New education classification better reflects spending patterns in the Consumer Expenditure Survey

February 20, 2014

To more accurately reflect consumer spending patterns, the Bureau of Labor Statistics published 2012 data based on a new classification of household expenditures. Household expenditures are now classified according to the highest level of education attained by any member in the consumer unit instead of the education level of the reference person. Spending on most items followed similar patterns in both classifications, with the exception of the share of the household budget spent (on average) on pensions and Social Security.

Share of annual expenditures for consumer units classified by education of reference person and highest education level of any member, 2012
Educational attainmentHousingTransportationFoodOther(1)
Education of reference personHighest education level of any memberEducation of reference personHighest education level of any memberEducation of reference personHighest education level of any memberEducation of reference personHighest education level of any member

Less than high school graduate

35.9%38.2%17.7%15.6%15.4%15.9%8.5%7.7%

High school graduate

33.334.919.217.914.014.29.49.5

High school graduate with some college

32.533.118.919.613.113.410.810.3

Associate's degree

31.931.818.820.313.313.110.39.7

Bachelor's degree

32.532.016.617.112.012.612.311.7

Master's, professional, doctoral degree

32.432.114.715.411.011.114.214.0
Educational attainmentPensions & Social SecurityHealthcareEntertainmentApparel & services
Education of reference personHighest education level of any memberEducation of reference personHighest education level of any memberEducation of reference personHighest education level of any memberEducation of reference personHighest education level of any member

Less than high school graduate

6.7%5.6%7.1%8.2%4.5%4.6%4.4%4.2%

High school graduate

8.57.67.88.14.54.73.23.1

High school graduate with some college

9.08.47.16.95.14.93.53.6

Associate's degree

10.19.96.97.05.55.13.13.1

Bachelor's degree

11.411.36.56.65.25.13.43.5

Master's, professional, doctoral degree

13.012.66.26.45.45.43.23.1

Footnotes:
(1) Includes cash contributions, alcohol, tobacco, personal care products and services, reading, education, life and personal insurance, and miscellaneous expenses.
 

Source: U.S. Bureau of Labor Statistics.
 

Data from both classifications indicate the share of the household budget spent by consumers on pensions and Social Security increased with educational attainment. However, across all education levels, the share of the household budget spent according to the new classification was lower than that spent according to the old classification—particularly at the lowest levels of education. One reason could be a reduction in voluntary pension contributions due to the lower pretax income earned, on average, by consumers under the new classification in relation to comparable households under the old classification. 

The share of the household budget spent on transportation expenses varied by classification. According to the new classification, transportation’s share of the household budget increased from 15.6 percent for those with less than a high school education to 20.3 percent for those with an associate’s degree, and then declined from 17.1 percent for those with a bachelor’s degree to 15.4 percent for those at the master’s, professional, doctoral degree level. According to the old classification, transportation expenses represented 17.7 percent of the household budget for those with less than a high school education, increasing to 19 percent for those households with a high school graduate, high school graduate with some college, or associate’s degree, and declining to 16.6 percent for those in the bachelor’s degree category and 14.7 percent for those in the master’s, professional, and doctoral degree category.

Regardless of classification, households at higher levels of education spent a lower share of their budget on healthcare than those at lower levels.  Entertainment spending narrowly ranged from about 4.5 percent of the household budget for the less-than-high-school-graduate category to 5.4 percent of spending for households in the master's, professional, doctoral degree category.

These data come from the Consumer Expenditure Survey. A reference person is the first member mentioned by the survey respondent when asked to "Start with the name of the person or one of the persons who owns or rents the home." It is with respect to this person that the relationship of the other consumer unit members is determined. Consumer units include families, single persons living alone or sharing a household with others but who are financially independent, or two or more persons living together who share expenses. For more information, see the Beyond the Numbers article, "New education classification better reflects income and spending patterns in the Consumer Expenditure Survey," by Ann C. Foster, January 2014.  

SUGGESTED CITATION

Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, New education classification better reflects spending patterns in the Consumer Expenditure Survey on the Internet at http://www.bls.gov/opub/ted/2014/ted_20140220.htm (visited November 27, 2014).

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