Friday, December 4, 2009

Television, the root of the crisis?

Plenty has been blamed on TV, so why not the current crisis? Let's see. TV encourage consumerism by bombarding the viewer with ads about must-have items. "as see on TV" is considered a label of quality. Infomercials push you to buy products you do not need. Soap operas and prime time shows anoint consumerism. There are channels entirely dedicated to shopping. You see were I am getting at, TV is accused of encouraging (too much) consumption, and by extension consumption over one's means and excessive debt. And such behavior certainly a component in the current crisis. But let's not get ahead of ourselves with assertions heard on TV and taken as a fact.

Matthew Baker and Lisa George look at the survey of Consumer Finance and exploit the gradual diffusion to study whether households with earlier access to television ended up with higher indebtedness. And it turns out to be true, in particular for debt resulting from durable good purchases. This is essentially based on data from the 1950s and 1960s. As the marketing industry has perfected its sales pitch since, this impacts should have become more important, and perfected the drive to consume beyond means.

3 comments:

Anonymous said...

Of course, the correlation between household debt and access to television/TV ownership might come from the fact that a TV cost about $200 at a time where average HH income was somewhere around $3000 annually....

Kansan said...

To the above poster: isn't it so that richer people bought TVs in those days, so they did not necessarily go into debt to buy them.

Joker's Wild said...

The urge to want to keep up with the Jones' is one of the causes of the financial crisis. People feel that they must have every modern amenity, which does include big hdtv's that cost a 1-3 months rent or mortgage payments. HDTV does make everything look better