Of course, interpreting the diferent uses of wage income and investment income as support for the commensuration theory of consumption involves a lot of suppositions. A particular problem is that investment income tends to be added at higher increments of the total income that an individual receives. The diference in how income from investment and wage income is spent might, therefore, simply reflect the marginal decline in the utility of spending as income increases.20 That would be in line with what Keynes (1936) and other economists assume about the general propensity to consume. Still, Zelizer’s research on how the uses of money are constrained by its social identity is broadly consistent with the idea that money earned in exchange for labor time will tend to be used to buy goods and services that index free activity, while money earned through investments is more likely to be reinvested.
One piece of suggestive evidence, already touched on in Chapter 3, is the surprisingly low rate of consumption of retirees in the United States. Retirees receive most of their income from either investments or social security payments and yet do not have high overall levels of income, at least compared to middle-aged wage earners (Deaton 1992). According to economic theory, retirees should be spending down their savings, while the middle-aged, who are in the phase of life when earnings are highest, should be saving. Because income is typically higher in middle than in old age, saving when middle aged is relatively less painful—so we might expect people in that stage of life to save more than when they are old. In fact, the data show that older people are more likely to save if they possibly can, while high-earning middle-aged people tend to spend all their income (Deaton 1992). The argument could be made that older people are reticent to spend their savings because they want to leave money for their children. But then we would expect higher-earning middle-aged persons to, likewise, be saving for their progeny, for a significant proportion of them face the prospect of their children needing substantial funds for things like college and down payments for cars, homes, and so on.
Perhaps this odd pattern of saving and spending across the life course is best explained by the diference between the sources of income for workers and retirees. Part of the reason why retirees spend less than middle aged people (who should, according to the theory, be saving) might be that their incomes are not construed as wage earnings. In the absence of a compulsion to spend in order to make money wages commensurate with the work given in exchange for them, maybe the urge to spend simply recedes. On this understanding, for retirees saving is not a positively directed, intentional activity but rather just the default consequence of their distance from wage labor exchange (more on this below, in section 1.7).
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Time for Things