Analyzing Generational Consumption Shifts through DID Model: Evidence from the U.S. Consumer Expenditure Survey

Abstract

Young people often behave differently from older groups when it comes to how they spend money, especially in uncertain times. This paper focuses on Generation Z (ages 18–24) and examines how their entertainment and digital expenditures changed before and after recent disruptions between 2019 and 2023. The analysis uses microdata from the Consumer Expenditure Survey (CE), which is conducted by the U.S. Bureau of Labor Statistics and offers detailed household spending and demographic information. To explore this issue, the study combines Ordinary Least Squares regression with a Difference-in-Differences (DID) approach, allowing both descriptive and causal insights. The research results indicate three main points. First, Gen Z consistently spent less on entertainment compared with young Millennials (ages 25–35). Second, during the disruptive years, overall entertainment spending declined across groups, reflecting precautionary saving behavior. Third, although descriptive trends suggest Gen Z may have shifted more quickly toward digital substitutes such as streaming and gaming, the regression evidence does not show a statistically significant difference compared to Millennials. Overall, the findings underline both the structural limits faced by Gen Z and the tentative signs of adaptability visible in descriptive data, though these patterns are not statistically significant. The study contributes to understanding how younger consumers react to shocks, and its findings are relevant for firms designing digital strategies as well as for policymakers concerned with digital equity and financial literacy.