Why do seniors get discounts?

they don't look poorFrom the Priceonomics blog:

You’ve seen them on the bus, in museums, and at movie theaters: senior discounts. As a reward for being old, senior citizens pay a quarter less for bus fare, a small fortune less for movie tickets, and receive discounts generally all over the place.

If you’re a twentysomething, or part of what some journalists have colorfully called the screwed generation,” you may be wondering: why not me?

The idea that seniors are a group in need of help and protection dates back to the thirties, when America’s senior citizens were disproportionately poor and affected by the Depression wiping out everyone’s savings. In 1935, President Roosevelt passed the Social Security Act, which gave federal assistance to the elderly. This became the norm. Aid to seniors increased over time, in particular with the creation of Medicare in 1965 and the passage of an amendment indexing social security to cost of living increases and creating an additional Supplemental Security Income for seniors in 1972.

As two poverty economists note, “One of the most striking trends in elderly well-being in the twentieth century was the dramatic decline in income poverty among the elderly.”

This makes the error of believing that any discounts we see, even in the commercial realm, are necessarily trying to effect some redistribution of purchasing power from rich to poor. But that is not necessarily the case.

It is true that a major change in the nature of income distribution and poverty since the 1930s has been through Social Security and Medicare; the incidence of poverty amongst the elderly has sharply declined (although it has not disappeared). But many discounts we observe in the market are targeted at seniors not because they are poorer but because evidence suggests they are careful shoppers, mindful of prices, searching for deals. The discounts at cinemas may be the result of (misdirected?) altruism by the owners, but it also could simply be a realization of different willingness-to-pay by seniors, a group that is easily identified and segmented by the presenter. Seniors pay less for groceries than non-seniors who shop at the very same stores, not because of discounts labelled “seniors discount” but because they take advantage of coupons, and random sales. In that case, the store recognizes different willingness-to-pay by a group but employs indirect price discrimination to provide the discount.

Each of the nonprofit theatre companies in my town offers small-ish discounts to seniors on tickets. The discounts could have arisen from trying to help what was perceived to be a poorer demographic, or perhaps because of evidence on willingness-to-pay (although I actually doubt many theatres go about gathering such data). Once it becomes the norm in the local cultural world it becomes difficult for any single organization to stop offering the discount, as it will stand out, surprise buyers, and could cause significant loss of business. So whatever the reason for bringing in the discount in the first place, I imagine it will not easily be dislodged.

UPDATE: On the other hand … Dylan Matthews reports that out-of-pocket medical expenses for seniors generate higher poverty levels than we might have thought.

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    • In Spokane, our symphony offers “senior rush” as well as “student rush” two hours before each concert begins. It’s a way to help out seniors who might not be able to afford single ticket pricing or a 10 concert subscription, but it also helps out the organization because seating location is at the discretion of the Box Office.

      If the performance has some gaps in prime seating, the seniors and students fill the holes.

      If the performance has sold well, the seniors and students get the cheaper seats (but still get in for a discount).

  1. Note that many senior discount options also include military—and that’s a good thing. I am 68 and generally take advantage of senior discounts, especially when I purchase tix (at full price) for younger folks. On some occasions, where “minimal philanthropy” is warranted, I cough up the full price—especially for non-profits.

    Your point about seniors “paying less for groceries because they take advantage of coupons, and random sales” is also well-taken.

    • “I am 68 and generally take advantage of senior discounts, especially when I purchase tix (at full price) for younger folks.”

      …Otherwise known as fraud.

      • No, there’s no fraud, you’ve misread. Tod says he takes advantage of the senior discount for himself when he’s buying full price tix for younger people.

        In other words, he doesn’t feel bad about getting a little discount for himself when he’s already paying full price for several other people.

  2. We *should* no more object to giving senior discounts than to the idea that we ought to care for our parents (individually and collectively), which we have enthroned in custom and law in Social Security. Ya want to get rid of social security and put it back on the community (individually)?
    But the better rationale is that of “Ladies Nite” where women get free admission to strip clubs. Isn’t it sexist to let women get into these places free? (Love how the liberal sensibility embraces female objectification and abuse, while objecting to honoring and protecting of women qua women.)

    Altruism and marketing, sexism and ageism?

    • But this isn’t about getting rid of income and medical security for seniors – the question I raised was whether, given we have policies in place that have been effective at poverty reduction for seniors, there remains a rationale based on income equity (as opposed to strategic profit-maximizing price discrimination) for the seniors discount.

