Graduation Year

2018

Date of Submission

12-2017

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Eric Helland

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© 2017 Brendan R. MacDonald

Abstract

Is avocado toast the reason that I am still living with my parents? In other words, does the consumption of avocado toast, or more specifically eating out in general, have any impact on one’s ability to be a homeowner. In May of 2017, an Australian real estate developer by the name of Tim Gurner was asked to provide advice to young people who could not afford to purchase a home. He responded by saying, “when I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” (Victor, 2017). While the claim may appear to be laughable at first glance, this is not the first time that statements such as this have been made.

The United States Census Bureau tells us that annual homeownership rates for individuals under the age of 35 has been on the steady decline. Additionally, per Goldman Sachs, it is known that the percentage of adults age 18-31 that were married and living in their own homes has decreased from 56% in 1968 to 23% in 2012. This paper assesses and compares the spending habits of different generations, working to discern if there are notable differences particularly between Millennials and other generations. Data sets from the Consumer Expenditure Survey (CEX) and Zillow between the years 2000-2013 were examined. Although there is not data on avocado toast specifically, it is possible to broaden the hypothesis to examine the expenditures on the consumption of meals prepared away from home. For the purpose of this study, I take Tim Gurner’s statement and apply it more broadly to the idea of spending money on the experience of eating out. The results show that the consumption of avocado toast, defined as money spent on meals prepared away from home, does not have an impact on whether an individual owns a home, nor is it an indicator as to whether they will be renters or living with their parents. Rather, the results indicate that owning a home leads to consuming more avocado toast. This means that although it is commonly perceived that Millennials are consumers as opposed to savers, their inability to afford home ownership does not have any direct connection to their spending habits on avocado toast, and more broadly, eating out in general.

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