chapter 2
THE COST OF HAVING FUN

CONSUMER EXPENDITURES FOR RECREATION

Americans are always finding new ways to spend their free time and money. In good economic times, people generally have more discretionary income to spend on leisure and recreation. The U.S. Bureau of Labor Statistics reported in Consumer Expenditures in 2002 that in 2002 Americans spent an average of $2,079 on entertainment, slightly more than the $1,953 that was spent in 2001. (See Table 2.1.) The study further noted that persons aged thirty-five to forty-four spent the most on entertainment ($2,685), and those over seventy-five spent the least ($896).

Research by the Bureau of Economic Analysis (BEA), a division of the U.S. Department of Commerce, showed that consumers steadily increased their total spending on entertainment from 1998 through 2002. According to the BEA's National Income and Product Accounts Tables, in 2002 Americans spent a total of $628.3 billion on recreation, up from $604 billion in 2001. Almost one-fifth of those dollars ($119.1 billion) was spent on video and audio goods. Toys and sports supplies accounted for $59 billion. According to the BEA, Americans spent $34.6 billion in 2002 to see such spectator amusements as performing arts, movies, and spectator sports, up from $26.2 million five years earlier. (See Table 2.2.)

Although total expenditures for various forms of entertainment increased from 1998 to 2002, most goods and services experienced incremental or gradual growth. Examples of goods and activities that sustained modest increases were books and maps, gardening supplies (flowers, seeds, and potted pants), admissions to spectator amusements, and clubs and fraternal organizations. (See Table 2.2.)

CONSUMER ELECTRONICS

The explosion of digital technology has changed the consumer electronics industry, making possible a wide array of new products and blurring the difference between information management and entertainment equipment. According to the Consumer Electronics Association (CEA), an industry advocacy group comprising more than 1,700 member companies, the wholesale value of electronics products sold to Americans was an estimated $96.4 billion in 2003, an increase of 2.3% over the 2002 figure, $94.2 billion. Sales growth was expected to continue, with a projected 5% rise in 2004 to $101 billion. (See Table 2.3.)

Spending on Computers Levels Off

After a period of dramatic increases in spending on computer products, this category was showing signs of leveling off. In 1998, $37 billion was spent on computers, peripherals, and software; two years later Americans spent $43.8 billion on such goods, but then this amount dropped to $42 billion in 2001 and increased by a modest 5% in 2002 to $44.2 billion. (See Table 2.2.)

One major change in the way Americans spent their money on computers was the rise in sales of notebook, or laptop, models. The NPD Group, a private market research firm, reported that in May 2003 the total dollar value of notebook computer sales exceeded that of desktop computers for the first time, accounting for 54% of the month's $500 million in retail computer sales. Just three years earlier, in January 2000, notebooks had accounted for just 25% of sales. At the same time, sales of flat-panel liquid crystal diode (LCD) monitors also topped sales of conventional cathode ray tube (CRT) monitors for the first time. These trends were expected to continue over time.

America Goes Digital

According to the CEA, digital products were finding increasing favor with consumers, especially devices that recorded video, images, or music. Blank media and accessories constituted the fastest-growing category during 2003, as manufacturers shipped recordable CDs and

TABLE 2.1

TABLE 2.2

TABLE 2.3

FIGURE 2.1

DVDs, batteries, and other accessories with a wholesale value of $9.5 billion, up about 8% from $8.8 billion in 2002. Other growth categories included mobile electronics, up 5% from $16 billion in 2002 to $16.8 billion in 2003; home security products, up 4.6% to nearly $2.1 billion; home information products, up 2.8% to $33.3 billion; and video hardware, up 1.8% to $19.1 billion. Sales of electronic gaming declined 1.7% to $10.9 billion, and home audio fell 9.6% to $4.6 billion. (See Table 2.3.)

Making projections for 2004, the CEA anticipated demand for cellular telephones, onboard navigation systems, and car audio systems to boost sales of the mobile electronics category by more than 15% to $19.4 billion, and forecast blank media sales to grow by 6.5% to $2.6 billion, while video equipment sales were expected to increase 4.2% to $19.9 billion. (See Table 2.3.)

