econlife - Who Is Likely to Live Alone? by Elaine Schwartz

Sort of like bookends, we tend to live alone before we are 30 and after we reach 65. However, many of us are “unpartnered.”

Who Lives Alone?

Among those of us who live alone, 58% have never been married, 21% are divorced, and 14% have been widowed. So yes, we are talking about a lot of people. One-tenth of all Americans and slightly more than one-quarter of all households are singles.

An NYU sociologist tells us that living alone is the logical result of four trends:

1. feminism
2. living in cities
3. communications technology
4. longevity

Pew Research meanwhile focuses on marriage, income, and education.

Marriage is one reason that the number of singles is up. In 2018, the average American woman married at 27.8 and her mate was 29.8. She is almost eight years older than her mother and grandmother when they married. Also, there are more people who never marry:

For men, affluence is a singles predictor. Below, $40,000 a year, less than one half of all men are married. Above, the figures climb. And once we get to $75,000-$100,000, two-thirds of all men have tied that knot.

From here, education makes a difference. People with bachelor degrees tend to have partners more than those who do not:

Where Do We Live Alone?

According to the U.S. Census Bureau, singles are concentrated in 21 urban areas where more than 1/3 of every household is occupied by one person. One reason could be that all but one have a lower cost of living. Another relates to the widowed population:

An interesting single household fact: In 2017, Utah (19.6%) had the fewest single person households. At 45.2% Washington D.C had the most.

Our Bottom Line: Consumption Expenditures

Living alone shifts how we spend our money. It changes the consumption components of the GDP.

A BLS study from 2011 concluded that except for healthcare, singles in their 20s (especially late 20s) spend “considerably” more per capita on food and clothing, housing, and education than comparably aged married couples.

A more recent but less academic report looked at the bigger picture. It told us that single people take more vacations, are a “gold mine” for home entertainment equipment, going to the cinema, and dining out. And we should note that in China, Single’s Day has become a massive event.

Where are we? Affecting where we live, what we buy, and how we spend our time, the singles trend is a major economic phenomenon.

My sources and more: The Hill was a good starting point for the big picture on singles. From there, it made sense to find more on how singles spend and where the unpartnered live. Then, for further insight and detail, I suggest this New Yorker article, Pew, here and here, and this BLS study.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - The Impact of the Starbucks Effect by Elaine Schwartz

Strolling around 110th street in New York’s Harlem, you see new restaurants and small cafes that sell gourmet coffee.

It could be called the Starbucks effect.

The Starbucks Effect

Zillow

A 2015 study from Zillow tells us that home prices increase after Starbucks arrives in a neighborhood. Yes, they say that “properties near Starbucks tend to start out more expensive.” However, they claim that the Starbucks connection stands out.

While homes near a Starbucks sell, on average, for $137,000, those that are distant from it average $102,000. They also found that over 17 years, the Starbucks correlation was reflected by a 96% appreciation. Homes not near went up by 65%.

The clincher though is the Dunkin’ Donuts comparison. You can see that your wealth went up by less when a Dunkin’ Donuts was nearby:

Here’s the data:

Asked which came first, the Zillow people concluded that Starbucks fueled the housing price increases. At Starbucks, they just said, sure…we understand real estate. It’s art and science and we get both.

Some Harvard professors do not entirely agree.

Harvard

In a recent paper, three economists from Harvard used Yelp to compare real time local business activity and gentrification. The Starbucks part of their study focused on the number of cafes. They wanted to see if housing prices rose when there were more Starbucks. Sidestepping causality, they were looking for a leading indicator.

And they found one.

With each new Starbucks, the home prices in a zip code rose by .5%. However, they suggest that Starbuck selects zip codes with an “upswing.” Also, Starbucks is one of many new establishments in the neighborhood. As the authors point out, we simply have communities where more people like expensive coffee. They also want more restaurants, bars, cafes, and grocery stores.

Our Bottom Line: Consumption Expenditures

Whether looking at Starbucks or the other businesses that accompany higher housing prices, we can hypothesize that GDP spending rises. As a dollar measure of what we produce, the totals are mostly what we, businesses, and governments spend. So, a new Starbucks can mean more consumer spending. Meanwhile, the new Starbucks and new housing are in the businesses category because they are defined as investments.

I guess we could conclude that the Starbucks effect is a GDP effect.

My sources and more: In two slightly different ways, Starbucks is linked to rising home prices. Quartz had an excerpt of a Zillow study in 2015. Much more auspiciously sourced, this NBER paper from Harvard Business School is dated August 2018.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.

econlife - Do We Really Have a Student Loan Crisis? by Elaine Schwartz

The Wall Street Journal recently introduced us to an orthodontist who had not yet repaid $1 million of his student debt…and probably never will.

You can see below that becoming a dentist is expensive:



Not quite typical, this orthodontist was one of 101 people whose outstanding federal student loan exceeds $1 million. At the $100,000 level, there are approximately 2.5 million individuals. As for the average, it is a more down-to-earth $17,000.

Should we be concerned?

These are some of the facts…

Where?

Based on four-year state institutions, the Midwest and Northeast have the most student debt. If you live in New Hampshire, Maine, or Pennsylvania it is likely that you owe more than someone who comes from New Mexico, California or Wyoming. But you probably owe more because tuition is higher.

Below, the darkest states have the highest proportion of student loans:

Who?

The AAUW (American Association of University Women) tells us that women hold two-thirds of all student debt. They point out that yes, there are more female students. But still, women’s average debt exceeds men’s. And the burden is compounded by the amount of interest women owe because they repay debt more slowly, .

You can see how the AAUW uses two graphs to connect the gender pay gap to the college loan problem:

How Many?

Fifty-three percent of all adults with a bachelor’s degree or more education have outstanding student debt. Furthermore, comparing 2011-2012 to 1989-1990, we’ve moved from half to two-thirds of all college seniors using loans for their education.

How Much?

Now at $1.3 trillion, the amount of student debt owed by U.S. households has tripled from 2001-2016. However, unlike other forms of household debt, delinquencies have been rising:




So, should we worry?

Our Bottom Line: Economic Growth

In their “Feds Notes,” the Federal Reserve does not sound very concerned. Attributing the surge in loans to higher college enrollment and rising tuition, they don’t believe the debt will constrain the consumption that is close to 70% of the GDP. Furthermore, because 90% of outstanding student loan debt is guaranteed by the federal government, financial institutions are not “highly exposed.”

They do express concern that household spending could be crowded out by debt service but then conclude a minimal drag on GDP growth. Similarly, they point out that at risk borrowers could jeopardize other credit markets but again conclude the risk is not considerable.

Instead, the Fed reminds us that the loans are adding to the human capital that fuels consumption. And that returns us to our orthodontist who owns a $400,000 house, drives a Tesla, and earns more than $255,000 a year.

My sources and more: Having just seen a WSJ  article about the largest loan careers, this Brookings commentary was especially relevant. From there, this CNN  student loan discussion provided a new perspective as did the AAUW report. But if you want more data, Pew, the Urban Institute, these “Fed’s Notes,” and a 2018 Federal Reserve Report have it.

Please note that the numbers I use from WSJ differ slightly from a 2018 Federal Reserve Report.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.