans are dominant, representing 59.4% of the Hispanic population. Puerto Ricans account for 13.7% and Cubans 5.5%. The remaining 21.3% of the Hispanic population comes primarily from Central America, South America, and the Caribbean." Despite this diversity, research on Hispanic consumers suggests that they share certain values, beliefs, and attitudes. According to a 1984 study by Yankelovich, Skelly, and White, Hispanics are increasingly likely to view themselves as a single ethnic group. '~ The unifying factor seems to be the Spanish language. According to Steven Steinberg, language is critical in defining ethnicity, because it shapes cultural perceptions and attitudes. '6 Hispanics in the U.S. contin- ue to be dependent on Spanish, and consider it an important vehicle for transmis- sion and maintenance of their culture. ~7

A second problem with objective definitions of ethnicity is that over the course of several generations, the phenotypical and cultural characteristics of an ethnic group may change. However, a sense of ethnic identity often persists, and may be captured in subjective measures of ethnicity. '~ Subjective measures, which are based on self-identification, suggest that ethnicity is a matter of choice. According to Talcott Parsons, the choice of an ethnic group may be a form of "social contract." For example, when intermarriage occurs, one spouse may assume the lifestyle of the ethnic group with which the other identifies. '~ An ethnic identity is then adopted by the household, and may be reflected in its behavior in the market.

The notion that ethnic identity is optional suggests that the boundaries of an ethnic group may change. One type of boundary change is amalgamation, which involves the merger of two or more ethnic groups. When amalgamation occurs, certain types of shared behavior emerge. 2° According to Steinberg, amalgamation has occurred among many ethnic groups of European descent. 2' Similarly, amalgamation seems to have occurred among Afro-Americans. There are 2,000 different cultural entities in Africa. Among Afro-Americans, most o f the related customs and language have disappeared, and distinct Afro-American cultural characteristics have emerged. 22 The merger of Mexicans, Puerto Ricans, and Cu- bans under the rubric "Hispanic" may also be characteristic of amalgamation, a phenomenon often associated with an abrupt change in size such as that experi- enced by the Hispanic population during the last 15 years. ~-3

Another type of boundary change is incorporation, which involves the merger of two groups, retaining the identity of one of the original groups. In order for incorporation to occur, the group or groups to be merged must change their behavior beforehand. 24 If this is the case, ethnic groups may adopt the behavior of a dominant group before being incorporated.

Ethnic identity seems to crystallize around symbols. The role of symbols in the development and maintenance of ethnic identity is reflected in differences in lifestyles among ethnic groups. 2s According to Frederick Barth, any dimension of lifestyle may serve as a symbol of ethnic identity. 26 Since one dimension of lifestyle


is the way in which the household spends money, expenditures for goods that have symbolic meaning may be related to ethnicity. Two categories of goods which are thought to carry symbolic meaning among ethnic groups are clothing and food. :7

Characteristics of Hispanic Consumers According to recent estimates, there are 18.1 million Hispanics in the U.S. Given

rapid growth in immigration and improvements in Bureau of the Census enumera- tion procedures, Hispanics are expected to be the largest ethnic group in the U.S. before the turn of the century) ~

The Hispanic population differs from the rest of the population in terms of income, family composition, characteristics of the household head, and location. The median income of Hispanics is lower than that of the other groups. 2' Hispanics also differ from the rest of the population in that they are employed predominantly in blue collar occupations, ~' and have low overall educational attainment. 3~

Hispanic households differ from others with respect to family size and median age of members. Hispanic households tend to be large, with an average family size of 3.7. This may be culturally related to the tradition of the extended family and the prevalence of Catholicism. 32 In 1980, the median age for Hispanics was 23.2 years, as compared to 24.9 for blacks and 31.3 for whites."

