In 1913 a cartoonist named Arthur R. Momand coined the phrase "Keeping Up with the Joneses" when he created a daily comic strip by the same name. In this rant I share why I think it is still so prevalent today... especially in the black community.

Studies show Blacks disproportionately spend on conspicuous items. In many cases they end up in financial crises more often than their white counter parts.

Economists refer to “Keeping up with the Joneses as playing “Wealth Signals”. Wealth Signals is a game all Americans play. They play to keep score in life. If a person is successful (i.e. doing well financially), they are able to buy more wealth signals. If a person is not doing as well, they don’t have as much disposable income to put on wealth signals.

What I find interesting though, is black and brown people tend to play “Wealth Signals” more fierce than whites. According to the report “Race and Consumption”, Blacks spend as much as 30% more on visible goods like clothes and cars than whites with a comparable income. Blacks are more willing to “break the bank” to win than to simply bow out when the stakes get too high.

It is easier for a poor black family to get “caught up” in the game because they don’t have as far to stretch to stay in the game. A poor white family, on the other hand, would have to stretch much farther to compete. Most simply opt out gracefully.

Imagine you are playing poker. You take a look at your hand. You have a pretty good hand. So you place your bet. You bet an amount you clearly can afford to lose or else you wouldn’t do it. Somebody else at the table has a Royal Flush… a guaranteed winning hand. They have a lot more money than you; hence can stand to bet and lose a lot more. They not only call your bet but raise your bet by 3 times the amount.

Now you have a dilemma. Assume you have the money to match the bet but really can’t afford it. You opt out of the game gracefully because if you lose you are completely out of the game altogether.

Now assume they have the same amount of money as you to bet/lose. They match and raise your bet, but only by a few dollars. You now have no problem matching their bet. It’s more than you can afford, but if you lose it won’t “break you”. More importantly, and here is the issue, you can keep playing!

In the white community the annual median income is $67,000. A white family making $25,000 a year can’t compete on the level of the $67,000 family. On the other hand, the median income for black households is $43,000. A black family bringing in $25,000 a year has a lot stronger pull to keep playing. The $43,000 family is not, “quite” out of their league. They might even be able to appear to win.

The problem is the poorer black family has invested a lot more to stay in the game. They could have used that money to build wealth, educate the kids, etc.

The interesting point is there are fewer leagues in the black community. You have more people competing in a league that they shouldn’t be. For example, in the same Black family there may be a person in jail, a blue collar worker, and a doctor. The family member in jail wants to show that he is as successful as his blue collar brother. He will even aspire in many cases to show that he is as successful as his brother the doctor. When he gets out, he puts $7,000 rims on his car. He pulls up to the stop light with his wheels spinning. Folks look at the car saying "man that dude got it going on!" Side note: You can only see spinning rims can when the car is moving, so clearly the driver is not buying them for himself.

We see wealth leagues in the White community defined a lot more clearly. Also, there are a more of them. Generally a family of doctors live in the same neighborhoods with other white doctors. They hang out with other white doctors. The marry people from families with other white doctors. They generally stay in their same financial peer group. White blue collar workers hang with, go to church with, and associate with other working class people. Poor whites just live in trailer parks...

Until very recently in American history, your "means" dictated what league of the "wealth signals" game you could play in. Access to credit has allowed people to play out of their league.

Are you outta your league?

Just my 20 cents!