A piece in today's WaPo (reg. req'd) begins with a narrative about a university student who has opted for a plain white $4 wastebasket for her dorm room as opposed to a fancier one for $29. It then says that students appear to be cutting back on cute and fun items because of concerns about the economic conditions:
"I went with less expensive products that might not be as 'attractive,' if you know what I mean, but that work perfectly fine," the 18-year-old from Brookeville said. "I felt that things like this weren't worth spending so much money on."
It's a small sacrifice but yet another example of how the weak economy is cramping our national style. In recent years, students stocked up on bold bedspreads, matching clothes hangers and iPod sound systems to outfit dorm rooms that increasingly resembled urban lofts, driving double-digit increases in sales in the emerging back-to-college market.
But those gains are expected to grind to a halt this season, with the National Retail Federation, a trade group, predicting sales dropping 1.4 percent to $31 billion as high gas prices and the tumultuous housing market force students and their parents to rein in spending. Economics 101: Cute comes second to cheap.
"College students are learning a hard lesson that when economic times are tough," NRF President Tracy Mullin said, "fun purchases take a back seat."
What are they saying?
- That the cross-price elasticity of demand between gasoline and dorm adornments is really high? (actually, every school I attended provided wastebaskets in the dorms, so this concept befuddles me a bit; I guess things have changed in the past 57 years.)
- That the wealth elasticity of demand for cute and fun is also pretty high? (as family wealth drops with falling house prices, students reduce spending on these product characteristics by an even greater percentage.)
- Or possibly that as expected family (and/or student) incomes drop, the students will be expected to spend considerably less on "fun" and "cute" (implying a high income elasticity of demand for fun and cute)?
Also from the article,
"I don't think it's going to be about pimping up your room," Cohen said. "I think it's about making sure the basic essentials are up to speed."
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