The Hispanic population is also unique in its geographic distribution. Five states--California, Texas, Illinois, Florida, and New York--contain 73% of the Hispanic population. In addition to being regionally concentrated, the Hispanic population is centered in metropolitan areas. 34

There has been a dramatic increase in interest in Hispanic consumers during the last decade. 35 Hispanics have been found to have conservative values, which trans- late into the importance of family-oriented expenditures, such as food. 36 Hispanics have also been reported to be heavy consumers of fast food and soft drinks, 37 but their consumption of processed foods for home consumption is lower than that of the mainstream. 38 Hispanics have been found to be brand loyal, and to be more concerned with quality than price in purchasing food. 3~ Melanie Wallendorf and Michael Reilly observed that the mean consumption of red meat, eggs, and high- sugar cereals is relatively high among some segments of the Hispanic population. "' They suggest, however, that the effect of ethnicity is likely to vary by product category, and stress the need to control for the effects of socioeconomic and demographic variables in studying consumption among Hispanics.

Given that brand loyalty, concern with quality, and family orientation seem to characterize Hispanic consumers, it was expected that Hispanic households would spend more than other households for food at home. Because Hispanics have been found to be heavy consumers of fast food, it was also expected that Hispanic households would spend more on food away from home.

Hispanic consumers seem to be oriented toward expressive consumption and to be concerned with status. 4' Since the consumption of clothing is thought to be both expressive in nature and status-oriented, it was expected that Hispanic households would spend more than other households for clothing. The following hypotheses were advanced with respect to the expenditures of Hispanic households:


HI. Hispanics will spend more than European households on food consumed at home. 1-12. Hispanics will spend more than European households on food consumed away from home. 1-13. Hispanics will spend more than European households on clothing.

Characteristics of Black Consumers

Research on the behavior of black consumers was extensive during the 1960s and 1970s. However, the increase in interest in Hispanic consumers has been accom- panied by a dramatic decrease in research on black consumers:

Recent estimates indicate that there are 29.2 million blacks in the United States, representing 11.8% of the population. '3 Despite a growing awarness that the black population may be heterogeneous with respect to ethnicity, there is controversy concerning the extent of this phenomenon.44 According to Weiser, American blacks are, by definition, Afro-American. W. Franklyn Joseph, however, maintains that other ethnic groups, such as Caribbean-Americans, appear to be a growing seg- ment of black households: Like Hispanics, the black population is growing more rapidly than the rest of the population.

Black households are at the low end of the socioeconomic continuum. 46 Their median income is lower than that of whites, but slightly higher than that of Hispanics. '7 Fewer blacks than whites have either high school or college degrees. 4~ In addition, a record number of blacks are out of work. Harrington Bryce attributes this to the concentration of blacks in central cities: ~ Regionally, over one-half of the black population lives in the South.

The black population is like the Hispanic population in that its median age is lower than that of whites, s' However, black household~ tend to be unique in terms of family composition, with a disproportionate number of female-headed households) j

In a series of review articles, based on B.L.S. expenditure data collected during the 1950s and 1960s, the expenditure patterns of black households were compared to those of nonblack households. Black households were consistently shown to spend smaller proportions of their budgets on food and automobile transportation, and larger proportions on clothing, personal care, nonautomobile transportation, and alcoholic beverages) 2 Evidence on other expenditure categories was mixed. However, the results of these studies should be interpreted with caution, because of failure to control for socioeconomic and demographic variables. In general, differences in expenditure patterns between blacks and nonblacks have been attributed to the effects of socioeconomic deprivation and discrimination: 3

Jerome Williams suggests that the behavior of black consumers is multicultural. While much of their behavior is consistent with the European heritage of the United States, some of their behavior may reflect the values of their African ancestry) 4 Values of Afro-Americans that appear to be derived from their African ancestry include affect, communalism, and expressive individualism, which are similar to values related to clothing consumption? 5 Consequently, it was expected that households identifying themselves as Afro-American would spend more than other households on clothing.