Video Equipment and Cameras

Sales of new flat-screen, high-definition televisions were growing as prices came down and more digital and high-definition television channels were made available. According to a survey conducted by the NPD Group in March 2004, 6% of televisions sold during that month were flat-screen LCD models and 1% were the plasma type, while 9% were projection televisions. With the cost of such equipment still considerably higher than that of conventional analog models, the market penetration of such equipment rose sharply with income. In households earning less than $50,000 per year, 6% reported having projection equipment and less than 1% plasma, while in households with income greater than $100,000, 19% claimed ownership of projection TVs and 4.3% had plasma sets.

In several video and imaging device categories, the sales growth of new digital products far outstripped that of their analog predecessors. Digital videodisc (DVD) player sales continued to grow rapidly, while sales of analog videocassette recorders (VCRs) fell sharply. Another popular new device was the digital camera, which allowed instant viewing of photographs and gave users the option of either printing or e-mailing copies. In addition to offering improvements or new capabilities in imaging, the new technology also permitted the devices to be smaller, sleeker, lighter, and more portable.

In 2003, according to the Photo Marketing Association International report Photo Industry 2004: Review and Forecast, sales of digital cameras topped those of film cameras for the first time. During the year Americans bought an estimated 12.5 million digital cameras versus 12.1 million film models. For 2004 the organization projected sales of 15.7 million digital cameras versus just 10.6 million film cameras. (See Figure 2.1.) Sixteen percent of digital cameras bought in 2002 were purchased as replacements for film cameras, and half of consumers surveyed reported that they would buy a digital camera as a replacement for their film camera if it were to break.

According to Photo Industry 2004: Review and Fore-cast, one-time-use film cameras continued to be the industry's best seller, hitting an estimated 211 million units sold in 2003, up from 162 million in 2000 and just fifty-four million in 1995. (See Figure 2.2.) The total number of rolls of film purchased during the year was dropping, however, to an estimated 816 million in 2003 from 888 million in 2002, which included single-use camera

FIGURE 2.2

FIGURE 2.3

sales. (See Figure 2.3.) At the end of 2003, 31% of U.S. households owned digital cameras, and this was expected to increase to 42% by the end of 2004.

Telephone surveys conducted by the CEA and published in U.S. Consumer Electronics Sales & Forecasts, 1999–2004, found that U.S. households have growing numbers of video products of all kinds. In 2004, 98% of homes had color televisions and more than two-thirds had a TV with stereo sound. Fifteen percent of American households had DVD players at the beginning of 2001, but by January 2004 fully half did. Direct-to-home satellite systems also grew in popularity—in January 2001, 16% of homes had one, but by January 2004, 24% of households had them. In 2004, 54% of Americans had camcorders, up from 39% three years earlier. (See Table 2.4.)

Audio

At the same time that video equipment sales were increasing, sales of audio products were falling. According to the CEA in U.S. Consumer Electronics Sales & Forecasts, 1999–2004, from 2002 to 2003 sales of portable audio equipment dropped from $1.5 billion to $1.3 billion in wholesale dollars, sales of separate audio components fell from $1.2 billion to $960 million, and compact audio system sales dropped from $965 million to $656 million. Home theater-in-a-box systems held relatively steady, slipping from $896 million to $860 million, while the one bright spot was sales of MP3 players, which can store hundreds of songs digitally in a unit smaller than the size of a pack of cigarettes. Sales in this category increased from $205 million in 2002 to $556 million in 2003, and the CEA projected they would rise further in 2004, to $706 million. (See Table 2.3.)

Although wholesale revenues were falling, the CEA found that between January 2001 and January 2004 the number of American households with audio products increased. During this period the number of homes with personal portable compact disc players grew from 28% to

TABLE 2.4

52%, and those with home theater audio systems jumped from 23% to 32%. Personal MP3 players such as the Apple iPod increased in penetration over the three years as well, from 2% of homes to 13%. (See Table 2.4.)

