Nina Smith

Are gay men wealthier than straight men?

Filed By Nina Smith | July 25, 2008 6:00 PM | comments

Filed in: Living

"Spending is quick, earning is slow." - Russian proverb

According to a new national survey conducted online by Harris Interactive, nearly half (48%) of gay and lesbian adults report they like to keep up with the latest styles and trends. This is compared to only 38 percent of heterosexual adults.

Taking a look only at gay men in the sample:

  • More than half (53%) report they like to keep up with the latest styles and trends, compared to fewer than one-third (30%) of heterosexual men.

  • Nearly half (49%) report they tend to upgrade to the latest model or version of a product, compared to 35 percent of heterosexual men.

Apparently, the image of gay affluence lives on. But what do these spending habits reveal? Are gay men wealthier than straight men? Or do they just have the queer eye for shopping?

I interviewed Bob Witeck and Wes Combs back in 2006 and they provide an explanation:

Because only about 20 percent of gay and lesbian households have children in them, we tend to have more discretionary income. What others spend on child care related costs we often spend on ourselves (or save.) In many cases we are also dual income households, which coupled with no children gives us more money to spend than the average consumer.

But John W. Stiles at OutSmart begs to differ and gives his take on the myth:

So we get all of the harm of appearing wealthy, without any of the fun (or security) of actually having the money in our pockets and bank accounts.

Appearance can be deceiving. Consider this guest post from an enterprising twentysomething gay guy in Houston:

I'd probably be rich (really rich, not just rich in appearance) right now if I'd learned earlier that I must live on far less than what I make, and invest the difference, if I ever want to achieve financial security.

Most of my friends are in the same boat - actually, most of my friends are in worse shape (simply because they haven't stopped to think about their situation.) I have several buds that earn far above the national income average, they drive Lexus and Mercedes cars, and live in trendy downtown lofts or townhouses. But, many of them owe thousands of dollars in credit card debt - just keeping up with the interest payments on those cards keeps them from getting caught up financially... I believe that gay guys are particularly prone to the "keeping up appearances" syndrome. Gay men just seem to really, deeply worry about what their peers think of them - whether it's how they dress, their physical appearance, or their financial situation.

In the case of finances, keeping up appearances can be very dangerous. Instead of truly striving for financial security by avoiding consumer debt and paying down mortgage debt, many gay men feel compelled to "show off" their relative "wealth" by purchasing cars and clothes and homes and trips and all kinds of things they can't afford. I've done it myself, and you probably know others who've done the same thing. You may even be doing it right now.

This tendency isn't confined to the US. In the UK, a writer at GayFinance ponders the same:

Luxury used to be something that was exclusively for the rich. That's not the case any more. With increasing affluence, more of us can afford the kind of things that used to be strictly for the Rockefellers. We don't just go abroad, we go on adventure holidays to New Zealand or Africa. We don't buy clothes, we buy designer labels...

But too many of us have a "live today, pay tomorrow" attitude. Keeping up with the Joneses can be costly and it's all too easy to max out the credit card - especially on holiday or at Christmas. If you're in serious debt or think you might be a "shopaholic", you should seek help from a debt counsellor.

But even people who don't have a problem with debt may be spending all their income without thinking about the future. Yes, you can afford the things you like now, but wouldn't you like to be able to afford them when you're 60 as well? All too often I meet guys in their late 30s who earn good money and enjoy an affluent lifestyle but who have no savings or investments at all. What do they think they'll live on when they're older?

What do you think? Why are gay men different than their straight counterparts when it comes to keeping up with the latest trends and styles? And what does this mean in regards to their wallet?

Nina blogs about money over at Queercents.

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See previous post by Nancy Polikoff, about the Williams Institute. If you want accurate demographics, and not market-driven demographics from biased sources, this is the place to go.

The thing that strikes me first here is that we're talking about a difference of 16 to 23 points between gay and straight men. So, the differences are statistically significant, and yet straight men remain the major players given that there are many more of them.

Add to that, the two categories here don't speak to wealth, they speak to spending temperment.

I just don't have a first-hand frame of reference on this stuff. I've known gay guys who are divorced, non-custodial parents, keeping up on their child support first. I've known men whose high school or college careers were mucked up by difficult family dynamics and loss of support, so early careers were minimum-wage and opportunities developed over time.

And, I know too many folks, gay and straight, who are living simply by choice, not obsessed with the latest and the trendiest stuff.

inkpeninmd | July 26, 2008 8:58 AM

There is no reason why Harris data in general is less reliable than Census data for analyzing consumer behavior. I read Professor Polikoff's July article about Williams. She wasn't making a case that William's Census data work was any more accurate than anyone else's. Well she may have -"No large, reliable data source asks people their sexual orientation."

The problem with Census data is that it tells nothing directly about sexual orientation. Researchers must extrapolate data from self identified same sex households (same sex unmarried partners). There is no Census information on single gay men and lesbians at all.