Patricia Robinson, C. P. Rao and Subhash Mehta maintain that black consumers pay more for some products because of price discrimination among retailers in racially segregated neighborhoods, and limited shopping alternatives resulting from lack of transportation? ~ Consequently, it was expected that Afro-American households would spend more than other households for food consumed at home. The results of research by Roger Blackwell, Lee Mathews and Carolyn Randolph, and James Stafford, Keith Cox and James Higgenbotham, indicates that because of discrimination, blacks are less likely than others to dine out. 52 This suggests that Afro-American households may spend less than other households on food away from home. Thus, the following hypotheses were advanced with respect to the expenditures of Afro-American households:

H4. Afro-Americans will spend more than households of European ethnicity on clothing. H5. Afro-Americans will spend more than households of European ethnicity on food consumed at home. H6. Afro-Americans will spend less than households of European ethnicity on food consumed away from home.

Engel Curve Analysis One approach to studying the effect of ethnicity on expenditures is Engel curve

analysis, which is derived from classical consumption theory. An Engel curve represents the relationship between the quantity of a good consumed and household income. When cross-sectional data, such as those of the CE Survey are used, prices are assumed to be constant, and the resulting Engel curve represents the relationship between household income and expenditures on a particular good or service. 5~ In analyzing this relationship, total consumption expenditures is often used as a proxy for income. 5" This is consistent with the permanent income hypothesis which suggests that, in the short run, households have more control over their expenditures than their incomes. As suggested by theory and the results of previous research, total consumption expenditures was expected to be positively related to all three dependent variables? °

Although the primary purpose of Engel curve analysis is to analyze the relationship between income and expenditures, it is also useful in studying the effect of a demographic variable, such as ethnicity, on expenditures. Given the controversy over whether the expenditure patterns of ethnic groups are attributable to ethnicity or to differences in income and other household characteristics, it is essential that the effect of ethnicity on expenditures be evaluated while controlling for the effects of other socioeconomic and demographic factors? ~

METHOD A subsample of expenditure data from the quarterly interview component of the 1980-1981 Consumer Expenditure Survey was used in this study. These data are similar to those collected in the 1972-1973 CE, which have been used extensively in expenditure research. 62 However, there are important differences. First, data collection is now a continuous process, involving a rotating panel of consuming units.

The Effect of EthniciW on Selected Household Expenditures 187

Data on expenditures as well as the socioeconomic and demographic characteristics of households are collected every three months for a 15-month period. Twenty percent of the households rotate in and out of the survey every quarter, with the total sample size targeted at 5,000 consuming units. 63 Second, the concept of the consuming unit has changed. In the 1972-1973 survey, the head of husband-wife households was assumed to be male. In the new survey, the head of the consuming unit is called a "reference person" and is defined as the first individual named by a respondent as either owning or renting a residence. ~

The subsample used for analysis was limited to households from which 12 consecutive months of expenditure data were available. Given that the composition of the panel rotated, households were included in the sample from each of the eight quarters of 1980-1981. Only urban households were included, because no information was available on region of residence for rural households. 65 In addition, households reporting family size greater than nine or total consumption expenditures greater than $75,000 were excluded, in order to avoid the effect of outliers. Of the 4,700 consuming units included in the original sample, a total of 3,481 were included in the final analysis.

Independent Variables The independent variables were chosen on the bases of theory, the results of

previous research, and the availability of data. Ethnicity, the variable of interest, was defined by self-identification, and was

treated as a set of dummy variables. AFRO included all households identifying themselves as of Afro-American ethnicity. HISPANIC included all households of Mexican-American, Chicano, Mexican, Puerto-Rican, Cuban, Central or South American, or Spanish descent. EUROPEAN, which was the base category, included households of German, Italian, Irish, French, Polish, Russian, English, Scot- tish, or Welsh descent. This group of households was chosen as the base category because of the European basis of America's ethnic heritage. ~ OTHER included all other households, including those in which ethnicity was unknown. Total consumption expenditures was used as a proxy for income. Since the CE data are cross- sectional, prices were assumed to be constant. Consequently, total consumption expenditures was expected to be the most important factor affecting expenditures in all three categories of goods.

The unique socioeconomic and demographic characteristics of Hispanic and Afro-American households are well-recognized. 67 This meant that it was necessary to control for the effects of those variables on household expenditures by including them in the estimating equation. Income, family composition (number of male adults, number of female adults and number of children), and age of the reference person were treated as continuous variables. The remaining variables-- characteristics of the reference person (marital status, sex, occupation, education), home tenure and region of residence--were treated as dummy variables.

