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Consumer Expenditures and Income: Concepts

A consumer expenditure survey is a specialized study in which the emphasis is on data related to family expenditures for goods and services used in day-to-day living. In addition to data on family expenditures, the Consumer Expenditure Survey (CE) collects information on the amount and sources of family income, changes in assets and liabilities, and demographic and economic characteristics of family members.

The importance of the CE is its ability to allow data users to examine the association of expenditures and income of consumers to consumer characteristics. CE survey data are of value to government and private agencies interested in studying the welfare of particular segments of the population, such as the elderly, low-income families, urban families, and those receiving food stamps. Data also are used by economic policymakers interested in the effects of policy changes on levels of living among diverse socioeconomic groups, and econometricians find the data useful in constructing economic models. Market researchers find consumer expenditure data valuable in analyzing the demand for groups of goods and services. The Department of Commerce uses the survey data as a source of information for calculating the Supplemental Poverty Measure, and in revising its benchmark estimates of selected items in the expenditure and income components of the national accounts. The Department of Agriculture uses CE information to estimate the cost of raising a child from birth to age 18, and the Internal Revenue Service uses expenditures to calculate alternate sales tax standard deductions. The Department of Defense uses the data in determining cost-of-living allowances for military personnel living off military bases.

As in the past, the regular revision of the Consumer Price Index (CPI) remains a primary reason for undertaking the Bureau’s extensive Consumer Expenditure Survey. Results of the CE are used to select new “market baskets” of goods and services for the index, to determine the relative importance of components, and to derive cost weights for the market baskets.

In August 2002, the Bureau of Labor Statistics began publishing another index, the Chained Consumer Price Index for All Consumers (C-CPI-U), which supplements the CPI for All Urban Consumers (CPI-U) index and the CPI for Urban Wage Earners and Clerical Workers (CPI-W) index. The use of expenditure data from different time periods distinguishes the C-CPI-U from the other two CPI measures, which use a single expenditure base period to compute price change over time. The chained index is designed to better measure the change in the cost of living, as compared with the CPI-U and CPI-W, which measure the change in a fixed market basket of goods and services in retail outlets. The C-CPI-U uses expenditure data from different time periods to reflect the effect of substitution that consumers make across item categories, in response to changes in the relative prices of goods and services. For more information, see: https://www.bls.gov/cpi/additional-resources/chained-cpi.htm.

The measurement unit for which expenditure reports are collected is the set of eligible individuals constituting a consumer unit (CU). The CU is defined as 1) all members of a particular housing unit who are related by blood, marriage, adoption, or some other legal arrangement, such as foster children; 2) a person living alone or sharing a household with others, or living as a roomer in a private home, lodging house, or in permanent living quarters in a hotel or motel, but who is financially independent; or 3) two or more unrelated persons living together who pool their income to make joint expenditure decisions. Students living in university-sponsored housing are also included in the sample as separate consumer units. Information on members living in the consumer unit is identified by their relationship to the reference person, who is defined as the first member mentioned by the respondent when asked to "Start with the name of the person or one of the persons who owns or rents the home."

Survey participants report dollar amounts for goods and services purchased by any member of the consumer unit during the reporting period, regardless of whether payment was made at the time of purchase. Expenditure amounts for items purchased by the consumer unit include all applicable sales and excise taxes. Excluded from expenditure total amounts are any business-related expenditures and expenditures for which the family is reimbursed.

The Interview Survey is designed to collect data on the types of expenditures that respondents can be expected to recall for a period of 3 months or longer. In general, expenditures reported in the Interview Survey are either relatively large, such as those for property, automobiles, and major appliances, or that occur on a fairly regular basis, such as for rent, utilities, or insurance.

The primary objective of the Diary Survey is to obtain expenditure data on small, frequently purchased items, which can be difficult to recall even a few weeks later. These items include food and beverage expenditures at home and in eating places; housekeeping supplies and services; nonprescription drugs; most clothing items, and personal care products and services.

Last Modified Date: February 25, 2016