Video Games

After a peak sales year of $11.1 billion (wholesale) in 2002, video game sales dropped in 2003 to $10.9 billion and were projected to fall slightly again during 2004 to $10.8 billion, according to the CEA. (See Table 2.3.) A study of retail purchases by the marketing information company NPD Group, found that consumers spent $11.2 billion at retail on video games and equipment in 2003, representing a drop of 4% over 2002's record $11.7 billion. A 27% decline in console hardware sales was a major factor in the decline, with growth occurring in other categories including console software, up 14%, portable game software, up 19%, and portable gaming hardware, which increased 54% to $750 million, up from $490 million in 2002.

SPORTING GOODS SALES

Sports Apparel

Many Americans devote part of their leisure time to pursuits related to personal health and fitness. Participants in physical fitness activities or in sports such as softball or skiing often purchase highly specialized apparel and equipment. According to the Sporting Goods Manufacturers Association (SGMA) in Shoppers Bought More, Spent Less on Sports Apparel in 2003 (May 2004), retail sales of all sports apparel totaled $37 billion in 2003, down slightly from the $37.8 billion tallied in 2002. Sports apparel sales represented about 22% of the $166.1 billion Americans spent on apparel of all kinds during 2003. (See Table 2.5.)

Despite the decline in revenues, the total number of sports apparel items purchased in 2003 increased by 3%. This discrepancy was attributed to a 5% drop in prices, to an average of $8.35 per item. This amount was more than a dollar less than the average price for all apparel of

TABLE 2.5

$9.66. One-third of the total number of items purchased were T-shirts, with the rest consisting of such items as swimwear, outerwear, socks, underwear, hats, and polo, golf, and rugby shirts.

According to the SGMA report, less than a third of the sports apparel purchased was used in active play, accounting for just $11.5 billion of the $37 billion total. (See Table 2.5.) The average cost of these items was less than the $8.35 sports apparel average—just $6.45 each.

Athletic Footwear

In 2003, according to research performed by the NPD Group/NPD Fashionworld for the SGMA, retail sales of athletic footwear in the United States reached $16.4 billion, up 4.2% from 2002. Running shoes accounted for some 28% of the athletic footwear market, with sales of basketball shoes increasing by 6.2%, almost triple the 2.2% sales increase for all running shoes. As with athletic apparel, NPD/SGMA observed that less than half of athletic shoes were purchased primarily for use in sports or exercise. The total number of athletic shoes sold during the year was 448.3 million pairs, approximately three for every two Americans. Men's shoes accounted for 197 million pairs, women's 126.5 million, and children's shoes 124.8 million. The average price per pair was $36.48, a figure that was 9% lower than the 1998 average of $40.07.

Sports Equipment

The SGMA reported in its Recreation Market Report (2004) that the wholesale value of sports equipment shipments rose slightly from 2002 ($17.4 billion) to 2003 ($17.5 billion). In 2003 the largest category was exercise equipment and machines ($3.8 billion), followed by golf equipment ($2.4 billion). Camping gear topped $1.7 billion, and firearms and hunting equipment wholesale shipments were worth $1.9 billion in 2003, while shipments of fishing gear slightly exceeded $1 billion. In team sports, the three largest categories during 2003 were baseball/softball ($473 million), basketball ($377 million), and soccer ($240 million). (See Table 2.6.)

Exercise Equipment

According to the SGMA, by 2000 adults in half of all American households owned at least one piece of exercise equipment, and it was used regularly in two out of three of them. Roughly equal numbers of men and women owned fitness equipment. Those twenty-five to thirty-four owned 24% of the equipment; those thirty-five to forty-four, 23%; fifty-five and over, 22%; forty-five to fifty-four, 18%; and eighteen to twenty-four, 13%. The most frequently owned equipment was free weights, followed by treadmills and stationary bikes.

Research conducted by the National Sporting Goods Association, a retail trade association, found that in 2001 more females (52%) than males (39%) purchased fitness equipment. Nearly one-third of purchases were made by consumers ages thirty-one to forty-four, 29% were made by persons ages forty-five to sixty-four, and 22% of exercise equipment purchases were made by adults ages twenty-five to thirty-four.

