Graduation Year

2026

Date of Submission

12-2025

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Murat Binay

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Abstract

Pine and Gilmore et al. 1999 examine American consumers’ preferences for experiences over durable goods. Since then, there has been a multitude of research on the psychology behind this shift in consumption preferences, and there has been an abundance of media coverage of the new “experience economy.” This thesis goes beyond psychology and examines the macroeconomic, demographic, and technological determinants of experiential spending in the United States from 1984 to 2023. I use annual data from the Bureau of Labor Statistics’ Consumer Expenditure Survey (CES) and variables from the Bureau of Economic Analysis (BEA), Federal Reserve Economic Data (FRED), US Census data, Pew Research Center, and Statista, to construct a long-run measure of the experiential share of household consumption and estimate four time-series models. The first is a static log-level specification, then a first-difference model, and then lagged AR(1) versions of both. Across all models, the results show that experiential spending is insensitive to income, mortgage costs, and most demographic or technological factors commonly assumed to drive the experience economy. Rather, unemployment rate appears to be the strongest and most consistent variable, suggesting that experiential consumption is highly cyclical and responsive to uncertainty in the labor market. Furthermore, education level has a negative long-run association, suggesting that demographic transitions may influence experiential spending through channels beyond income alone. Measures of internet penetration, social media usage, and music streaming adoption show no systematic relationship with experiential consumption. Overall, the results of this research challenge prior cultural and media narratives that emphasized income growth and digital transformation, and instead highlight labor-market confidence and slow-moving demographic forces as the primary determinants of experiential spending from 1984 to 2023.

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