Household Life Cycles and Lifestyles in the United States

Abstract

Household life cycle has been widely used as a determinant of consumer behavior and a basis for market segmentation. However, there is considerable disagreement about how life stages should be defined and how households progress through these stages. Existing studies use a priori definitions, which are tested on a cross-sectional survey of households collected at a single point in time and thus cannot reveal the real dynamics of the household life cycle. The Panel Study of Income Dynamics provides longitudinal data on household composition in the United States for a period of 34 years; the authors use this to identify empirically the most typical stages and paths that U.S. households have followed since 1968. They develop a hidden Markov model in which the stages of the household life cycle are taken as latent, unobservable states that are uncovered from the manifest household demographic profiles over the 34 years, assuming that households evolve through these latent stages following a first-order Markov process. The authors apply their results to classify members of another panel (Consumer Expenditure Survey) into life stages, which enables them to study the impact of the household life cycle on households' budgetary allocations, providing a comprehensive analysis of lifestyles (through expenditure patterns) over the household life cycle.

How price increases affect future purchases: The role of mental budgeting, income, and framing

“…First, this article shows that customer income influences the degree of mental budgeting and, as a result, how customers align their future purchase behavior to budgets they set for particular categories of expenses. However, the degree to which customers engage in budgeting could be affected by additional factors such as the customer's stage in the life cycle (Du & Kamakura, 2006. For example, customers with young children might engage in mental budgeting to a higher extent than customers with no or adult children.…”

The Relationship between Household Lifecycle and Brand Loyalty

“…Danko and Schaninger, 1990;Douthitt and Fedyk, 1988;Douthitt and Fedyk, 1990;Du and Kamakura, 2006;Fritzsche, 1981;McLeod and Ellis, 1982;Putler et al, 2007;Redondo-Bellón et al, 2001;Wagner and Hanna, 1983;Schaninger and Danko, 1993;Wells and Gubar, 1966;Wilkes, 1995). Most of these studies examine the effects of household life cycle on product category buying behavior.…”

Operations research methodology life cycle trend phases as recorded in journal articles

“…These and other life cycle studies (e.g. Du and Kamakura, 2006) have consistently shown that identifying the phase of a life cycle is a critical precursor to using the life cycle for forecasting purposes.…”