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Consumer expenditures: results from the Diary and Interview surveys.

Consumer expenditures: results from the Diary and Interview surveys

Historically, the Bureau of Labor Statistics Consumer Expenditure Survey has been of importance largely for its role in periodically revising the Bureau's Consumer Price Index. Results from the survey are used to select new market baskets of goods and services for the CPI, and to determine the relative importance of the items selected. While this remains an important use of the Consumer Expenditure Survey, the increasing demand for more timely information about the spending habits of different kinds of households has expanded the role of the survey, making it an important source of information in its own right.

In the past, the expenditure survey was conducted about every 10 years, the previous one being in 1972-73. However, sharp increases in the costs of energy and housing during the 1970's highlighted the need for timely expenditure data in order to observe consumers' response to these phenomena. The BLS recognized the need for a survey that would provide a continuous flow of data, and began the current survey in 1980. Data from this ongoing survey allow analysts to track expenditures classified by household characteristics over a period of time and to link expenditure changes to changes in economic and social conditions. Among the characteristics by which the expenditures may be classified are: before-tax income, consumer unit size, age of reference person, region of residence, and number of earners.1

Data from the 1982-83 Survey of Consumer Expenditures show that urban American consumers spent about two-thirds of their total expenditures on food housing, and transportation; they spent more than a third of their food dollar on food away from home; and average transportation expenditures increased 7 percent from 1980-81 to 1982-83, despite a 10-percent decline in gasoline expenditures. These are among the results that the Consumer Expenditure Survey provides and that this article describes.

Description of the survey

The expenditure survey consists of two separate components, each with its own questionnaire and sample: a quarterly interview survey in which each of the sampled consumer units reports information to an interviewer every 3 months for five consecutive quarters, and a diary survey in which consumer units are asked to complete a diary of expenses for two consecutive 1-week periods. At the same time, a great deal of information is obtained about the characteristics of the members of the consumer unit. The Interview survey is designed to obtain data on expenditures and income that respondents can be expected to recall for a period of 3 months or longer, such as property or automobile purchases, and those that occur on a regular basis, such as rent, utility bills, or insurance premiums. It is estimated that about 95 percent of expenditures are covered in the Interview survey. The Diary survey obtains data on frequently purchased items such as food and beverages, housekeeping supplies, and so forth, that respondents are less likely to be able to recall over long periods of time. Expenditures incurred away from home overnight or longer are excluded from the Diary survey. Spending on trips is obtained in the Interview survey. To obtain a complete picture of consumer spending, it is necessary to integrate results from both survey components. Data collection for both components of the survey is carried out by the Bureau of the Census under contract to the Bureau of Labor Statistics.

Average expenditure levels

Expenditures and income of consumer units classified by five household characteristics--income quintile, age of reference person, region of residence, size of consumer unit, and number of earners--are shown in tables 1 and 2. Table 1 includes Interview survey data and table 2 shows Diary survey data for 1982-83. The tables also include the number of consumer units and average consumer unit size for each class.

The interview data show that expenditures can vary substantially when classified by different consumer unit characteristics. The amount spent for food and housing by consumer units in the highest income quintile was more than three times the amount spent by those in the lowest income quintile. Consumer units with reference persons aged 65 and over spent four times as much on health care as those with reference persons under 25 years of age. Consumer units in the West spent 20 percent more on average for transportation than those in the Northeast, and four-percon consumer units spent twice as much on housing as single persons.

Results from the Diary survey show that consumer units in the highest income quintile spent more than 2 1/2 times as much on food at home as the lowest income quintile consumer units, and more than 4 1/2 times as much on food away from home. Consumer units whose reference person was under 25 years of age spent about 38 percent less for good at home than those with reference persons over 65 years of age, but spent 48 percent more for food away from home. Consumer units in the South spent about 11 percent less for food than those in the Northeast.

Budget shares

While actual expenditure levels are revealing to some users, others may find budget shares more appropriate. Budget shares are the portion of total expenditures spent on a component or the portion of an average component expenditure spent on a subcomponent.

