Is the Pareto a principle? A longitudinal exploration of inequality in category-level consumer spending

Consumer spending inequality is a crucial input for customer management, and the Pareto 80/20 principle of consumer spending is widely accepted as expected regularity. However, research results are inconsistent, and the past focus on brand-level cross-sectional snapshots provides only a partial view of consumer spending inequality. Using 16 years of data (2009–2024) from the U.S. Consumer Expenditure Survey, we provide a first holistic view of category-level consumer expenditure inequality, complementing brand-level evidence and enhancing our understanding of the product-category markets in which brands operate. We find that, in a remarkably consistent pattern over the years, the top 20% of buying households are, on average, responsible for half of the category spending. Consumer packaged goods, which have often been used to study brand-level inequality, do not accurately represent the full spectrum of spending inequality. Consistent with work in economics, we explain why a 10/40 spending ratio may be a complementary measure for managers in this regard and demonstrate that what may appear to be low inequality in a Pareto-based framework still reflects a high level of consumer inequality. We discuss the implications of our results for the broader understanding of consumer inequality.