Did watching television put Americans in debt?

Nov 18, 2011

A new study conducted by researchers at Hunter College reveals that the role of advertising in household consumption and debt may be greater than suggested by existing research. Drs. Matthew Baker and Lisa George (Economics) analyzed the effect of television penetration on debt using household finance measures drawn from the annual Survey of Consumer Finances covering years 1946 to 1958. Their results indicate that the appearance of television was associated with higher levels of debt for durable goods.

With a grant from the Professional Staff Congress-City University of New York (PSC-CUNY) Research Award Program, Baker and George evaluated whether television played a causal role in changing household finances or was simply correlated with unobserved market factors responsible for these changes. Exploiting exogenous variation in the timing of the spread of television across different U.S. markets, they tested whether households with early access to television saw steeper debt increases than households with delayed access.

The study finds a positive link between mass and the tendency to take on household debt. The results indicate that television exposure is associated with a higher tendency to borrow to purchase consumer goods and a higher tendency to hold non-mortgage debt. The authors also offer suggestive evidence that markets with early access to television saw higher male compared to markets with delayed access to television.

One possible reason for the link between television and is that exposure to new products on alters the tradeoff between consumption and leisure. Households may wish to both work more and purchase more consumer goods. But if they cannot adjust labor supply in the short term, they may borrow to increase consumption in the present and work more in the future.

Explore further: 18 million workers produced more than one-fifth of US gross domestic product in 2012

More information: Baker, M.J. and L. M. George. The Role of Television in Household Debt: Evidence from the 1950's. 2009. Hunter College Department of Economics Working Papers, 427. arrow.hunter.cuny.edu/research… /HunterEconWP427.pdf

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not rated yet Nov 18, 2011

I use to fix TV's for a living but stopped because what should have been the best learning tool, advancement ever instead turned into a corporate wasteland where the sheep went to be programed what they 'needed'.

Sadly 80-90% of people are sheep willing to follow any fool, religion, ideolog that will let them be a part of the group.

Yet most in life is friends and family helping each other is what makes us happy costs little.
1 / 5 (1) Nov 19, 2011
Verry interesting thesis!

We are six years TV free, with a small mortgage only that is used as an investment tool.

We do not allow logos to be visible in the house or on our clothing. Any hint of marketeering engages critical skepticism.

E. T. Jaynes' 'Converging and diverging views' explains these correlations.
0.7 / 5 (48) Nov 23, 2011
So basically what you are saying, Doug, is that you live like a hippy. Neat. You have some watermelon on your face.
5 / 5 (1) Nov 23, 2011
Why is living without a TV equal to being a hippy?

I recently moved and don't plan on buying a TV. (Bought the appartment only after I had the entire money up front)

Watching TV has given me an 'advertisement allergy' overthe years (i.e. whenever I hear advertisement on the radio or see one on a TV screen I have the urge to leave the room or change the channel)

Praise be to Adblock, junkmail filters and the internet (and DVDs...though the mandatory trailers, endless company logos before the movie even starts, and copyright notices are already getting on my nerves there, too).

No mortage, no debts - and plan on keeping it that way. Before I'll take on a loan I'd rather reduce my lifestyle.
0.8 / 5 (49) Nov 23, 2011
It was actually this that caused me to make the hippy comment.

We do not allow logos to be visible in the house or on our clothing. Any hint of marketeering engages critical skepticism.

It's one thing to avoid advertising (i.e. avoiding television). It's another to ban it from your vision. I've only known hippies to take anti-consumerism to such an extreme. I understand the anti-consumerist mindset, however going that far to me is an admission of a weak mind (i.e. "A t-shirt is enough to brainwash me, my children, etc.").

I also found Doug's mindset ironic as he is one of our resident Champions of the Free Market. It's ironic that functionally, on this subject which is pertinent to the economy, he is no different than a hippy. Just goes to show you we aren't all as different as we think we are.