Consumer Spending Across Life Stages

Does the effect of income on spending differ across life stages?

Overview

Income is one of the few consumer characteristics that policy can directly change — through tax credits, transfers, or wage interventions. But does a $10,000 income increase produce the same spending shift for a college student, a working adult, and a retiree? This project uses data from three sources spanning 7,094 students, working-age adults, and elderly households to answer a single central question:

What is the causal effect of a $10,000 income increase on spending composition, and does that effect differ by life stage?

The short answer the data suggests: yes — a $10,000 income boost affects discretionary spending differently depending on which life stage a household is in.

We define three life stages — Students (Kaggle Student Spending dataset), Working Adults (Kaggle Customer Personality Analysis dataset), and Elderly (2024 BLS Consumer Expenditure Public Use Microdata) — and measure spending as a percentage share across four categories: food, discretionary (leisure/entertainment), essentials (housing + transportation), and healthcare.

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Discretionary Spending vs. Income by Life Stage

Even at the same income level, the three life stage groups maintain distinct discretionary spending shares, suggesting life stage has an independent effect beyond income alone.