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 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.
A First Look
Income vs. Spending — The Core Comparison
The chart above shows raw group differences, but it doesn’t account for the fact that these groups also have very different incomes. Groups with different incomes would spend differently even if life stage had nothing to do with it. The chart below shows discretionary spending share plotted against income for each life stage. If income were the whole story, the three lines would overlap. That they don’t — and stay separated even at the same income level — is the central finding this project builds toward.
The Data at a Glance
| life_stage | N (rows) | Median Age | Median Income | Median Spend |
|---|---|---|---|---|
| Student | 1121 | 22 | $12,732 | $6,457 |
| Working Adult | 4135 | 51 | $61,482 | $1,665 |
| Elderly | 1838 | 73 | $57,616.70 | $44,244.88 |