Industry observers attributed the strength of the exercise and fitness market to the growing number of older Americans who wanted to stay healthy and fit. This trend was expected to continue as an aging U.S. population, intent on lifetime fitness, drove the market.

Recreational Transport Expenses

In its Recreation Market Report, the SGMA announced that wholesale recreational transport sales, which included bicycles, pleasure boats/motors, recreational vehicles, and snowmobiles, totaled $18.5 billion in 2003. Sales of pleasure boats and motors grew from $9.4 billion in 2002 to $9.6 billion in 2003, while sales of personal watercraft, such as Kawasaki's Jet Ski brand, increased from $581 million to $597 million. Sales of other recreational vehicles (not including motor homes) increased from $5.6 billion in 2002 to $5.8 billion in 2003. (See Table 2.6.)

The National Marine Manufacturers Association (NMMA) estimated in 2003 Recreational Boating Abstract that in 2003 seventy-two million Americans participated in recreational boating, up 6% from the sixty-eight million who participated in 2001. Americans owned about 1.6 million sailboats and approximately 2.5 million miscellaneous craft, such as canoes and rowboats. In 2003 the average cost of a sailboat was $40,077 and inboard cruisers averaged a hefty $372,830, while the typical personal watercraft cost $8,890 and a canoe just $573. (See

TABLE 2.6

TABLE 2.7

Table 2.7.) The NMMA estimated that Americans spent more than $25.6 billion on retail expenditures for boating in 2003, up from $19.3 billion in 1997.

TRAVEL COSTS

Travel and tourism is the largest services export industry in the United States. It is also the third largest retail sales category and one of America's largest employers. An estimated 7.2 million U.S. residents worked in the travel and tourism industry in 2002, resulting in $157 billion in payroll. The Travel Industry Association of America (TIA) calculated that one out of every eighteen people in the U.S. civilian labor force was employed as a result of direct travel spending in the United States.

Although the travel industry suffered significant losses following the events of September 11, 2001, which came on the heels of an economic downturn, the TIA projected that domestic and international travelers would spend an estimated $552 billion in 2003, up from $537.2 billion in 2002. International travel accounted for $65.1 billion, and international visitors spent an estimated $80.7 billion traveling in the United States during the year, including $15.6 billion in travel fares alone.

The TIA reported that travel-related purchases made via the Internet rose dramatically during the early years of the twenty-first century. In 2003 an estimated 64.1 million people used the Internet to check prices or schedules or to find other information about travel destinations. More than two-thirds of these, or 42.2 million, booked some portion of their travel package online, with 29% of that number doing all their travel booking on the Web, up from 23% the year before. The average amount spent by online travel bookers was $2,600, up more than 10% from the $2,300 average spent in 2002. The TIA further reported that 75% of online travel planners had purchased airline tickets via the Internet in 2003; that same year 71% had booked accommodations online, and 43% had ordered rental cars. Other purchases made online included tickets to cultural events and complete travel packages.

The TIA predicted that tourism would continue to grow. By 2005 total domestic person trips were expected to top 1.2 million, and nearly forty-five million international travelers were expected to visit the United States. Travel price inflation was expected to increase 2.2%, mainly because of higher hotel rates and gasoline prices.

AMUSEMENT PARK EXPENDITURES

Americans have always enjoyed such amusement parks and attractions as Busch Gardens, Disneyland, and Six Flags. Big amusement parks and theme parks featuring children's rides, roller coasters, and water slides have existed in the United States since the early years of the twentieth century. According to the International Association of Amusement Parks and Attractions, in 2003 the approximately six hundred parks and attractions in the United States had 322 million visitors and took in revenues of $10.3 billion, up from 317 million visitors and $9.6 billion in revenues in 2000.

SPENDING ON TOYS AND CRAFTS

Buying and playing with toys is a popular activity in the United States. In the past, the toy industry considered children from birth to age fourteen as its prime audience. Today, the prime toy-purchasing years are birth to ten years of age.

While some toys may sell very well one year and then disappear the next, other toys sell consistently from year to year. These enduringly popular best-sellers are the basis of the toy business and include games (such as Monopoly and Scrabble) and preschool and infant toys such as plush stuffed animals and trains.

