Our discretionary life: The top-spending cities for travel, cable and entertainment
Dr. Seuss had it half right. Oh, the places we would go...if only we had the money. Whether it's lying on the beach in Fiji, laying fresh tracks in the back bowls at Vail, or even just a weekend at a B&B upstate, we all have a list of the kinds of trips we'd take if we just had a little more room in the budget. And not just trips! We'd see more concerts, and at those concerts, we'd move down from the balcony and into the orchestra. We'd belong to the museum, listen to more music, go to more movies. All those things we know other people are doing, possibly right now.
How, though, do they afford it? That's the question Bundle set out to answer in this report. We looked at spending in three, very discretionary spending categories: Travel, which includes airplane tickets, rental cars, hotels, cruises, taxis, buses, and other vacation infrastructure; Entertainment, which covers tickets to sporting events, concerts and the like, amusement parks, bowling alleys, gambling, and other ways to spend your time and money; and Cable and Satellite, which includes TV and internet. These are among the most flexible areas of spending in a budget — a well-used Netflix subscription can replace most TV-watching and movie-going, trips can be postponed or scaled back, and on Saturday night, you can always stay in and make your own free fun.
The average American household spent $1,571 on travel in 2009, $560 on entertainment, and another $568 on cable and satellite services, for a total of $2,699. But some spent far more. In San Jose, Saint Paul and Seattle, the average household spent more than $1,000 on entertainment last year. In New York City, Washington D.C., and San Francisco, they spent more than $3,250 on travel — more than double the national average. Even cable bills hit the ceiling in some places, like Raleigh ($1,033) and Austin ($970).
And in each category, where the money comes from is a little bit different. We were curious not just about who spent the most (answer: rich people), but about where the people who allocated a greater share of their budgets and income to this fun stuff were spending less to make up for it. It turns out that people who spend a lot of their money on travel, for instance, tend to sink less money into home maintenance, electronics, and charity, whereas those with big entertainment budgets afford all those tickets by spending less on their cars, their phone bills, and, yes, TV.
As we sifted through the data, a picture of Americans' spending priorities emerged. Those people who are, right now, applying SPF 50 on a beach somewhere, they are not necessarily richer than you — they have made different choices about how to spend their money. (Or they're piling up credit card debt. But that's for another story.) And as we see how consumers shift money around to account for the things they truly want, we can learn where our own spending goals and priorities lie.
Of all of these categories, travel might seem to be the most enviable/mysterious. You might appreciate the wide array of premium channels on a neighbor's big-screen, but it's their vacation photos on Facebook that push us to the brink of seething jealousy. Or maybe it's just me. Where do they get the money?
On average, Americans devote just 4.2 percent of their daily spending (not including mortgage or rent) to travel. New Yorkers, on the other hand, allocate 8.7 percent of their daily spending to travel. (Manhattanites spend more still: $6,263, or about 10.5 percent of their annual daily spending.) San Franciscans devote 7.6 percent of their budget to travel; Washingtonians, 6.9 percent.
To make room in their travel budgets, though, they forego other things. For one, their daily living expenses take a smaller bite out of their budgets. People who spend more on travel are devoting less of their spending to utilities, home maintenance, and home improvement. "There are people who will live relatively frugally most of the time, but save up to take a big trip," said Dennis Jacobe, the chief economist at Gallup. "Those experiences are part of their well-being, and that says a lot about their quality of life."
Of course, Bundle's travel data also includes mass transit — ferries, subways, taxis and buses. Those are popular modes of transportation for tourists, sure, but also for city-dwellers in some of these high travel-spending cities, like Washington D.C., New York, and San Francisco. It's not enough to account for all the additional travel spending in those cities, but we do see that people who spend more on travel (which includes the occasional rental car, as well) are also spending less on gas and auto maintenance. So maybe we can take heart: Top spenders on travel aren't just sunning themselves on beaches, they're also stuck on the 6 train platform in 100-degree weather.
Something else we noticed: There seems to be an inverse relationship between travel spending and employment. Cities with high levels of unemployment posted relatively high travel spending numbers. In Detroit, for example, where unemployment is more than double the national rate, the average household still spent $1,158 on travel — or 7 percent of its total daily spending (not including rent and mortgage) — last year. That's 57 percent more than the average U.S. household allocated to travel. In Cleveland, Newark, Philadelphia and Saint Louis — all cities with higher-than-average unemployment — residents devoted a larger portion of their spending to travel expenses.
It's not clear why this is. The impact of mass transit spending doesn't account for the difference - besides, many people who take mass transit do so because they have to go to work. Are people spending money on travel to look for jobs? It seems crass to suggest they're more mobile because they have more flexible schedules, but maybe that's part of it too. We did notice that unlike the broad population, in these cities with high unemployment rates, people cut back on dining out, personal care, and shopping in order to spend the money they do on travel.
Who spends more on cable and satellite? College kids. Though they spend less, in dollars, than every other age group save seniors, people ages 18 to 25 devote a much greater percentage of their overall spending to premium channels, On Demand, XM radio and the like. They devote 23.3 percent more of their income to cable and satellite services than the average U.S. household, and about 28 percent more than their parents (ages 50 to 65).
