Building a Comparable Measure of Consumption: Concepts and Measurement Challenges Faced by Emerging and Advanced Economies

This paper aims to take stock of the different conceptual elements of consumption as defined and applied in emerging and advanced countries, and data collection efforts based on household surveys. This work diverges from the Eurostat-OECD EG and other country-specific analyses that focus on consumption from a national accounts’ perspective (OECD 2024; Zwijnenburg et al. 2021). In doing so, we contribute to the discussion of how to guide statistical authorities in building a consumption-based economic well-being measure at the household level. The purpose of this paper is twofold: (1) to further clarify the conceptual framework for defining a comparable consumption-based well-being concept; and (2) to provide an empirical, descriptive, distributional analysis by consumption components and demographic groups across low, middle and high-income countries. This comparative work is based on nine country case studies: Mali, Laos, Palestine, Peru, Georgia, Italy, France, the United Kingdom (U.K.), and the United States (U.S.). We first provide an update of Mancini and Vecchi (2023) concerning the aggregation plan and variable detail in a potential Luxembourg Consumption Study database and provide comparisons to the OECD ICW framework (2013) and COICOPs 2018 definitions of consumption components. The empirical section first presents the core differences in the analyzed surveys and then provides a distributional analysis. To the best of our knowledge, this is the first analysis of consumption patterns across low, middle and high-income countries as a set. We conclude that there are challenges concerning what to include or exclude in consumption, for example, with regard to what to consider as durables, shelter maintenance and repairs, and accounting for insurance. In addition, we discuss the major considerations as to whether health and education expenditures should be part of an economic well-being measure. We also find that data for own-produced goods for consumption are often collected for emerging economies, but they are systematically missing in expenditure surveys conducted by high-income countries. The importance of equivalence scales is discussed with reference to major differences in consumption inequality across countries. Finally, the decomposition of the Gini coefficient highlights how the structure of consumption and its impact on inequality shifts with economic development, with basic needs driving inequality in poorer countries and more diverse consumption patterns driving it in wealthier nations.