The United States is the largest market for toys in the world, followed by western Europe, Asia, and Japan. U.S. toy sales in 2003 declined to $30.7 billion from $31.6 billion

TABLE 2.8

in 2002. In 2003 the leading category in toy sales, as reported by the Toy Industry Association, was video games ($10 billion). Other strong sellers were dolls/accessories ($2.8 billion), infant/preschool toys ($2.6 billion), arts and crafts for children ($2.4 billion), games/puzzles ($2.4 billion), vehicles ($2 billion), plush stuffed toys ($1.4 billion), and action figures/accessories ($1.2 billion). (See Table 2.8.)

Spending on crafts and hobbies grew to $29 billion in 2002, up from $25.7 billion in 2001, according to the Hobby Industry Association (www.hobby.org). Needlecrafts, painting and finishing supplies, floral crafts, and general crafts all experienced increased sales. According to statistics presented on the Hobby Industry Association Web site, more than 80% of households have "at least one family member engaged in crafts/hobbies," and the average crafter spends about 7.5 hours per week on his or her hobby.

SPENDING ON BOOKS

According to the Book Industry Study Group (BISG), consumers spent about $37.9 billion to purchase books in 2003, a figure that was projected to rise 2.9% to $39 billion in 2004. Of this total, retail sales of adult trade books accounted for an estimated $8.4 billion in 2003, which would rise to $8.5 billion in 2004, while juvenile trade book sales of $3.4 billion in 2003 were expected to increase to $3.7 billion in 2004. According to the American Booksellers Association, the average retail price of a new hardcover book was declining, hitting $22.75 in 2003, down from $23.73 in 1998. In addition to buying books, many people also borrowed them from libraries, purchased used copies, and shared, loaned, or passed books on to friends or family.

Reflecting the gradual decline in reading that was found by a Harris poll conducted in late 2003, the market research firm Ipsos-Insight reported in 2003 that book sales figures had remained relatively stagnant during the preceding five years. Among the group that historically purchased the most books, households earning $50,000 per year or more, sales had in fact declined. This was true despite the expansion of such chains as Barnes & Noble and Borders and the emergence of such Internet "e-tailers" as Amazon.com.

Ipsos-Insight found that 22.5% of book purchases in 2002 were made at large bookstore chains, while book clubs accounted for 19.2%, independent stores and small chains 15.5%, warehouse clubs 6.8%, mass merchandisers 5.5%, used bookstores 4.8%, and the rest divided among variety stores, supermarkets, drugstores, and other types of retail outlets. Internet sales, nonexistent in 1995, continued to grow steadily, up from 7.1% in 2000 to 8.1% in 2002.

The U.S. publishing industry as a whole saw wholesale revenues of $23.4 billion in 2003, as estimated by the Association of American Publishers in a press release dated March 31, 2004. Sales of trade books rose 1.2% from 2002, to $5.1 billion, while adult trade hardbound titles dropped 2.4% to $2.5 billion, and paperbound sales declined 0.6% to $1.5 billion. Sales of juvenile hardbound books increased 28.6%, to $698 million, while juvenile paperbacks dropped 5.2% to $448.6 million. Sales of book club titles fell 9%, to $1.3 billion, and mass-market paperbacks declined 1.7% to $1.2 billion. The biggest growth area was religious titles, which increased 50.2% to $1.3 billion.

Other major categories included elementary/high school educational books, which increased 2.5% to $4.3 billion; higher education titles, which rose 3.6% to $3.4 billion; professional and scholarly books, which grew by 3.6% to $4 billion; and standardized tests, which increased 12.4% to $592 million.

SPENDING ON COMPACT DISCS AND DVDS

In 2003 Americans spent more on digital videodiscs (DVDs) than they did on compact discs (CDs) for the first time ever. According to the "2003 Consumer Profile" released by the Recording Industry Association of America, manufacturers shipped sound recordings with a retail value of $11.9 billion during the year, down from $12.6 billion in 2002 and $13.7 billion in 2001. (See Table 4.9 in Chapter 4.) The decline in sales was attributed to the impact of illegal Internet file-sharing, as well as the increasing competition for entertainment dollars that had led retailers, and some manufacturers, to reduce prices.

