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

  • Pudney, Stephen

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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File URL: https://www.iser.essex.ac.uk/research/publications/working-papers/iser/2008-09.pdf
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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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  1. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  2. Baker, Michael, 1992. "Digit preference in CPS unemployment data," Economics Letters, Elsevier, vol. 39(1), pages 117-121, May.
  3. 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.
  4. Orazio Attanasio & Hamish Low, 2002. "Estimating Euler equations," IFS Working Papers W02/06, Institute for Fiscal Studies.
  5. 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.
  6. Martin Browning & Thomas F. Crossley & Guglielmo Weber, 2003. "Asking consumption questions in general purpose surveys," Economic Journal, Royal Economic Society, vol. 113(491), pages F540-F567, November.
  7. repec:ese:iserwp:2006-35 is not listed on IDEAS
  8. 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.
  9. 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).
  10. 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.
  11. Altonji, Joseph G & Siow, Aloysius, 1987. "Testing the Response of Consumption to Income Changes with (Noisy) Panel Data," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 293-328, May.
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