  3. I didn’t realize the rationale for my parents to get discounts (they’re in their early 70s and comfortable, but by no means wealthy) was to redress inequities between their income and some mythical rich person’s income. I thought senior discounts existed because seniors don’t work for a living and that most people do eventually live on fixed incomes. That my parents happen to possess some property and have banked some retirement money doesn’t mean they’re poised to pay full price for everything, arts-related or otherwise.

    Another reason seniors enjoy so much discounting is because AARP lobbies and advocates on behalf of its members. AARP’s approach, however some might disdain it, provide the template for much of the rest of the so-called “senior economy.”

    Senior poverty, by the way, does indeed remain alive and well, Michael. Just three days ago, the Washington Post published this: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/20/senior-poverty-is-much-worse-than-you-think/

    So ultimately I’m unclear what your point is. If you’re arguing that economic policies have been effective enough for seniors that maybe they don’t need discounts, shouldn’t you argue that maybe — because social policies have been effective for minorities wishing to vote — we don’t need the Voting Rights Act anymore?

    • Thank you Leonard. Yes, in my “update” at the bottom of the post I refer to the piece from the WP. My argument (if it can be called such) was that given there had been movement to address income issues for seniors across the board, it wasn’t clearly the case that they ought to be singled out for concessionary fares in the arts. That doesn’t mean we ought to end the programs we do have (that the medication is working is not a good reason to stop taking it!). Yes, many of them do end up on fixed incomes, although if you look at trends in median household income, fixed-income doesn’t look so bad …

  4. You will find all sorts of discounts – seniors being but one that encourages those on a fixed income the ability to attend performances. But look at the changing picture: there’s a great increase in under-35 discounts, and lower rates for children and students continue to proliferate.

    Discounting has never been about wealth or poverty, it has to do with marketing, luring new audiences or filling otherwise cold, empty seats.

    The painful reality is that the wrong people ( the subscribers) get the biggest discounts of all, and as Danny Newman used to point out, we’re give our biggest discounts and best seats away to people who usually can afford to pay the most. There are no hard and fast marketing rules, and I have seen companies use discounts as a lazy way to sell tickets by offering them early, instead of waiting until it is clear that there will be empty seats otherwise.

  5. I have been doing music and arts previews for publications in my area for the last decade. I have found that lots of arts presenter/museums etc have a senior/students category that offers discounted tickets to both senior and students with a college or university ID.

  6. I wonder how a “take a discount if you need it ( whatever age or sex you are)” might work out for the bottom line of the presenting venues. Although “trust” would come into play, it might be the fairest way to encourage attendance by economically diverse populations. This self-regulating discount would also resolve any issues of discrimination that sometimes arise when one group gets a discount and another doesn’t. Anecdotal information about a scattering of restaurants that have their prices as “pay what you want” end up with a better bottom line than when they had a regularly priced menu.

  7. Michael Rushton seems to think that Medicare and an indexed SSDI have greatly reduced poverty among senior citizens. He seems to believe that Social Security provides adequate means for people in retirement (it was never designed to do that), and Medicare provided all the health coverage one needs in retirement (it doesn’t). Apparently he has not seen the hundreds of articles in recent years that show how tens of millions of baby boomers approaching retirement age have no savings at all to help finance their retirement, and tens of millions more who are drastically underfunded, not to mention those who were ‘retired’ early because of layoffs in the Great Recession and have to fund that retirement with their savings (all or in part) because they have many years to go before they reach Social Security eligibility. Add to that the measures taken by companies in recent years to gut pension plans altogether and raid 401K plans. I know many seniors who would be happy to provide Rushton and anyone else with an interest with a quick look at the present state of the financial landscape for retirees in this country.

    Prior to my own retirement, I worked for a large company providing financial education to large corporate clients, and the financial unpreparedness of employees at both ends of the spectrum was staggering. (I have also spent many years working in the performing arts field.) Rushton seems extremely naive to posit that the modest (and only occasional) SSDI COLA adjustment and the existence of Medicare (which costs many seniors some hundreds of dollars a month) should make concerts affordable. And from the performing arts organization’s perspective, does it make sense to have people decide not to attend a concert because they cannot afford it? How does that help their bottom line?

  8. Many events cannot fill seats by charging any set price, so a suggested price is probably the best policy, these days. Some seniors are well enough and not others, just like everyone else. But they have the time to attend, and now we have to get baby boomers to join them in that role.

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