IDEAS home Printed from https://ideas.repec.org/h/nbr/nberch/12662.html
   My bibliography  Save this book chapter

The Validity of Consumption Data: Are the Consumer Expenditure Interview and Diary Surveys Informative?

In: Improving the Measurement of Consumer Expenditures

Author

Listed:
  • Adam Bee
  • Bruce D. Meyer
  • James X. Sullivan

Abstract

This paper examines the quality of data collected in the Consumer Expenditure (CE) Survey, which is the source for the Consumer Price Index weights and is the main source of U.S. consumption microdata. We compare reported spending on a large number of categories of goods and services to comparable national income account data. We do this separately for the two components of the CE--the Interview Survey and the Diary Survey--rather than a combination that has been used in past comparisons. We find that most of the largest categories of consumption are measured well in the Interview Survey as the ratio to the national account data is close to one and has not declined appreciably over time. Several other large categories are reported at a low rate or have seen the ratio to the national accounts decline over time. The results are less encouraging for the Diary Survey. There is no large Diary category that is both measured well and reported at a higher rate than in the Interview Survey. We also compare the ownership of and the value of durables, such as homes and cars, in the CE to other sources. This evidence suggests the CE performs fairly well. Based on observable characteristics, the CE Survey appears to be fairly representative, although there is strong evidence of under-representation at the top of the income distribution and under-reporting of income and expenditures at the top. We then examine the precision of the two surveys and the frequency of no spending overall or for a given spending category. In the Diary Survey, we find much greater dispersion in spending and the dispersion relative to the Interview Survey varies across goods and over time. Diary respondents are much more likely to report zero spending for a consumption category, and a high and increasing fraction of respondents reporting zero for all categories. These results suggest that using Diary data to assess inequality trends and other distributional outcomes is likely to lead to biased and mislea
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Adam Bee & Bruce D. Meyer & James X. Sullivan, 2013. "The Validity of Consumption Data: Are the Consumer Expenditure Interview and Diary Surveys Informative?," NBER Chapters,in: Improving the Measurement of Consumer Expenditures, pages 204-240 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:12662
    as