Dependent Variables The effects of ethnicity on household expenditures for clothing, food at home,

and food away from home were analyzed. Total clothing expenditures were defined


Table I. Proportion of Variance (R 2) Explained by Each Functional Form

Functional Form

Dependent Variable Linear Quadratic S e m i l o g Double-log

Clothing 0.49 0.49 0.40 0.52 Food away from home 0.44 0.40 0.38 0.49 Food at home 0.57 0.55 0.56 0.61

as the sum of total annual expenditures for clothing, footwear, accessories, clothing materials, and clothing services, including dry cleaning and alterations. Total food at home expenditures were defined as the sum of total annual expenditures for food consumed in the home. Total food away from home expenditures were defined as the sum of total annual expenditures for food consumed in restaurants and cafete- rias. 6~

The Model

Ordinary Least Squares (OLS) regression techniques were used to analyze the relationship between the set of ethnicity variables and each dependent variable. The following double-logarithmic functional form was used:

where lnCi = the natural log of expenditures for the good in question, 130 = the constant, 13~ = the income elasticity of expenditures, lnY~ = the natural log of total consumption expenditures (the proxy for income), 132i = the regression coefficient of E~j, which represents ethnicity, 133k = regression coefficient of X~k, which represents the remaining socioeconomic and demographic variables, and e i = the error term.

Before choosing the double-logarithmic model, a number of functional forms, including linear, semilogarithmic, and quadratic, were tested for each dependent variable. The results, as presented in Table 1, suggested that the double- logarithmic form offered the best statistical fit, as measured by R 2. In the strictest sense, this functional form does not meet the adding-up criterion of classical consumption theory that the sum of the marginal budget shares should equal one. However, there were two compelling reasons for using the double-logarithmic model. First, the tradition in expenditure analysis has been to choose a functional form on the basis of goodness of fit? ~ Second, the elasticity of demand for the good in question can be read directly from the coefficient of total consumption expenditures in the double-logarithmic functional form. Economists view the estimation of such elasticities as a major objective of this type of analysis. TM

In order to facilitate comparison with the base category, the regression coefficients in each set of dummy variables were converted to adjusted antilogs. 7' In addition, the significance of the set of ethnicity variables was tested using a joint F-test. 72

RESULTS AND DISCUSSION

In order to gain insight into the relationship between ethnicity and race, a cross- tabulation of households by those variables is presented in Table 2. The results of


Table 2. Cross-Tabulation of Households by Ethnicity and Race

Ethnicity White Black Other Total

Afro-American 0 298 0 298 Hispanic 171 0 2 173 European 1,344 0 2 1,346 Other 1,531 41 92 1,664 Total 3,046 339 96 3,481

the regression analyses of the effect of ethnicity on expenditures for food, food consumed at home, and food consumed away from home, appear in Tables 3 and 4. Table 3 includes frequencies as well as the results for ethnicity and the other sets of dummy variables. Table 4 includes mean values and the results for total consumption expenditures and the other continuous variables.

The Relationship Between Ethnicity and Race Comparison of the ethnic composition of the sample to that of the population as

a whole shows that both black and Hispanic households were slightly underrepre- sented. The results demonstrate that 9.7% of the sample was black, compared to 11.7% reported by the Bureau of the Census at the time of the CE Survey. Similarly, 5% of the sample was Hispanic, which is slightly below the 6.4% reported by the Bureau of the Census.

The relationship between race and self-reported ethnicity is controversial. The results of the cross-tabulation support Weiser's contention that the two variables are highly correlated, particularly in the case of Afro-Americans. 73 Two hundred and ninety-eight of the black households reported Afro-American ethnicity, and 41 reported other ethnicities. All of the households reporting Afro-American ethnicity were black. This lends support to the position of Harold Isaacs, that race is an essential component of Afro-American ethnicity. TM Unfortunately, the number of nonAfro-American households was too small to yield unbiased coefficients in the regression analysis. Consequently, nonAfro-American blacks were included in the "other" ethnic category.