Why? I thought all the kids were watching TV online. No, says Melanie Shreffler, editor of Research Alert, a digest of consumer behavior research: "The amount of 'cord-cutting' is really minimal," she said. She suggested a series of explanations: College students tend to live with roommates, and the most expensive cable packages are more appealing when you're splitting the cost three or four ways; also, most college students' cable services are ultimately covered by the students' parents. Why not get every channel under the sun? Mom and Dad do. Lastly, suggested Adam Lynn, from Free Press, a non-profit consumer advocacy group, college students move so frequently, they may not be able to take advantage of, say, a 2-year offer that would get them a discount.
Or maybe it's not the kids at all, suggested Tammy Nelson, vice president of research and marketing at Alloy Media, a youth-focused media company. She pointed out that cities with strong college communities also tend to attract a highly educated and affluent adult population - people who might be more willing and able to pay for premium cable and high-speed internet.
Either way, cities with high student populations also tend to devote a higher proportion of their spending to cable and satellite services. Raleigh, the city with the second-highest overall spending in the category, has a student population that's 73 percent greater than the average U.S. city — and they devote 16 percent more of their budgets to cable and satellite. On the other end of the spectrum, take Scottsdale. The city spends a lot — $918 per year, on average — on cable and satellite, but that's just 1.4 percent of their annual spending, about 15 percent less than the U.S. average. Why? Demographics, most likely: a higher proportion of retirees, who tend to spend less on cable and satellite, and a relatively low population of students. Oh, and don't forget the Internet! While "cable" is classically defined as discretionary spending, don't tell that to the 20-year-old Russian literature major who's relying on a wifi connection and three cases of Red Bull to finish up her thesis at 3 o'clock in the morning.
So, where do they all get the money? They're not skimping on their phone bills or electronics - both of those categories are positively correlated with spending on cable and satellite. But people who allocate a bigger share of their wallet to cable and satellite do spend proportionally less on auto expenses, and on home improvement and home maintenance.
The funny thing about cable and satellite services is this: you do top out after a while. After you add your sports packages, and your movie channels, and your satellite radio — well, a person can only spend so much on TV. There are only 24 hours in a day. Which means there's less variation in cable spending than in most other categories. At the state level, the lowest-spending state (Alaska) spends about $310 per year, which is 56 percent less than Connecticut, which, with average annual cable bills of $711, the highest spending state. In other categories, like travel or entertainment spending, the range is a lot wider. On entertainment, residents of the lowest-spending state (Mississippi) spend 74 percent less than residents of the highest-spending state (Massachusetts). On travel, the gap is even wider: residents of the lowest-spending state (West Virginia) spend a whopping 78 percent less than the big spenders in New York.
Dig deeper: Who spent more on entertainment, people in their 20s and 30s, or people over 65?
What do San Jose, Saint Paul, and Boston have in common? They all like a good time: people in those cities spent at least 50 percent more on entertainment than the average U.S. household did ($560) in 2009. The average household in San Jose, the top-spending big city on our list, spent $1,304 on entertainment last year, or about $109 a month. That's enough for a day at Great America, a visit to the Winchester Mystery House, and a ticket to Raging Waters — every month.
But those kid-friendly diversions probably aren't where San Jose's biggest entertainment spenders are dropping their cash. The other characteristic that unites San Jose, Saint Paul, and Boston are higher-than-average single populations — the kind of folks who are more likely to spend an evening at a concert or a movie than at the Electric Light Parade at Disney. Sorry, marrieds, it's true: Single people do have more fun. Or at least they devote more of their income to entertainment, anyway. (If only dating were as simple as a daylong trip to the playground. Then the guy would only have to pay for crayons.)
So what aren't they buying? People who spend a lot on entertainment tend to spend less on gas an auto expenses. But they also tend to spend less than average on home maintenance or home improvement, because, suggests Shreffler, "they're renters. Single people tend to be younger people, and they're less likely to own their own home." It's true: one of the benefits of renting is you don't have to pay the plumber. Usually. Also, people who spend a lot on entertainment also tend to spend less, overall, on cable and satellite. Which makes sense: when you're going out a lot, who has time to watch TV?
In Boston, for example, where the single population is 43 percent higher than the U.S. average, residents spend 95 percent more on entertainment, but 48 percent less on their cars, 13 percent less on home maintenance and improvement, and 15 percent less on utilities.
And, marketers, heads up: people who are spending more on entertainment are also spending more on the things that go along with entertainment, like clothes and shoes, personal care, and dining out. After all, if you're going out on the town, you really should put your best foot forward. What would your mother say?
Methodology: Bundle's numbers are compiled from data provided by Citi (one of Bundle's investors), as well as the U.S. government and third-party research. Here's a complete summary of how we highlight the data and what's included in each category. The Bundle Report's city rankings measured the household averages of top 100 cities by population, according to U.S. Census data.
About the artist: Christopher Pace is an interactive designer in Brooklyn, New York. In his spare time, he hunts zombies.
Hat tip: To Fitzgerald Analytics, data crunchers extraordinaire and friends of Bundle, who helped with this report.
Travel spending in the biggest U.S. cities
Infographic: Cable spendingin the biggest U.S. cities
Infographic: Entertainment spending in the biggest U.S. cities