Econography

Last updated

Econography is the study of spending profiles of a population of a region and the culture of its people, down to the postcode level, including consumer and business spending by gender, age, income, living situation and location. Econographic trends describe the historical changes in category spending over time, by segment or community.

Contents

History

Econography is one of the many children of economics that as of late has begun to spread its wings and fly into the workings of our world. Ever since spending has been accurately analyzed, economists have used this data as a tool to understand the habits of people. Econography focuses mostly on the categorical spending of people and how money is spent in different places. Econography allows people from all over the world to be compared on many different levels in different times throughout history.

Corporate Use

Econography is very useful to corporate America as well as the average person. Corporations gather their desired data in a variety of ingenious ways. This could be by a survey, by sign up information for a website, or by buying your information from a different source. Some people are a part of websites that allow them to partake in major company surveys that have a direct effect on them. Whatever way they get this information is not as important as what they do with it. The information is used to draw comparisons and frequencies between many different groups of people. These comparisons are then used for advertising purposes like relevance and placement of ads. The information companies gather has become a milestone in how they interact with their customers. This can also be used as a basis for future product innovations that are best suited for the consumer.

UBank

Australian bank UBank introduced the world's first Econography tool, on Tuesday 6 November 2012, at Finovate where it won the title of 'Best in Show'. [1] PeopleLikeU is powered by about 23 million people that account for over a billion real but de-identified bank transactions generated by Australian consumers, the data is then cleansed and weighted to give an accurate representation of the spending habits of the entire Australian population; giving consumers the ability, for the first time, to benchmark their spending habits against people that share the same profile, both on a local and national scale. [2]

UBank uses different groups to properly categorize people. Things such as postal code, gender, age, relationship status, and level of income form the basis of the system. Then purchases are sorted into groups like food, shopping, rent, travel, and other day-to-day expanses that allow for accurate representation. This allows people to better compare themselves to others in a practical way that requires little effort. Many users have a relatively easy time using this tool for comparison. When signing up for the program, users are informed that the average user on PeopleLikeU is a single woman who owns a home and makes less than 50 thousand dollars a year. [3]

Government Use

Governments around the globe have many ways of showing the familiar faces of the econography of their region. Censuses and other means of representation have been used over the years to get an accurate description of the financial standpoint of the people. In the United States, the Census Bureau reports the levels of income of most people that participate in the Census. [4] Over the years, these reports have been used as a tool in how Americans spend their money. The way in which these reports are evaluated is a useful tool in econography. Evaluating American spending over the years allows a pattern to be established and creates a basis for future projections. These projections may be able to predict future recessions or times of economic success. These patterns can also be compared to other countries during periods of economic recession or periods of war.

The income levels associated with different time periods throughout American history are an important part of how econography works from a historical standpoint. After the obvious adjustment for inflation, a better perspective can be seen on the financial standing of that time period. This allows people of today to accurately measure just how bad the Great Depression would be in the present day environment. When given these modified figures, people can more easily conclude the depth of despair that the people living in this time had to endure on a daily basis. For example, today, a loaf of bread today can be obtained for under a dollar at the right location; however, during the Great Depression that same loaf of bread may have cost about eight cents. [5] The value of eight cents compared to a dollar today would hold little to no merit as time, as well as prices, have changed. Now apply the inflation. The eight-cent loaf of bread becomes much more than a dollar and a greater burden on your checkbook. The quality of the bread of the Great Depression is also below the margin of today's cheaper and more efficiently made counterpart. This example illustrates how econography can be used to show differences in not only location but also in generations and in times of increased hardship.

Related Research Articles

Purchasing power parity (PPP) is a measurement of the price of specific goods in different countries and is used to compare the absolute purchasing power of the countries' currencies. PPP is effectively the ratio of the price of a basket of goods at one location divided by the price of the basket of goods at a different location. The PPP inflation and exchange rate may differ from the market exchange rate because of tariffs, and other transaction costs.

<span class="mw-page-title-main">Debt</span> Obligation that requires one party to pay agreed-upon value to another party

Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The debt may be owed by sovereign state or country, local government, company, or an individual. Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest. Loans, bonds, notes, and mortgages are all types of debt. In financial accounting, debt is a type of financial transaction, as distinct from equity.

Purchasing power is the amount of goods and services that can be purchased with a unit of currency. For example, if one had taken one unit of currency to a store in the 1950s, it would have been possible to buy a greater number of items than would be the case today, indicating that the currency had a greater purchasing power in the 1950s.

<span class="mw-page-title-main">Consumer price index</span> Statistic to indicate the change in typical household expenditure

A consumer price index (CPI) is a price index, the price of a weighted average market basket of consumer goods and services purchased by households. Changes in measured CPI track changes in prices over time.

The theory of consumer choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand curves. It analyzes how consumers maximize the desirability of their consumption as measured by their preferences subject to limitations on their expenditures, by maximizing utility subject to a consumer budget constraint. Factors influencing consumers' evaluation of the utility of goods: income level, cultural factors, product information and physio-psychological factors.

<span class="mw-page-title-main">Cost of living</span> Cost to maintain a standard of living

Cost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time can be operationalized in a cost-of-living index. Cost of living calculations are also used to compare the cost of maintaining a certain standard of living in different geographic areas. Differences in cost of living between locations can be measured in terms of purchasing power parity rates.