One hundred and seventy-one of the 173 households reporting Hispanic ethnicity were white. Two households reported that they were of other races, and none reported being black. This appears to be at odds with Bureau of the Census statistics compiled at the time of the CE Survey, which confirm that there are very few blacks among Hispanics, but show a substantial proportion of other races. 75 Data collected in the annual survey of the Current Population Reports are, however, similar to those collected in the CE Survey, showing more than 90% of the Hispanic population to be white. One obvious explanation for this discrepancy is differences in data collection procedures. In the decennial Census, households may be classified in 15 racial groups other than white or black. In both the Current Population Reports and CE Surveys, however, households may be classified in only two or three other racial groups. Given that many Hispanics are of mixed races, both enumerators and respondents may be unsure of the correct category, and, as a


result, may choose white. 7~ William Toll suggests that Hispanics are more likely than other groups to consider a wide range of phenotypical types to be white. 77

Of the 1,346 households reporting European ethnicity, 1,344 were white, none were black, and two were of another race. There were 1,664 households reporting other ethnicities. Of those, 1,531 were white, 41 were black, and 92 were of other races.

Ethnicity The results of a joint F-test showed that the set of ethnicity variables affected

expenditures in all three categories of goods. Hispanic ethnicity was found to be related to expenditures for food at home. Afro-American ethnicity was found to affect expenditures for both clothing and food away from home. Prior to publica- tion of the 1980-1981 CE, expenditure data categorized by the ethnic identity of the household were not available. Consequently, these are new findings. It is important to note that these results are based on a model in which socioeconomic and demographic factors were controlled, in order to resolve controversy concerning the effect of those variables on the expenditures of ethnic consumers. TM

Expenditures for food at home by Hispanic households were 8% higher than those of households reporting European ethnicity. This effect was in the antici- pated direction, and is consistent with Madav Segal and Lionel Sosa's observation that family-oriented expenditures are important among Hispanic households. TM It is. also consistent with reports that, in purchasing food, Hispanic consumers are often willing to pay more in order to purchase the brand and quality that they desire. ~' This finding may also reflect the high consumption of red meat, a relatively expensive source of protein, observed by Wallendorf and Michael. Expenditures for food away from home were no different among Hispanic households than among households reporting European ethnicity. This was somewhat surprising, given that Hispanics have been found to be heavy consumers of fast food. ~ However, Hispanics, with their strong family-orientation, may be correspondingly less likely to frequent exclusive restaurants, where the food may be expensive and the atmosphere less conducive to bringing a family. Although Hispanics are thought to be oriented toward expressive consumption and status symbols, their clothing expenditures were no different from those of households reporting Euro- pean ethnicity. ~=

AFRO was related to expenditures for both clothing and food away from home. As compared to households of European ethnicity, households of Afro-American ethnicity spent 19% more on clothing, but only 57% as much on food away from home. No difference was observed, however, between Afro-American and Euro- pean households in expenditures for food at home. These results lend support to Williams' contention that the behavior of Afro-American consumers may be multicultural. ~3 Their expenditures for clothing may reflect their Afro-American heritage, while their expenditures for food at home may reflect the European cultural tradition.

The fact that the clothing expenditures of Afro-Americans were relatively high was consistent with the hypothesis. This finding may reflect both differences in values between Afro-American and European households, and the fact that race is

The Effect of Ethnicity on Selected Household Expenditures t 91

Table 3. Results of Regression Analyses of Expenditures for Clothing, Food at Home, and Food Away from Home: Ethnicity and Other Dummy Variables*

Antilog of regression coefficient

Absolute Food at Food Away Variable Frequency Clothing Home from Home

Ethnicity Afro-American 298 1.19** 1.03 0.57"* Hispanic 173 1.10 1.08** .92 Other 1,623 0.95 0.98 0.93 (European) 1,346 1.00 1.00 1.00

