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How do recessions affect friendships?
From Slate's new XX blog, here is Emily Bazelon:
Because of the downturn, friendships between two people whose Saturday night spending and overall class status used to calibrate precisely have now turned into trickier relationships between one person who still has money and one person who doesn’t. The sudden uneven footing isn’t easy to negotiate, as I’ve learned from the responses I got to my question about the effect of the recession on friendships.
Do income classes become more clannish in hard economic times? There is either a very deliberate trade of favors for money, or you stick with those who can spend as you do. An alternative model is that it becomes easier to ask what the other person can afford, and more gains from friendlly trade are opened up across a variety of income classes.
Posted by Tyler Cowen on June 19, 2009 at 07:24 AM in Economics | Permalink
Comments
Tyler - The third link is broken.
Posted by: nicholas at Jun 19, 2009 8:01:36 AM
Now fixed, thanks...
Posted by: Tyler Cowen at Jun 19, 2009 8:13:42 AM
We are experiencing that situation right now, but it isn't causing problems. Saturday nights have become stay-in nights, where we go to one person's house and play games or watch movies and have dinner. We do go out occasionally, and we often pay for our friend, but it's just one of the many favors exchanged in the friendship. We don't keep track of who owes who a favor at this point, and really it would be hard to keep track. We helped her move, she helped us put in a vegetable garden, we babysit for each other, we drove her around before she got her car, she drove us around when ours was out of commission. It all evens out in the end, and helping each other out is part of what friendship is about. In fact, it may have made us closer, because we know exactly how much we can rely on each other.
Posted by: Tracy at Jun 19, 2009 9:46:56 AM
The problem, laid bare in the downturn, may have been initiated during the bubble, when friends were keeping pace through consumer credit and unsustainable employment. Of course, we could just tolerate economic inequality, but that's not going to happen any time soon. Samuelson said happiness is having a little more money than your colleagues.
Posted by: Andrew at Jun 19, 2009 9:57:58 AM
I'm friends with someone living on Social Security and have had to look at that problem even before the recession. And in fact, going through one of my college Great Books - Aristotle's Ethics - the section on Friendship goes into the problems you mention. Aristotle's take is that if one friend is rich and the other poor, there is usually some offset, generally the personal qualities of the poor friend. He says nothing about one who suddenly becomes poor, though.
Posted by: Pat Mathews at Jun 19, 2009 10:17:15 AM
I have had to forgo several friend outings because, after the first we had, I couldn't keep up due to our financial woes. We try to attend the more informal home parties, where potluck is the rule, as opposed to $200 per couple nights out. I've made it informally known that we will do what we can, but our budget is tight, and it has strained our socialization
Posted by: Fraud Guy at Jun 19, 2009 10:52:59 AM
Part of the problem is that friendship involves relaxing, letting down your guard, speaking freely and hanging out with people you can really relate to.
If there's a money gap, people can often no longer relate to each other's circumstances. Worse, the newly poor person sometimes has a chip on their shoulder, parsing everything you say for evidence of insensitivity. Making small talk, you want to ask if they've taken any trips lately -- oh wait, maybe they can't afford to, better not ask. At some point it can be tiring to walk on eggshells and be careful all the time.
Newfound wariness and lack of common ground is not a recipe for a continuing close relationship. Money changes everything.
Posted by: anonymous at Jun 19, 2009 10:58:10 AM
I'd take it as a sign of the type of the friendship. I've had friends who obviously couldn't keep up, but that was ok, because our shared social interests were cheap. We just did cheap things, and it was never an issue. I've also had friends who, when they had money troubles, we stopped hanging out, because we did not have many interests in common other than the expensive interests.
Finally, I've had friends that cross that boundary. I like hanging out with them, and when we have money, we do nice things, and when we don't, we don't.
It seems likely that people are sociallizing based on what they like to do and can afford to do, and when the circumstances change, they may not have many interests in common anymore.
Surely you accept that most of a person's friends are friendships of mutual interest?
Posted by: Granite26 at Jun 19, 2009 11:15:55 AM
This isn't a particularly new problem; just ask any recent college graduate who has friends both in grad school and in the business world with decent jobs(granted, the latter is a dwindling group).
My husband and I were both pretty lucky after graduation, job-wise, so we're on the higher end of the income spectrum for people our age. We've found it easy to stay friends with our poor grad student friends - mostly, you just need to get out of the "dinner & a movie" mentality - staying in & playing board games & ping pong, going out hiking, etc etc.
Posted by: Gori Girl at Jun 19, 2009 11:27:45 AM
Somehow this was less askward in my twenties, when I was still slogging through grad school on $9,000/year but still hanging out with your old friends who were starting to make decent money for the first time in their lives. I guess the lesson from that time in my life is that eventually everybody's relative fortunes will change, and if you like long term friendships then it's not wise to put too much emphasis on how compatible your lifestyles are at any one point in time.
Posted by: mobile at Jun 19, 2009 11:51:14 AM
If the people who are more eager to keep spending money view a group outing as a shared good, it might make sense to give Lindhal pricing a try and subsidize the friend. Whether that would work socially is a different matter -- it probably depends on the friend.
Posted by: dWj at Jun 19, 2009 4:47:16 PM
I have recently gone back to school to get my PhD and as such our income (wife and I) dropped to about 25% of it's former level. In doing so, I'm convinced that those "with money" which I was before simply get a little lazy when it comes to spending time with friends. It can be 'easier' to go out, you want to seem culturally aware, so you go see movies when first come out, etc.
Honestly, I've found that I can get probably 80% of the quality of life on my now 25% of the income because time with friends can be very inexpensive if you plan a bit, and I spend time with friends who make a lot more than us and (unfortunately) a lot less as well. We do a bit if (very subtle) subsidization (I've been on both sides). I'm genuinely sorry for those who find changes in money greatly affecting their friendships because it doesn't have to be so. If you are on the high side, invest some time thinking about more inexpensive ways to spend time together. If you're on the low side, recognize that it isn't insulting for your friend to buy your drink every now and then and be thankful.
Posted by: Jesse Blocher at Jun 19, 2009 5:22:59 PM
I see a lot of people cutting back who don't strictly have to, because they're worth significantly less than they were pre-crisis. How long will that continue?
Posted by: Larry at Jun 19, 2009 8:36:10 PM
It's a matter of what you value isn't it? Do you value friends? Or engaging in expensive activities with financial equals?
I have a below-the-poverty-line income due to health issues. But I have a very large number of friends, wealthy and poor. I am truly blessed, rich beyond imagination.
Perhaps it helps that I'm out in the country. Maybe city life creates barriers to friendship with folks who are different.
Posted by: In the country at Jun 20, 2009 12:58:58 AM
"There is either a very deliberate trade of favors for money, or you stick with those who can spend as you do"
If that's the structure of the relationship, I wouldn't call it friendship.
Posted by: J at Jun 20, 2009 10:27:30 AM
After graduating, I realized how much my college lifestyle had been subsidized by my parents. I already had the spirit of frugality, if not the practice, but living on my own and staying with an iron-clad budget has really given me some great habits that I hope to keep. I've taken up a lot of cheap hobbies, and discovered group activities I can do with my poor grad-student friends. This weekend I hope to invite some people over to help me fold dumplings (chinese potstickers). Some cheap ingredients and a lot of social labor produce 50-100+ potstickers, which people can take home with them. Very fun afternoon!
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