<span class="mw-page-title-main">Consumption (economics)</span> Using money to obtain an item for use

Consumption is the act of using resources to satisfy current needs and wants. It is seen in contrast to investing, which is spending for acquisition of future income. Consumption is a major concept in economics and is also studied in many other social sciences.

<span class="mw-page-title-main">Consumer spending</span>

Consumer spending is the total money spent on final goods and services by individuals and households.

A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), HSA funds roll over and accumulate year to year if they are not spent. HSAs are owned by the individual, which differentiates them from company-owned Health Reimbursement Arrangements (HRA) that are an alternate tax-deductible source of funds paired with either high-deductible health plans or standard health plans.

The Consumer Expenditure Survey is a Bureau of Labor Statistics (BLS) household survey that collects information on the buying habits of U.S. consumers. The program consists of two components — the Interview Survey and the Diary Survey — each with its own sample. The surveys collect data on expenditures, income, and consumer unit characteristics. In May 2020, the American Association for Public Opinion Research recognized the CE program with its 2020 Policy Impact Award, for joint work by the BLS -- including CE and the Division of Price and Index Number Research -- and the Census Bureau on the Supplemental Poverty thresholds and measure, and the essential contributions these data products have made to the understanding, discussion, and advancement of public policy related to the alleviation of poverty in the United States.

<i>The Millionaire Next Door</i> 1996 book by Thomas J. Stanley and William D. Danko

The Millionaire Next Door: The Surprising Secrets of America's Wealthy (ISBN 0-671-01520-6) is a 1996 book by Thomas J. Stanley and William D. Danko. The book is a compilation of research done by the two authors in the profiles of American millionaires.

<span class="mw-page-title-main">Permanent income hypothesis</span> Economic model explaining consumption pattern formation

The permanent income hypothesis (PIH) is a model in the field of economics to explain the formation of consumption patterns. It suggests consumption patterns are formed from future expectations and consumption smoothing. The theory was developed by Milton Friedman and published in his A Theory of Consumption Function, published in 1957 and subsequently formalized by Robert Hall in a rational expectations model. Originally applied to consumption and income, the process of future expectations is thought to influence other phenomena. In its simplest form, the hypothesis states changes in permanent income, rather than changes in temporary income, are what drive changes in consumption.

<span class="mw-page-title-main">United States Consumer Price Index</span> Statistics of the U.S. Bureau of Labor Statistics

The United States Consumer Price Index (CPI) is a set of consumer price indices calculated by the U.S. Bureau of Labor Statistics (BLS). To be precise, the BLS routinely computes many different CPIs that are used for different purposes. Each is a time series measure of the price of consumer goods and services. The BLS publishes the CPI monthly.

Chained dollars is a method of adjusting real dollar amounts for inflation over time, to allow the comparison of figures from different years. The U.S. Department of Commerce introduced the chained-dollar measure in 1996. It generally reflects dollar figures computed with 2012 as the base year.

Participatory culture, an opposing concept to consumer culture, is a culture in which private individuals do not act as consumers only, but also as contributors or producers (prosumers). The term is most often applied to the production or creation of some type of published media.

A target market, also known as serviceable obtainable market (SOM), is a group of customers within a business's serviceable available market at which a business aims its marketing efforts and resources. A target market is a subset of the total market for a product or service.

<span class="mw-page-title-main">UBank</span> Australian bank subsidiary

Ubank is an Australian direct bank, that operates as a division of National Australia Bank (NAB). It was established in 2008, and provides savings products and home loans over the Internet and telephone.

Paper wealth means wealth as measured by monetary value, as reflected in price of assets – how much money one's assets could be sold for. Paper wealth is contrasted with real wealth, which refers to one's actual physical assets.

This glossary of economics is a list of definitions of terms and concepts used in economics, its sub-disciplines, and related fields.

The pain of paying is a concept from Behavioral Economics and Behavioral Science, coined in 1996 by Ofer Zellermayer, whilst writing his PhD dissertation at the University of Carnegie Mellon, under supervision of George Loewenstein. The term refers to the negative emotions experienced during the process of paying for a good or service. In other words, to make this simpler to understand, the more a purchase hurts, the less people are willing to make this purchase. During the payment process, the handing over of money is akin to losing money. As most people are loss averse, this is experienced as a negative feeling, and as such can also be used to avoid or reduce spending. The pain of paying has been tested in several contexts, and has been found to differ per payment method. The pain of paying is often heralded as a tool to curb individuals' spending.

References

  1. ↑ Bruene, Jim (2012-11-06). "FinovateAsia 2012 Best of Show Winners: CurrencyFair, Finantix, SocietyOne and Ubank". Finovate. Retrieved 2020-09-21.
  2. ↑ "People Like U". Archived from the original on 2017-11-26. Retrieved 2014-10-31.
  3. ↑ ubank. "Online Banking & Home Loans - UBank". www.ubank.com.au. Retrieved 2020-09-21.
  4. ↑ Bureau, US Census. "Census.gov". Census.gov. Retrieved 2020-09-21.
  5. ↑ "Food Groceries and Toiletries in the 1930's prices 50 examples from The People History Site". www.thepeoplehistory.com. Retrieved 2020-09-21.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.