The Impact of Retirement on Household Leisure Expenditures

Household leisure expenditures for retired and near-retired households were examined in order to better understand the dynamics associated with the move to retirement status. Data from the 1995 Consumer Expenditure Survey indicated that retirement, total expenditures, and education had positive impacts on leisure expenditures. For retired households, greater total expenditures and education increased expenditures, while age and the presence of earned income decreased expenditures. For near-retired households, greater total expenditures, education, and the presence of asset income significantly increased leisure expenditures. ********** Significant social and economic changes are influencing the patterns of work and leisure time in Americans' lives. As market work time has declined, studies of time use have demonstrated that the average American has more leisure time than in the 1960s (Juster 1985; Robinson and Godbey 1997; Stafford and Duncan 1985). According to data from the Americans' Use of Time Project, average weekly work hours for employed people ages 18 to 64 declined from 42 hours in 1965 to 36 hours in 1985. Concurrently, average weekly free time for all Americans aged 18 to 64 significantly increased from 35 to 40 hours. In particular, older Americans have greater free time as they are, with the bounty of increased retirement benefits, on average retiring earlier and reducing their work time (Robinson and Godbey 1997). With more time for leisure, Americans have spent more money on leisure goods. According to the Department of Labor's Consumer Expenditure Survey (CES), the average household expenditure on entertainment increased from $200 in 1960 to $1,834 in 1996, with the household budget share for entertainment increasing from 3.3% to 5% during the same period. In addition, nearly 41% of all consumer units interviewed in 1997 reported additional expenditures for pleasure trips and vacations, accounting for 7% of their quarterly expenditures (U.S. Department of Labor 1998). Studies on leisure expenditures have focused on aggregate American demand for leisure-related goods and services and have reported sizable increases over the last four decades (Blaine and Mohammad 1991; Fisk 1963; Kitchen and Hutchison 1990; Wagner and Washington 1982). Fewer studies focused on household leisure expenditures. Thompson and Tinsley (1979) examined the relationship between income and leisure expenditures and did not consider other factors. Dardis et al. (1981, 1994) investigated the impact of household socioeconomic characteristics on leisure expenditures by categorizing leisure expenditures as passive, active, or social leisure expenditures, thus limiting the analysis by their choice of categorization. Our study examines the differences in total leisure expenditure patterns for retired and near-retired households, in the attempt to better understand the dynamics associated with the move to retirement status. Previous studies note the impact of retirement on households' consumption behavior and expenditure patterns (McConnel and Deljavan 1983; Moehrle 1990; Nieswiadomy and Rubin 1995; Rubin and Nieswiadomy 1994, 1995). Clearly, retirement forces older households to adjust to an altered economic environment. Withdrawal from full-time market work often requires retired households to adjust their consumption patterns to reflect a new resource constraint, as well as actualizing their preferences following retirement (McConnel and Deljavan 1983). The differences in leisure expenditures between retired and near-retired households are our focus. STUDIES OF LEISURE EXPENDITURES Thompson and Tinsley (1979) examined the income elasticity for recreation expenditures and found per capita leisure expenditures to be positively related to income for all income classes. Leisure income elasticities were greater than one for all but the lowest income class, indicating that leisure is primarily a luxury good. …