‘A LESSON IN FRUGALITY, FROM THE TENEMENTS, ‘ by Damon Darlin in the Sunday Times.

In Uncategorized on December 14, 2009 at 06:03

ON the weekend after Thanksgiving, the traditional start of the holiday shopping season, I skipped the department stores and headed instead to the Lower East Side Tenement Museum on Orchard Street in Manhattan. Hundreds of people had the same idea. Every tour was booked.

We each paid $20 to shuffle up the dim, narrow and creaky stairwell of a restored tenement where we learned about families who once lived on wages of less than a dollar a day. In these dark, crowded and airless rooms, one or two steps beyond Ellis Island, the poor people who lived here somehow managed to save money and accumulate capital. They had no choice but to practice frugality.

When we re-emerged, in the daylight of the 21st century, it was to a radically different atmosphere: Retailers around the country were doing their best to encourage consumer spending — hoping desperately that contemporary Americans had not entered a new era of frugality themselves. In fact, retail revenues have been clobbered by the financial crisis. With high unemployment and an uncertain future, people have been shopping cautiously — suggesting that maybe, just maybe there is some foundation to all of the talk about a change in the consumer mind-set.

There are grounds for skepticism, though. Shoppers may be holding back until the good times return or the discounts get deep enough, whichever comes first. That’s very different from the scrimp-and-save behavior ingrained in immigrants or, for that matter, the generation that grew up in the Great Depression.

The question might be put this way: Can middle-class American consumers save like immigrants of more than a century ago? Can they change their mind-sets and lifestyles in order to accumulate capital and work down debt?

Not easily, for many of us. It would be a challenge to overturn habits ingrained by doting parents, endless marketing pitches and the belief that the person with the most stuff wins. And it might seem to embrace a rather pessimistic outlook on life, one of deprivation and denial. You would have to scale back on spending until you save most of your income. Do you need all that space and all those things — new cars, expensive watches or smartphones? A prepaid cellphone might have to do.

You could make an effort to live off cash, not credit cards. When you see green pieces of paper disappear, your spending may seem more real than it does when you swipe a card. And to really save money, you’d have to maximize income, not just cut down on spending. Some approaches, like working for cash — a form of tax avoidance, to be polite, for those who don’t have Bahamanian bank accounts — are impossible for anyone on a payroll. But you could just work more.

If you are going all in on frugality, it really does call for a new mind-set. On scores of belt-tightening Web sites that have popped up since the recession began, you will see advice that, at best, amounts to half- measures. Use coupons at restaurants. Don’t order as much food. That’s fine as far as it goes. But if you are really being frugal, you would not go out to eat.

No, frugality would not be easy, not just because it requires the sacrifice of material goods, although that is plenty hard. Rather, the problem is that it seems to demand too much change in cherished beliefs about life. First, abandon the idea that we must live better than our parents did. That’s a fine motivator when your parents live in a tenement on the Lower East Side with a shared privy in the backyard for 20 families and a saloon in the basement. But is it necessary for those who already have a home, a car and a standard of living that is the envy of most of the world?

The Pew Research Center found in April 2008 that nearly two-thirds of Americans said they had a higher standard of living than their parents did at their age. Most people expected their children to do better in life than they had.

This survey on economic attitudes, published before the world’s financial troubles were apparent to most people, also found what it called a “possessions perception gap.” We tend to overestimate what other families have. For instance, 62 percent of the respondents said they believed that most families had a high-definition TV, although just 42 percent said their own family had one.

A PEW survey in April, during the economic turmoil, suggested that it might be possible for upwardly mobile Americans to defer gratification, another necessary mind-set change. It found that over the previous three years, the percentage of Americans thinking, for instance, that a microwave oven was a necessity dropped to 47 percent from 68 percent. That was true of air-conditioning (54 percent, down 16 percentage points), clothes dryers (66 percent, down 17 points) and cable TV (23 percent, down 10 points). More people, however, said they could not go without a cellphone.

No air conditioning? Hang the wash on the fire escape? It sounds a bit like a return to the dreary tenement.The funny thing is, though, some economists who study spending through consumers’ life cycles tell us frugality may actually be the practice of an optimist. If you expect good things in the future, you’re inclined to save money for that event.

If you are a pessimist, you might as well spend everything now.


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