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Presented at the 2011 Conference
(In alphabetical order)
Conference11/Papers/thumbs/wilgus.jpgEntertainment as defined by Merriam Webster (1967) is “the act of diverting, amusing, or causing someone’s time to pass agreeably”. Because little is known about how U.S. households allocate resources to entertainment, the purpose of this paper is to quantitatively document the structure of entertainment consumption. The structure is decomposed along three dimensions. First, the data are analyzed to extract their trending components. Presumably, trends in entertainment consumption are important since households have significantly changed the choice of mediums to receive the consumption over time.1 Next, we extract the cyclical properties of the data. The cyclical component of entertainment consumption illustrates how consumer spending fluctuates over the business cycle. Finally, the data are analyzed in order to describe the impact of demographics on entertainment demand. This enables a better understanding of the underlying determinants of household demand. To analyze each of the dimensions, the authors use the Bureau of Labor Statistics’ Consumer Expenditure Survey (CES) data set for the period 1984-2009. This unique survey extends a time period that enables estimation of long run and cyclical trends and is detailed enough to provide demographic properties. Additionally, the comprehensive nature of the CES allows us to categorize entertainment consumption as spending on (1) home video, (2) home audio, (3) publishing, (4) toys and games, (5) sports and recreation, (6) film, (7) performing arts and culture, (8) gaming and wagering, and (9) photography. The data set is also augmented with the BLS average U.S. regional unemployment rates and the BLS's regional Consumer Price Index; used to proxy business cycle effects2 and correct for inflation, respectively.

As a quick preview of the results, it is shown that spending has significantly changed within and across our nine entertainment categories. That is, as a percentage of total entertainment consumption, there have been winners and losers. It is also shown that total entertainment consumption is highly pro-cyclical and more elastic with respect to real GDP; a measure of the U.S. economy. When the economy is growing (falling), household entertainment consumption grows (falls) and at a greater pace than real GDP. Interestingly, though total entertainment consumption is pro-cyclical, some of the components are counter-cyclical. This implies that some forms of entertainment are defined as inferior goods. With respect to demographics, the results show that many obvious determinants such as family size, region, and education significantly influence entertainment consumption. Surprisingly, even when controlling for income, race and marital status of the head of household significantly affect the size and composition of entertainment consumption.  (view session)

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