Income Statements
I go to my accounting class every Tuesday night. In accounting, I expect to learn about income statements but don’t expect to so much in my microeconomics class. But we did, sure enough. My economics teacher is an interesting elderly gentleman who is most of the time not the easiest professor to follow. He says things, however, in ways that can at times be quite comical. And I enjoy those moments.
I’ve already mentioned the fried bologna sandwich discussion we had in class, so it wasn’t really a surprise that we ended up talking about blue jeans one day. The topic of discussion was what kinds of things affect the quantity that is purchased of a particular good. One factor, he says, is income. Prof B said that if he conducted a survey throughout all the college dorms and asked how many students had blue jeans and how many pairs they had, the results would come back that everyone would have about 5 or 6 pairs of jeans. Income, in this particular survey, would have no bearing on the outcome. However, if the survey asked how many students had Lucky jeans or Abercrombie and Fitch jeans, you would find a direct correlation between income level and the number of jeans the student had, i.e., high-income students would have more pairs of expensive jeans than a low-income student.
Prof B went on to say that most people cannot tell the difference in the fit of a $20 pair of Levis versus the fit of an $80 pair of A & F’s. “So why do some people spend $80 on jeans when they could spend $20?” The answer, according to Prof B, is that people buy and wear expensive jeans in order “to make an income statement.” It would be socially unacceptable to go around telling people how rich you are, so people rely on the things they wear to convey this message. This, in turn, influences who people hang out with in college (or wherever), and can even influence who a person marries.
This brought up the topic of Catholic schools who make their students wear uniforms to prevent these “income statements.” Prof B said he had a student once who had gone to a Catholic high school prior to entering college. In the course of the class discussion, he found out that unlike other former Catholic students he has had in his classes, this particular girl said she did not take her uniform off right after school, and in fact, she and her friends from school would go to the mall, etc., with their school uniforms on.
Prof B told our class that when he heard that, he thought this girl was either really weird or there was more to the story. So he asked her what school it was that she had attended. It turned out to be a Catholic school from Nashville, TN. But it wasn’t just any Catholic school—it was a Catholic school that only the VERY rich can afford to attend. So then Prof B was satisfied that this gal did indeed fit into his theories. She and her friends were doing what all other teens do—by wearing her school-specific uniform, she was doing nothing other than “making an income statement.”
I thought it was interesting and, in fact, shed some light on not only blue jean habits but also some other behaviors we are guilty of. The houses we have, the vehicles we drive, the fabric we wear—why, they’re nothing more than an income statement. Would you concur?
I’ve already mentioned the fried bologna sandwich discussion we had in class, so it wasn’t really a surprise that we ended up talking about blue jeans one day. The topic of discussion was what kinds of things affect the quantity that is purchased of a particular good. One factor, he says, is income. Prof B said that if he conducted a survey throughout all the college dorms and asked how many students had blue jeans and how many pairs they had, the results would come back that everyone would have about 5 or 6 pairs of jeans. Income, in this particular survey, would have no bearing on the outcome. However, if the survey asked how many students had Lucky jeans or Abercrombie and Fitch jeans, you would find a direct correlation between income level and the number of jeans the student had, i.e., high-income students would have more pairs of expensive jeans than a low-income student.
Prof B went on to say that most people cannot tell the difference in the fit of a $20 pair of Levis versus the fit of an $80 pair of A & F’s. “So why do some people spend $80 on jeans when they could spend $20?” The answer, according to Prof B, is that people buy and wear expensive jeans in order “to make an income statement.” It would be socially unacceptable to go around telling people how rich you are, so people rely on the things they wear to convey this message. This, in turn, influences who people hang out with in college (or wherever), and can even influence who a person marries.
This brought up the topic of Catholic schools who make their students wear uniforms to prevent these “income statements.” Prof B said he had a student once who had gone to a Catholic high school prior to entering college. In the course of the class discussion, he found out that unlike other former Catholic students he has had in his classes, this particular girl said she did not take her uniform off right after school, and in fact, she and her friends from school would go to the mall, etc., with their school uniforms on.
Prof B told our class that when he heard that, he thought this girl was either really weird or there was more to the story. So he asked her what school it was that she had attended. It turned out to be a Catholic school from Nashville, TN. But it wasn’t just any Catholic school—it was a Catholic school that only the VERY rich can afford to attend. So then Prof B was satisfied that this gal did indeed fit into his theories. She and her friends were doing what all other teens do—by wearing her school-specific uniform, she was doing nothing other than “making an income statement.”
I thought it was interesting and, in fact, shed some light on not only blue jean habits but also some other behaviors we are guilty of. The houses we have, the vehicles we drive, the fabric we wear—why, they’re nothing more than an income statement. Would you concur?
I must confess, I wish my income statement packed just a little more punch.
posted by Kris at 9/12/2005 11:43:00 PM
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