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Heaping and leaping: survey response behaviour and the dynamics of self-reported consumption expenditure

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  • Pudney, Stephen

Abstract

Survey respondents often use simple strategies to answer retrospective questions about their level of consumption expenditure, resulting in the heaping of data at certain round numbers. In the panel context, wave-to-wave leaping from one heap to another can distort the sample pattern of consumption movements over time. Using BHPS energy expenditure data, we show that respondents use a variety of different response strategies, often switching between those strategies. We estimate a joint model of the dynamics of consumption and response behaviour and find that neglect of response behaviour can lead to serious biases in empirical studies of consumption dynamics.

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Bibliographic Info

Paper provided by Institute for Social and Economic Research in its series ISER Working Paper Series with number 2008-09.

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Date of creation: 10 Mar 2008
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Publication status: published
Handle: RePEc:ese:iserwp:2008-09

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Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
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References

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  1. R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
  2. Orazio Attanasio & Erich Battistin & Hidehiko Ichimura, 2004. "What Really Happened to Consumption Inequality in the US?," NBER Working Papers 10338, National Bureau of Economic Research, Inc.
  3. Baker, Paul & Blundell, Richard & Micklewright, John, 1989. "Modelling Household Energy Expenditures Using Micro-data," Economic Journal, Royal Economic Society, vol. 99(397), pages 720-38, September.
  4. Martin Browning & Thomas F. Crossley & Gugliemo Weber, 2002. "Asking Consumption Questions in General Purpose Surveys," CAM Working Papers 2002-05, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  5. Orazio P. Attanasio & Hamish Low, 2000. "Estimating Euler Equations," NBER Technical Working Papers 0253, National Bureau of Economic Research, Inc.
  6. repec:ese:iserwp:2006-35 is not listed on IDEAS
  7. Headey, Bruce & Muffels, Ruud & Wooden, Mark, 2004. "Money Doesn’t Buy Happiness… Or Does It? A Reconsideration Based on the Combined Effects of Wealth, Income and Consumption," IZA Discussion Papers 1218, Institute for the Study of Labor (IZA).
  8. Baker, Michael, 1992. "Digit preference in CPS unemployment data," Economics Letters, Elsevier, vol. 39(1), pages 117-121, May.
  9. Erich Battistin, 2002. "Errors in Survey Reports of Consumption Expenditures," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 C4-2, International Conferences on Panel Data.
  10. Joseph G. Altonji & Aloysius Siow, 1986. "Testing the Response of Consumption to Income Changes with (Noisy) PanelData," NBER Working Papers 2012, National Bureau of Economic Research, Inc.
  11. Bruce D. Meyer & James X. Sullivan, 2003. "Measuring the Well-Being of the Poor Using Income and Consumption," NBER Working Papers 9760, National Bureau of Economic Research, Inc.
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Cited by:
  1. Thomas F. Crossley & Joachim K. Winter, 2012. "Asking Households about Expenditures: What Have We Learned?," NBER Chapters, in: Improving the Measurement of Consumer Expenditures National Bureau of Economic Research, Inc.
  2. Andrea Neri & Roberta Zizza, 2010. "Income reporting behaviour in sample surveys," Temi di discussione (Economic working papers) 777, Bank of Italy, Economic Research and International Relations Area.

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