A consumer survey performed in 2004 by the NPD Group found that one-third of respondents cited price as an "important" or "very important" factor when deciding to buy a CD. The average price of CDs was in fact dropping, from $13.79 per disc in the first quarter of 2003 to $13.29 in the first quarter of 2004, according to NPD.

A growing number of music consumers were also downloading music online legally via such Web sites as Apple's iTunes and the relaunched Napster.com. By mid-2004 each offered more than 700,000 licensed songs, which were available from iTunes for ninety-nine cents each or from Napster via a $9.95 monthly subscription.

Purchases of DVDs, meanwhile, were growing dramatically, with retail sales in 2003 topping $12 billion, according to the Video Software Dealers Association. This was up $3.9 billion, or 46%, from 2002. An additional $4.3 billion was spent on DVD rentals, an increase of 53% over 2002. While many DVDs were rented from such chains as Blockbuster or Hollywood Video, growing numbers were obtained from online vendors such as Netflix and Walmart.com, which, for a monthly fee of approximately $20, allowed users to borrow an unlimited number of discs provided they kept no more than three at a time.

At the end of 2003 the average retail price of a DVD was $20.21, while the average video store rental cost just $3.20, according to the Video Software Dealers Association. Americans bought seventeen discs per DVD player during the year, a nearly threefold increase over the highest reported rate for video cassettes of six per player in 1996.

COSTS OF WILDLIFE-RELATED RECREATION

Many Americans enjoy participating in recreation that involves wildlife. Fishing and hunting are some of the most popular forms of recreation in the United States, and increasing numbers of people enjoy watching, photographing, and feeding wild animals and birds. According to the U.S. Fish and Wildlife Service, more than eighty-two million U.S. residents fished, hunted, and observed wildlife in 2001.

The U.S. Department of the Interior's 2001 National Survey of Fishing, Hunting, and Wildlife-Associated Recreation found that in 2001 Americans spent more than $108 billion on wildlife-related recreation. Fishing accounted for approximately 32% of that expense, wildlife-watching activities accounted for 36%, and hunting for 19%. Another 13% was unspecified. (See Figure 2.4.) Of the expenditure by sportspersons, 59% was for equipment, 28% was trip-related, and 13% was for other items. (See Figure 2.5.)

Americans who enjoyed watching wildlife spent an estimated $38.4 billion in 2001. Of that amount, 63% was for equipment, 20% was trip related, and 17% was other (such as magazines, membership dues, and contributions to conservation or wildlife-related organizations). (See Figure 2.6.) Although the number of participants had declined somewhat, those who did participate spent more—on more expensive equipment—than previously.

FIGURE 2.4

FIGURE 2.5

FIGURE 2.6

Expenditures by wildlife recreationists, including funds generated by licenses and taxes on fishing and hunting equipment, finance many conservation efforts throughout the United States. The U.S. Fish and Wildlife Service calls wildlife recreationists "the nation's most ardent conservationists" because they not only underwrite conservation efforts but also take the time to introduce children and adults to the pleasures of the outdoors and wildlife.

BUYING COLLECTIBLES

At the end of the 1990s, collectibles, including limited-edition plates and figurines, accounted for $5.5 billion of the $20.9 billion giftware market. This category was growing at an annual rate of more than 10% and represented 26% of total giftware sales. Industry observers credited the "cocooning trend," with its emphasis on the importance of the home as a place of leisure and entertainment, as a prime driver of increasing sales of collectibles. They also cited the investment value of collectibles and the concept of "family collecting" for helping fuel sales growth as baby boomers found collecting a satisfying way to spend time with their children.

In the early twenty-first century, however, sales of collectibles declined. Unity Marketing, in its Collectibles Industry Report, 2002, noted that traditional collectibles industry revenues fell 9% in 2001 to $6.5 billion, from $7.1 billion in 2000. The figurine and sculpture category, which was the industry's largest, saw sales drop by 20% during 2001, to $1.9 billion at the retail level. Industry observers attributed the decline to the economic downturn heightened by the events of September 11, 2001.