Family type Married 2,228 1.21 ** 1.18** 0.79** (Unmarried) 1,193 1.00 1.00 1.00

Female Head 1,074 1.11 ** 1.02 0.81 ** (Male) 2,407 1.00 1.00 1.00

Occupation Professional/manager 917 1.23** 1.01 1.37** Clerical/sales 481 1.28** 0.98 1.68** Operator/service 1,166 1.14** 1.00 | .42** (Not working) 917 1.00 1.00 1.00

Education College 1,409 1.32** 0.89 2.19** High school 1,573 1.23** 0.97 1.79** (Grade school) 499 1.00 1.00 1.00

Home tenure Owner with mortgage 1,594 0.78** 0.98 0.97 Owner with no mortgage 884 0.76** 0.99 1.23** (Renter) 1,003 1.00 1.00 1.00

Region Northeast 773 1.09*** 1.07** 0.89 Northcentral 1,027 1.14** 0.92** 1.28** West 991 0.97 1.00 1.09 (South) 690 1.00 1.00 1.00

* N = 3,481

** p < 0.01

***p < 0.05

an essential component of Afro-American ethnicity. Values such as affect, communalism, and self-expression, which have been shown to be related to clothing consumption, are similar to values derived from African heritage. ~

Since all of the Afro-Americans in the sample were black, the results lend support to the results of previous studies in which the clothing expenditures of black households were shown to be higher than those of other households. ~ Because socioeconomic and demographic factors were controlled in this research, the argument that differences in expenditures between black households and others are related to differences in socioeconomic and demographic factors appears to be incorrect. ~ However, discrimination may still be a factor. Clothing is acknowledged


to be a status symbol and may be used by Afro-Americans to compensate for the effects of discrimination on their access to other status symbols, such as housing. ~7 Barth implies that the physical characteristics associated with race are highly visible, and, when enhanced by clothing, may serve to define the boundaries of Afro-Americans as an ethnic group. ~

Discrimination on the part of eating establishments may also explain the relatively low expenditures for food away from home among Afro-Americans. This finding is consistent with the results of previous research in which black households have been shown to eat out less frequently than white households. ~" This finding may also reflect differences between Afro-American and European households in preferences for leisure activities noted by Elizabeth Hirschman. "'

There were no differences in expenditures between households in the "other" category and households reporting European ethnicity. There are two reasons to believe that the "other" households actually included many households of Euro- pean backgrounds. First, households reporting Eastern and Northern European ethnicities, such as Romanian, Greek, Yugoslavian, Hungarian, Norwegian, Swed- ish, and Danish, were excluded from the definition of European used in the CE. However, individuals of those backgrounds represent a relatively small percentage of the American population."' A second, more plausible explanation, may be that many European immigrants have relinquished their ethnic heritages in order to achieve social and economic mobility22 Consequently, it is possible that most of the households in the "other" category were actually of European origin, but no longer identified themselves as such.

Ethnicity may affect any dimension of lifestyle, including the way in which households spend their money2 ~ The results of this research suggest that high expenditures for food at home are dimensions of the Hispanic lifestyle, while high expenditures for clothing and low expenditures for food away from home are dimensions of the Afro-American lifestyle.

Total Consumption Expenditures Total consumption expenditures, the proxy for income, was positively related to

expenditures in all three product categories. As shown in Table 4, the elasticity of clothing expenditures, with respect to total consumption expenditures, was 1.44. This suggests that expenditures for clothing are a luxury. That is, as income increases, expenditures for clothing are likely to increase more rapidly than income. The elasticity of food away from home expenditures was 1.85, indicating that dining out is also a luxury. On the other hand, the elasticity of expenditures for food at home was 0.45, suggesting that food at home is a necessity. That is, as total consumption expenditures increase, expenditures for food at home increase, but at a declining rate.