For example, the interview data show that the highest income quintile consumer units spent more than three times the amount for food and housing than did those in the lowest quintile, but that amount accounted for only a 44-percent share of their total expenditures, compared with a 58-percent share of the total for those in the lowest quintile. Almost 10 percent of the total expenditures of consumer units with reference persons aged 65 and over were spent on health care, compared with less than 3 percent spent by those with reference persons under 25. The youngest consumer unit class spent 23 percent of their total on transportation, compared with 16 percent spent by the oldest class of consumer units. Food and housing expenditures accounted for a relatively constant share of total expenditures across consumer unit size classes. Single persons spent 51 percent of their total on food and housing, two-person consumer units spent about 48 percent, and shares for other size classes fell within that range.

The diary data show that consumer units spent over a third of their total food dollar on food away from home. The youngest class of consumer units spent about 47 percent of their food dollar on food away from home, compared with only 27 percent for the oldest class.

Food expenditures away from home were also influenced by the number of wage earners in the consumer unit. Single-person consumer units in which the individual was not a wage earner--primarily elderly persons--spent 31 percent of total food expenditures away from home, compared with 58 percent for those in which the individual was a wage earner. Consumer units of two or more persons with no wage earner spent 23 percent of their food budget away from home, compared with 30 percent for those with one earner, and 37 percent for those with two earners.

Income also influences expenditures for food away from home. Consumer units in the lowest income quintile spent 30 percent of their total food expenditures on food away from home, compared with 42 percent for those in the highest quintile. For the middle income quintile, the proportion was about 33 percent.

Aggregate expenditure shares

Some users of expenditure data may be interested in the aggregate amount spent on a component by a particular class of consumer units. Or they may be interested in the portion that amount is of aggregate spending by all consumer units. For such users, aggregate expenditure shares are another way of analyzing the consumer expenditure data.

Aggregate expenditures on a component are determined by multiplying the mean expenditure on that component by the total number of consumer units. The aggregate expenditure share of a class of consumer units is determined by multiplying the class's mean expenditure on the component by the number of consumer units in the class and dividing by the aggregate expenditure. This differs from the budget share of a class of consumer units which is the average amount spent on a component as a portion of the average total expenditures of the class. Even though the class's component budget share may be large, the aggregate expenditure share will be relatively small if the class size is small or the class mean expenditure for the component is low relative to that of other classes. For example, the interview data show that consumer units with reference persons under age 25 spent 23 percent of their average total expenditures on transportation, compared with 20 percent spent by all consumer units. However, because the dollar value of their mean expenditure is low relative to most other classes, the aggregate expenditure share for units in the under-25 class was only about 7 percent of total aggregate transportation expenditures, although they account for 10 percent of the total number of consumer units.

The Diary survey data show that consumer units with reference persons age 65 or over had an aggregate expenditure share for food of 13 percent even though the class made up about 19 percent of the population. When classified by income quintile, each income class has a 20-percent population share (of complete income reporters), but aggregate food expenditure shares varied from 10 percent for consumer units in the lowest quintile to 32 percent for those in the highest quintile.2 By size of household, one- and two-person households accounted for 43 percent of aggregate food expenditures, but 51 percent of aggregate expenditures for food away from home. By age of reference person, consumer units with reference persons age 65 or over accounted for 21 percent of aggregate expenditures for non-prescription drugs and supplies, compared with 3 percent for consumer units with reference persons under 25.(3)

Per capita expenditures

Average consumer unit size varies by classifications of consumer units according to age of reference person, number of earners, and so forth. It may be useful to also consider per capita expenditures because consumer unit size may contribute to differences in expenditures among classes.

For age classes, mean expenditure levels per consumer unit generally increase with age until they peak in the middle age classes, then decline. However, per capita expenditures show a different pattern. Per capita expenditures for housing are highest, $2,425, for the age class with reference persons age 65 or over, compared with the lowest per capita housing expenditure of $1,894 by consumer units with reference persons under 25.

Data from the Diary survey show that expenditure levels for food at home are highest for age classes with reference persons ages 35 to 44 and 45 to 54. However, the highest per capita expenditures are for those classes with reference persons ages 55 to 64 and 65 or over. Average expenditures for nonprescription drugs and supplies are highest for the class with reference persons ages 45 to 54, but per capita expenditures are highest for the class with reference persons age 65 or over.