On the other hand Harris can and does ask about sexual orientation and partner status. One problem with the reporting on the present study is that partner status is not revealed. Coupled people tend to spend differently than single people.

That this is an online study should raise lots of red flags. Even if Harris randomizes the study groups the information gathered can't be generalized to a population larger than those who choose to participate in online surveys.

The first category "keep up with latest styles and trends" is a little vague. The actual questions may have been more focused and specific but the reporting is open to a great deal of interpretation. Keeping up with latest styles and trends does not of necessity mean dropping cash or plastic on them.

In the early-mid 90's there was a huge to-do made of the supposed greater spending power of gay households. The lifestyle magazines reported and capitalized on it for the obvious reasons. There was also a political line that suggested that we use this as leverage for more influence in the marketplace. In a market economy we're only valued as units of consumption. So on and so forth.

The backlash was that if we have so much economic power, our quest for civil rights was without any real world basis - nobody is oppressing us. This was particularly troubling because the perception of greater economic power even if true only applied to single gay white males. There are others far more qualified than I to recap the economic history of the movement.

So for Nina's questions, the data support no conclusions. A more interesting set of questions would be which gay men blah blah blah and under what circumstances. It woul be more useful to know how glbt people approach savings, how do they view and value wealth generation, how do they do retirement and estate planning. It would be really nice if we started asking the kind of questions that would yield answers we could do something about.

Robert Ganshorn Robert Ganshorn | July 26, 2008 9:28 AM

Ok, Gay man here! Started with nothing, sold business at 49, really retired at 54. Nothing about my life was (or is)designer label. All was about the value of an investment be it a Roth, IRA, Self employed IRA, or real estate. If I bought a new car it lasted seven to ten years.

And we lived very well and comfortably, took great vacations and enjoyed ourselves, but we worked much harder than we played. We worked hard enough to put ourselves in a position to enjoy the last third of our lives in comfort. No, we did not have children, we had relatives who needed us, but having no family to worry over providing for when we are gone, it evens out nicely.

This is a tired subject that has been discussed decades ago. Gay men have more disposable income but not more income than straight couterparts.

Bose: I like your "spending temperament" explanation, but it makes me wonder then why some gay men lack these conventional restraints when it comes to spending.

Inkpeninmd: Which gay men and under what circumstances? That's a good question. I suspect age is the primary factor when it comes to spending on the trendy stuff. Since investing is dependent on time and the compounding effect, it seems even more important for young gay men to start saving as young as possible.

Ewe: If it's a tired subject, why do they keep doing studies?

Nina Smith:
First identify "they" for me.

Nina said:

Bose: I like your "spending temperament" explanation, but it makes me wonder then why some gay men lack these conventional restraints when it comes to spending.

Thanks for the response, Nina...

I was pointing to the fact that your data, about the tastes and spending preferences of gay men, bore no direct relationship to the wealth-oriented headline of this piece.

Your question was:

What do you think? Why are gay men different than their straight counterparts when it comes to keeping up with the latest trends and styles? And what does this mean in regards to their wallet?

And, my response was that you offered evidence about gay men's preferences for keeping up with trends, but only anecdotes about whether they actually spend their money in proportion to their their preferences, or in proportion to their wealth (or lack thereof).

I'm a gay guy who is aware of fashion trends, but because of my budget, the clothes I wear on any given day are generally 3-12 years old. If I had money to spend on fashion, those numbers would be different.

So, why might some gay men lack these conventional restraints when it comes to spending? You've offered evidence to suggest that gay men like fashion, but not that a significant proportion of them spend beyond their means on fashion.

As some points in the post and comments indicate, Nina, I think it is a mistake to gauge wealth on consumption --- instead, it should be measured by savings rates, passive income --- and possibly, by investment expertise after and only after said expertise begins showing results.

One can be comfortably well off, but IMHO one is not "rich" until your passive income is substantial (for most of us, passive income means investment income, but it could be income from other sources, such as a business you own, or royalties, etc.), and one is not "wealthy" until you are living off your investment income --- or alternatively, maybe you continue working your career simply because you enjoy it.

Using these criteria, (1) there are relatively few people, gay, straight, or whatever, under fifty who are "wealthy" and (2) I doubt if there is much percentage difference between straights and gays, and (3) being "wealthy" isn't the same thing as "living large" --- for example, legend has it that Sam Walton drove the same modest pick-up truck even after his Wal-Mart chain had made him a billionaire.

There is the possibility that life doesn't give gay men the standard "signals" about when it is time to quit playing around and get serious about planning financially. Many of us do not marry, and many of us do not find ourselves with children to raise --- and these are the standard milestones that tell the average suburban straight guy to get serious about the way he (and his wife) manage money. Yet, this is only a generalization, a very broad one, and is not true for many of us.