As suggested by the economic theory of consumer behavior, total consumption expenditures had the largest effect of any variable on expenditures in each of the product categories24 That variable explained 48% of the variance in clothing expenditures, 42% of the variance in expenditures for food away from home, and 40% of the variance in expenditures for food at home. In contrast, the set of ethnicity variables explained approximately 1% of the variance in each of the expenditure categories. While the effect of ethnicity was small, the results of the


Table 4. Results of Regression Analyses of Expenditures for Clothing, Food at Home, and Food Away from Home: Continuous Variables*

Regression Coefficient

Food at Food Away Variable Mean Clothing Home from Home

Total Expenditures $16,223.65 1.44** 0.45** 1.85**

Family type Number of Male Adults 0 .99 -0.11"* 0.16"* -0.41"* Number of Female Adults 1.14 0.09** 0.14'* -0.13"* Number of Children 0.17 0.01 0.15"* -0.18"* Age of Reference Person 48.90 -0.01"* -0.01"* -0.10"*

* N = 3,481

** p < 0.01

***p < 0.05

joint F-test demonstrated that the set of ethnicity variables was significantly related to expenditures in each product category. This is an important finding, because the behavior of ethnic consumers has often been attributed to differences in income. Consequently, the results of this study demonstrate the importance of controlling for the effects of income in studying ethnicity.

The results of the multiple regression analyses showed that the effects of the remaining socioeconomic and demographic variables--age, occupation, education, and marital status of the household head, as well as family composition and home tenure--were consistent with those obtained in previous expenditure studies based on data from the 1972-1973 CE Survey25

The R 2 for the clothing expenditures model was 0.52, which is comparable to values obtained in similar studies of clothing expenditures based on the 1972-1973 CE Survey. ~ The R 2 for expenditures for food away from home was 0.49, which is consistent with the value obtained by Frederick Derrick et a127 However, the R 2 for food at home expenditures was 0.61, which is substantially higher than the value of 0.50 obtained by Alane Lehfeld2 ~ This difference may be attributable to use in that study of the quadratic functional form.

CONCLUSION AND IMPLICATIONS

The results of this study demonstrate that household ethnicity affects expenditures for clothing, food at home, and food away from home. This finding has implications for the development of the economic theory of consumer behavior and suggests directions for future research.

Afro-Americans and Hispanics, the two largest ethnic groups in the United States, are characterized by unique socioeconomic and demographic characteristics. Previous research involving ethnic consumers has been criticized for failing to control for the effects of those characteristics on behavior. In this study, the effects of income, family type, home tenure, region of residence, and the age, sex, marital status, occupation, and education of the reference person, were controlled by including those variables in the estimating equation.


The results establish that there is a relationship between Hispanic ethnicity and expenditures for food at home, and Afro-American ethnicity and expenditures for clothing and food away from home. As compared to other households, Hispanics spent more on food at home, and Afro-American households spent more on clothing and less on food away from home.

The results were consistent with economic theory, in that total consumption expenditures, the proxy for income, was the most important variable in the expenditure analysis. Compared to that variable, the effect of ethnicity was small. The effect of ethnicity was, however, significant. From the perspective of economic theory, this is important, because the omission of significant variables may lead to bias in estimation of the parameters. ~

Directions for future expenditure research include longitudinal studies, inclusion of other ethnic groups, and extension to other categories of goods and services. The results of this study were limited to a cross-section of household expenditures from the 1980-1981 CE Survey. Since this survey is now conducted on a continuing basis, the expenditure patterns of Hispanics and Afro-Americans might be tracked longi- tudinally in order to detect changes that may occur. Daniel Horowitz implies that the development of expenditure patterns comparable to those of households reporting European ethnicity might indicate that incorporation is occurring."x' Even- tually, this type of analysis might be extended to include other ethnic groups, such as Caribbean-Americans and Asians, which appear to be growing segments of our population. Finally, this study was limited to expenditures in three consumption categories - - clothing, food at home, and food away from home. As suggested by Wallendorf and Reilly,"" and demonstrated by the results of this study, it is likely that the effect of ethnicity may vary across categories of goods and services.

NOTES

* The authors thank the four anonymous reviewers for their constructive suggestions. Funds for the computer analysis were provided by the Computer Science Center of the University of Maryland.

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Documents

The effect of ethnicity on selected household expenditures