In addition to those who collected figurines and plates, other Americans were acquiring "blue-chip" items such as stamps, coins, antiques, and artwork, while others were caught up in fads that rode a wave of massive popularity, and then, when the market became oversaturated, began to fill the clearance shelves of stores or the dollar bins at flea markets. Examples of the latter included items that started out as toys and ended up collected feverishly by adults when they appeared to have potential as "investments," Beanie Babies by Ty Inc. being a prime example.

ONLINE AUCTIONS

One popular way that Americans purchase collectible items is via online auctions. The leading auction Web site, eBay.com, has grown rapidly since it was founded in 1995. By mid-2004 eBay had sixty-five million registered users in the United States, along with thirty million more internationally. Of the ninety-five million users who were registered, 41.2 million had bid, bought, or listed an item for sale during the previous year.

During 2003 eBay users purchased $20 billion worth of goods at auction from an estimated 160,000 sellers. Items listed for sale numbered 971 million, up 52% from the 638 million listed in 2002. The top ten categories, in terms of dollar volume, were: vehicles, $7.5 billion; consumer electronics, $2.6 billion; computers, $2.4 billion; books/movies/music, $2 billion; clothing and accessories, $1.8 billion; collectibles, $1.5 billion; toys, $1.5 billion; home and garden, $1.3 billion; and jewelry and gemstones, $1.3 billion. Other companies also operated online auction sites, and many vendors of collectibles sold items through their own Web sites as well.

PAYING TO TAKE A RISK

Weekend daredevils may encounter a variety of insurance problems, depending on the pastime and the danger involved. People who participate in extreme sports and high-risk recreational pursuits may find themselves forced to pay high rates for insurance coverage or be unable to get such coverage at all. When approached by persons who participate in risky activities, insurance companies may decline to insure them, exclude accidents related to the dangerous activity, postpone coverage until after a specific event, or require a physical examination to renew such a policy. In some cases, they may deem the activity and relative risk as negligible or slight and offer the policy at no additional cost.

Some insurance companies have added questions about high-risk behaviors to their applications for prospective policyholders. Participation in extreme sports can add hundreds or thousands of dollars in annual premiums. Pursuits that involve great speed—auto, motorcycle, and boat racing—tend to make insurers most apprehensive. Disability insurers are more likely than other carriers to reject such high-risk applicants. Disability claims have increased sharply, with some insurers losing money and others leaving the business.

Sports associations sometimes step in to provide insurance when other carriers will not. The Professional Association of Diving Instructors offers certified scuba divers medical insurance. The U.S. Hang Gliding Association has a $1 million liability policy to cover a glider who sails into bystanders. The American Motorcycle Association offers its racers some medical coverage and accidental death and dismemberment insurance.

THE COST OF A NIGHT OUT

A survey conducted by a Philadelphia-based online dating service in 2000 compared the cost of a date—dinner and a movie—in various cities in the United States. New York was the most expensive city with an average cost of $135, followed by Chicago ($128) and San Francisco ($124). Las Vegas was the least expensive of the fourteen major cities ranked, with dinner and a movie averaging just $74. When the cost of a baby-sitter is added to the cost of an evening out, the price may be prohibitive for many American families.

The high cost of an evening out is considered one of the market forces driving the booming business of video and DVD movie rentals. At the end of 2003 the Motion Picture Association of America reported in U.S. Entertainment Industry 2003 MPA Market Statistics that the average price of a movie ticket had risen to $6.03, up 22 cents from the year before (see Table 2.9) and almost double the average DVD rental price of $3.20. If split between two or more people, the cost of seeing a movie dropped well below $2 per person when it was viewed at home.

Family outings can also be quite expensive. Theme park admission fees have increased dramatically over the years: In 1955 a family of four (two parents and two children) paid just $8 for admission to Disneyland, while in 2004 the same family paid $179. In 2004 admission for two adults and two children to Six Flags Magic Mountain in California cost $94, entrance to Colorado's Hyland Hills Water World was $104, and tickets for a family of four to visit Cedar Point in Sandusky, Ohio, cost $138.