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February 2010, Vol. 133, No. 2

New expenditure data in the PSID: comparisons with the CE

Geng Li, Robert F. Schoeni, Sheldon Danziger, and Kerwin Kofi Charles

Geng Li is an economist in the Household and Real Estate Finance Section, Division of Research and Statistics, Federal Reserve Board, Washington, DC; Robert F. Schoeni is a research professor, Institute for Social Research, University of Michigan, Ann Arbor, MI; Sheldon Danziger is H. J. Meyer Distinguished University Professor of Public Policy, Gerald R. Ford School of Public Policy, also at the University of Michigan; and Kerwin Kofi Charles is Edwin and Betty L. Bergman Distinguished Service Professor, Harris School of Public Policy Studies, University of Chicago, Chicago, IL. E-mail: Geng.Li@frb.gov

New data in the Panel Study of Income Dynamics (PSID) align closely with corresponding measures from the Consumer Expenditure Survey (CE), for each broad category in the former; imputed total PSID expenditures are very close to total ce expenditures, and cross-sectional life-cycle estimates of household expenditures are similar across the two surveys, both for total expenditures and for the distinct categories.

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Consumption is a fundamental concept in economics, figuring prominently in the theoretical literature of both microeconomics and macroeconomics. However, data on consumption expenditures at the household level have been quite limited. The Consumer Expenditure Survey (CE), the modern version of which began regular data collection in 1980, is the most widely used data set for studying consumption in the United States.

Another national survey that has collected data on some consumption expenditures over a long period is the Panel Study of Income Dynamics (PSID).¹ Historically, this survey collected information only on food and housing expenditures. Beginning in 1999, however, the psid added questions about other expenditures, including spending on transportation, health care, education, utilities, and childcare. With this expanded set of questions on consumption expenditures, the psid covered more than 70 percent of the total outlays measured in the CE.

This excerpt is from an article published in the February 2010 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.

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Footnotes
1 The 2001 and 2003 Consumption and Activities Mail Surveys, supplements to the Health and Retirement Study, gathered comprehensive assessments of expenditures of people 50 years and older, allowing longitudinal analyses of consumption in this panel study.