As the world begins to open up in the post-pandemic era, we have seen a steep rise in “revenge spending”, which includes travel, dining, luxury goods, shopping, and live events, such as concerts. Economists have used the term to explain people’s excessive spending behavior after an “unprecedented economic event,” such as a pandemic, in order to make up for lost time.
Concert tours are back in full force and boy, did everyone pretty much miss it. Tickets are sold out almost as soon as the sales have opened up and drove up the prices exorbitantly. Taylor Swift’s concerts have resellers selling tickets for $40,000 or more, leaving millions of “Swifties” unable to get tickets and in tears. Members of Beyoncé’s “beyhive”, traveled to Sweden to watch their Queen perform, thereby increasing hotel prices and other travel related expenses. It was said that Beyonce’s concert partially caused a blip in the Swedish economy and increased the country’s inflation.
“Swifties” and Beyoncé’s “Beys,” are perfect examples of what a post-COVID consumer is like. They are consumers who, in spite of exorbitant ticket prices and higher prices of goods overall, would be willing to splurge on experiences they have missed during the pandemic. In fact, the Wall Street Journal dubbed 2023 as the year of the $1,000 ticket.
Revenge spending is nothing new. In 2003, following the SARS epidemic, the Chinese experienced the same behavioral patterns of excessive spending and gravitated towards luxury goods. Revenge spending is rooted in anxiety about death. Luxury items (yes, a $1,000 concert ticket is a luxury) are built on this anxiety and provide a feeling of safety and security after what could be a traumatic event or period of deprivation. It is also a form of celebration to reward oneself for getting through or surviving tough times.
Revenge spending is great for businesses and an economy that needs jumpstarting. It provides a much needed boost to recover from the recent downturn. It is, however, a growth that is not sustainable.
Revenge spending causes significant inflation from the sudden surge in demand for products and services. It causes supply shortages because businesses are unable to keep up. It may also cause a wealth gap since only those who can afford them tend to purchase luxury goods and services, while those unable to do so grapple with the realities of higher prices overall.
On the micro level, consumers also tend to carry on more debt in order to justify their revenge spending, thereby decreasing savings and less future financial freedom.
It is without a doubt that the economic impact of these concert tours are tremendous. The Federal Reserve has estimated that Swift’s tour and its downstream effects would be at $5 billion…from tickets all the way to elaborate outfits. In an inflationary era, however, the effect of these sudden surges in spending can put an increased strain on the economy as a whole, and some only make these purchases because of revenge spending. As Beyoncé has once wisely sang: “Can you pay my bills?, Can you pay my telephone bills? Do you pay my automo' bills?”
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