Expenditure changes over time

Consumer Expenditure Survey data are used to document changes in the expenditure patterns of American consumers over a period of time. Changes in expenditure patterns can be attributed to such factors as shifts in relative prices and wage rates, changes in tastes and habits, changes in lifestyles, and the availability of new products. Demographic trends such as changes in average family size, age, and earner composition can also affect expenditures. The current, ongoing survey allows users to recognize trends more quickly than was possible in the past, and to identify trends that might have been missed altogether using data that were only infrequently available.

Tables 3 and 4 show Interview and Diary survey results from 1972-73 and 1982-83 and percent changes between the two periods. Also shown are CPI changes. The interview data show that gasoline and motor oil expenditures increased 166 percent from 1972-73 to 1982-83, while total expenditures rose 103 percent. This reflects the large increases in energy costs in the 1970's resulting from oil price increases. While the increase in gasoline and motor oil expenditures was somewhat higher than the increase in total expenditures, it was still well below the 232-percent price rise measured by the CPI. That was the result of consumers modifying their behavior in response to price increases by reducing their gasoline and motor oil consumption, and adjusting their longer term buying habits, as by purchasing more fuel-efficient automobiles.

Although gasoline and motor oil expenditures rose sharply over the decade 1972-73 to 1982-83, they actually decreased by 10 percent from 1980-81 to 1982-83. This recent decline can be attributed to falling prices and conservation measures over that period. These are the kinds of trends that might have been missed had data for 1980-81 not been available.

Diary survey data show that average weekly expenditures for food increased 70 percent between 1972-73 and 1982-83, well below the 104-percent price rise for food measured by the CPI. Expenditures for food away from home increased 113 percent over the period, compared with a more modest increase of 53 percent for food at home. The changes in the expenditure data and the CPI for food away from home were quite similar (113 percent, compared with 120 percent), while there was a sharp difference in the changes for food at home (53 percent, compared with 99 percent).

Between 1972-73 and 1982-83, CPI-measured prices increased more than average expenditures for all food at home categories. Food categories with the largest price increases tended to have the largest expenditure increases. However, prices for meats, poultry, fish, and eggs rose 70 percent, while expenditures for those items rose only 24 percent.

While not presented in this article, expenditure data for specific products and services keep track of the speed with which new products are disseminated. Such data are available on public use tapes. The following tabulation shows mean expenditures from the Interview survey, for selected items:

This article has presented some of the ways of analyzing the consumer expenditure data. As speed and efficiency in processing the data improve, the uses of the data and the number of users are expected to multiply. The timeliness of this ongoing survey enhances its application not only in revising the CPI, but also as a valuable information source for public and private analysts examining the relationships of family characteristics, income, and expenditures.

FOOTNOTES

1 A consumer unit is defined as a single person or group of persons in a sample household, related by blood, marriage, adoption, or other legal arrangement, or who share responsibility for at least two out of three major types of expenses--food, housing, and other expenses.

2 The distinction between complete and incomplete income reporters is based in general on whether the respondent provided values for major sources of income, such as wages and salaries, self-employment income, and Social Security income. Even complete income reporters may not have provided a full accounting of all income from all sources.

3 For a more detailed discussion of aggregate expenditure shares, including data tables, see Kirk Kaneer, "Distribution of consumption examined using aggregate expenditure shares,' Monthly Labor Review, April 1986, pp. 50-53.

Table: 1. Average annual income and expenditures by selected household characteristics, urban United States, Interview survey, 1982-83

Table: 2. Average weekly income and expenditures by selected consumer unit characteristics, urban United States, Diary survey, 1982-83

Table: 3. Characteristics and average annual expenditures of urban consumer units, and percent change in consumer expenditures, interview survey, and Consumer Price Index, 1972-73 and 1982-83

Table: 4. Characteristics and average weekly expenditures of urban consumer units, and percent change in consumer expenditures, Diary survey, and Consumer Price Index, July 1972-June 1974 and 1982-83

Table:
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Title Annotation:urban consumer spending statistics
Author:Gieseman, Raymond; Rogers, John
Publication:Monthly Labor Review
Date:Jun 1, 1986
Words:2637
Previous Article:Deindustrialization and the shift to services.
Next Article:BLS area wage surveys will cover more areas.
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