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December 2009, Vol. 132, No. 12
Household liability data in the Consumer Expenditure Survey
Kathleen W. Johnson and Geng Li
Kathleen W. Johnson is a senior economist, and Geng Li is an economist, in the Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington, DC. The opinions, analysis, and conclusions put forth in this article are solely the authors' and do not necessarily reflect those of the Board of Governors of the Federal Reserve System or its staff. All errors are the authors'. E-mail: kathleen.w.johnson@frb.gov or geng.li@frb.gov
Liability data from the Consumer Expenditure Survey (CE), the Survey of Consumer Finances, and an analogous aggregate measure show that the major types of household debt balances and payments are measured reasonably well in the CE; thus, CE data may be used to examine household debt and its relation to household economic decisions.
The Consumer Expenditure Survey (CE) is the only household survey that records both a wide variety of household expenditures and the household's balance sheet. Although its primary purpose is to provide weights for the market basket used to construct the Consumer Price Index (CPI) the CE has been used extensively by researchers to study household consumption and saving, distributions of personal income and wealth, the effect of income taxes, and issues related to the poor and the elderly.
Several studies have validated the quality of CE data. As the Bureau of Labor Statistics (BLS) notes, "consumer expenditure surveys are specialized studies in which the primary emphasis is on collecting data related to family expenditures for goods and services used in day-to-day living."1 With this description in mind, many studies seeking to validate CE data focus on the ability of the data to replicate aggregate expenditure measures, such as personal consumption expenditures (PCE) reported quarterly by the Bureau of Economic Analysis (BEA). In general, these studies conclude that annual aggregate expenditures reported in the CE are below those reported by the BEA.2
Although validation studies have been conducted on expenditure data in the CE, there does not appear to be any study that has validated CE liability data. This article seeks to bridge that gap by comparing household debt payments and balances measured in the CE with those measured in the Survey of Consumer Finances (SCF). A triennial survey conducted by the Federal Reserve, the SCF collects high-quality data on household wealth and liabilities, as well as rich covariates such as household demographics and income data. The accuracy of the SCF has been established in several studies. For example, a year-2000 study showed that several balance sheet categories measured by the SCF lined up well with those in the Federal Reserve System's Flow of Funds Accounts,3 and another study compared estimates of income and wealth from the SCF with administrative tax data and found that the two sources compared favorably.4 On the basis of this research, and because of its focus on measuring the household balance sheet, the SCF data are presumed to be accurate in this article, which then goes on to compare SCF debt payment and balance information with the same information in the CE.
This excerpt is from an article published in the December 2009 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
Footnotes
1 "Consumer Expenditures and Income," BLS Handbook of Methods (Bureau of Labor Statistics, 2006), chapter 16, p. 1, on the Internet at www.bls.gov/cex/#publications (visited Dec. 16, 2009).
2 See, for example, Raymond Gieseman, "The Consumer Expenditure Survey: quality control by comparative analysis," Monthly Labor Review, March 1987, pp. 8–14; and E. Raphael Branch, "The Consumer Expenditure Survey: a comparative analysis," Monthly Labor Review, December 1994, pp. 47–55.
3 Rochelle Antoniewicz, "A Comparison of the Household Sector from the Flow of Funds Accounts and the Survey of Consumer Finances," working paper (Federal Reserve Board of Governors, October 2000), on the Internet at www.federalreserve.gov/pubs/oss/oss2/papers/antoniewicz_paper.pdf (visited Dec. 16, 2009).
4 Barry Johnson and Kevin Moore, "Consider the Source: Differences in Estimates of Income and Wealth From Survey and Tax Data," working paper (Board of Governors of the Federal Reserve System, 2005), on the Internet at www.federalreserve.gov/pubs/oss/oss2/papers/johnsmoore.pdf (visited Dec. 16, 2009).
Income imputation and the analysis of consumer expenditure data.—Nov. 2006.
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