    Download full text from publisher

    File URL: http://www.nber.org/chapters/c12662.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Martin Browning & Thomas F. Crossley & Guglielmo Weber, 2003. "Asking consumption questions in general purpose surveys," Economic Journal, Royal Economic Society, vol. 113(491), pages 540-567, November.
    2. Robert K. Triest, 1998. "Has Poverty Gotten Worse?," Journal of Economic Perspectives, American Economic Association, pages 97-114.
    3. Michael D. Hurd & Susann Rohwedder, 2013. "Measuring Total Household Spending in a Monthly Internet Survey: Evidence from the American Life Panel," NBER Chapters,in: Improving the Measurement of Consumer Expenditures, pages 365-387 National Bureau of Economic Research, Inc.
    4. Melvin Stephens Jr., 2003. ""3rd of tha Month": Do Social Security Recipients Smooth Consumption Between Checks?," American Economic Review, American Economic Association, pages 406-422.
    5. Jaroslav Borovička & Mark Hendricks & José A. Scheinkman, 2011. "Risk-Price Dynamics," Journal of Financial Econometrics, Society for Financial Econometrics, pages 3-65.
    6. Jonathan A. Parker & Nicholas S. Souleles & David S. Johnson & Robert McClelland, 2013. "Consumer Spending and the Economic Stimulus Payments of 2008," American Economic Review, American Economic Association, pages 2530-2553.
    7. Slesnick,Daniel T., 2001. "Consumption and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521497206, December.
    8. Jonathan A. Parker & Nicholas S. Souleles & David S. Johnson & Robert McClelland, 2013. "Consumer Spending and the Economic Stimulus Payments of 2008," American Economic Review, American Economic Association, pages 2530-2553.
    9. Thomas F. Crossley & Joachim K. Winter, 2014. "Asking Households about Expenditures: What Have We Learned?," NBER Chapters,in: Improving the Measurement of Consumer Expenditures, pages 23-50 National Bureau of Economic Research, Inc.
    10. Bruce D. Meyer & James X. Sullivan, 2008. "Changes in the Consumption, Income, and Well-Being of Single Mother Headed Families," American Economic Review, American Economic Association, pages 2221-2241.
    11. Bruce D. Meyer & Wallace K. C. Mok & James X. Sullivan, 2009. "The Under-Reporting of Transfers in Household Surveys: Its Nature and Consequences," NBER Working Papers 15181, National Bureau of Economic Research, Inc.
    12. Bruce D. Meyer & James X. Sullivan, 2009. "Five Decades of Consumption and Income Poverty," Working Papers 0907, Harris School of Public Policy Studies, University of Chicago.
    13. Slesnick, Daniel T, 1992. "Aggregate Consumption and Saving in the Postwar United States," The Review of Economics and Statistics, MIT Press, pages 585-597.
    14. Bruce D. Meyer & James X. Sullivan, 2011. "Viewpoint: Further results on measuring the well-being of the poor using income and consumption," Canadian Journal of Economics, Canadian Economics Association, vol. 44(1), pages 52-87, February.
    15. Barry Bosworth, 2010. "Price Deflators, the Trust Fund Forecast, and Social Security Solvency," Working Papers, Center for Retirement Research at Boston College wp2010-11, Center for Retirement Research, revised Oct 2010.
    16. Melvin Stephens Jr., 2003. ""3rd of tha Month": Do Social Security Recipients Smooth Consumption Between Checks?," American Economic Review, American Economic Association, pages 406-422.
    17. Naeem Ahmed & Matthew Brzozowski & Thomas Crossley, 2006. "Measurement errors in recall food consumption data," IFS Working Papers W06/21, Institute for Fiscal Studies.
    18. Slesnick, Daniel T, 1993. "Gaining Ground: Poverty in the Postwar United States," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 1-38, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mark Aguiar & Erik Hurst, 2013. "Deconstructing Life Cycle Expenditure," Journal of Political Economy, University of Chicago Press, vol. 121(3), pages 437-492.
    2. Bruce D. Meyer & James X. Sullivan, 2017. "Consumption and income inequality in the US since the 1960s," AEI Economics Working Papers 953873, American Enterprise Institute.
    3. William Passero & Thesia I. Garner & Clinton McCully, 2014. "Understanding the Relationship: CE Survey and PCE," NBER Chapters,in: Improving the Measurement of Consumer Expenditures, pages 181-203 National Bureau of Economic Research, Inc.
    4. James Banks & Richard Blundell & Peter Levell & James Smith, 2016. "Life-cycle consumption patterns at older ages in the US and the UK: can medical expenditures explain the difference?," IFS Working Papers W16/16, Institute for Fiscal Studies.
    5. Thomas F. Crossley & Joachim K. Winter, 2014. "Asking Households about Expenditures: What Have We Learned?," NBER Chapters,in: Improving the Measurement of Consumer Expenditures, pages 23-50 National Bureau of Economic Research, Inc.
    6. Campos, Rodolfo G. & Reggio, Iliana, 2014. "Measurement error in imputation procedures," Economics Letters, Elsevier, vol. 122(2), pages 197-202.
    7. Marta Lachowska, 2013. "Expenditure, Confidence, and Uncertainty: Identifying Shocks to Consumer Confidence Using Daily Data," Upjohn Working Papers and Journal Articles 13-197, W.E. Upjohn Institute for Employment Research.
    8. repec:eee:macchp:v2-255 is not listed on IDEAS
    9. James Banks & Richard Blundell & Peter Levell & James Smith, 2015. "Life-cycle consumption patterns at older ages in the US and the UK: can medical expenditures explain the difference?," IFS Working Papers W15/12, Institute for Fiscal Studies.
    10. Bruce D. Meyer & Wallace K. C. Mok & James X. Sullivan, 2015. "Household Surveys in Crisis," Journal of Economic Perspectives, American Economic Association, pages 199-226.
    11. Coibion, Olivier & Gorodnichenko, Yuriy & Koustas, Dmitri, 2017. "Consumption Inequality and the Frequency of Purchases," IZA Discussion Papers 10882, Institute for the Study of Labor (IZA).
    12. Atif Mian & Amir Sufi, 2016. "Who Bears the Cost of Recessions? The Role of House Prices and Household Debt," NBER Working Papers 22256, National Bureau of Economic Research, Inc.
    13. Erling Røed Larsen, 2014. "Is the Engel curve approach viable in the estimation of alternative PPPs?," Empirical Economics, Springer, pages 881-904.
    14. Bruce D. Meyer & Wallace K. C. Mok & James X. Sullivan, 2015. "Household Surveys in Crisis," Journal of Economic Perspectives, American Economic Association, pages 199-226.
    15. repec:pri:cheawb:slusky%202012%20federal%20parental%20insurance%20mandate%20vf is not listed on IDEAS

    More about this item

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberch:12662. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: () or (Joanne Lustig). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.