Reference no: EM131636058

Question: SAVING, SPENDING, AND SOCIAL CLIMBING

The best-selling book The Millionaire Next Door by Thomas J. Stanley and William D. Danko (Longstreet Press, 1996) presents some very interesting data on the characteristics of millionaires. We tend to believe that people with expensive houses, expensive cars, expensive clothes, country club memberships, and other outward indications of wealth are the millionaires. The authors define wealth, however, in terms of savings and investments, not consumer items. In this sense, they argue that people with a lot of expensive things and even large incomes often have surprisingly little wealth. These people tend to spend much of what they make on consumer items, often trying to keep up with, or impress, their peers. In contrast, the real millionaires, in terms of savings and investments, frequently come from "unglamorous" professions (particularly teaching), own unpretentious homes and cars, dress in inexpensive clothes, and otherwise lead rather ordinary lives. Consider the (fictional) data in the file Social Climbers.xlsx. For several hundred couples, it lists their education level, their annual combined salary, the market value of their home and cars, the amount of savings they have accumulated (in savings accounts, stocks, retirement accounts, and so on), and a self reported "social climber index" on a scale of 1 to 10 (with 1 being very unconcerned about social status and material items and 10 being very concerned about these). Prepare a report based on these data, supported by relevant charts and/or tables, that could be used in a book such as The Millionaire Next Door. Your conclusions can either support or contradict those of Stanley and Danko.