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Is the Consumer Expenditure Survey Representative by Income?

  • John Sabelhaus
  • David Johnson
  • Stephen Ash
  • David Swanson
  • Thesia Garner
  • John Greenlees
  • Steve Henderson
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    Aggregate under-reporting of household spending in the Consumer Expenditure Survey (CE) can result from two fundamental types of measurement errors: higher-income households (who presumably spend more than average) are under-represented in the CE estimation sample, or there is systematic under-reporting of spending by at least some CE survey respondents. Using a new data set linking CE units to zip-code level average Adjusted Gross Income (AGI), we show that the very highest-income households are less likely to respond to the survey when they are sampled, but unit non-response rates are not associated with income over most of the income distribution. Although increasing representation at the high end of the income distribution could in principle significantly raise aggregate CE spending, the low reported average propensity to spend for higher-income respondent households could account for at least as much of the aggregate shortfall in total spending.

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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19589.

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    Date of creation: Oct 2013
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    Publication status: published as Is the Consumer Expenditure Survey Representative by Income? , John Sabelhaus, David Johnson, Stephen Ash, David Swanson, Thesia I. Garner, John Greenlees, Steve Henderson. in Improving the Measurement of Consumer Expenditures , Carroll, Crossley, and Sabelhaus. 2015
    Handle: RePEc:nbr:nberwo:19589
    Note: EFG
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    1. Thomas F. Crossley, 2009. "Measuring Consumption and Saving: Introduction," Fiscal Studies, Institute for Fiscal Studies, vol. 30(Special I), pages 303-307, December.
    2. Richard Burkhauser & Shuaizhang Feng & Stephen Jenkins & Jeff Larrimore, 2009. "Recent Trends in Top Income Shares in the USA: Reconciling Estimates from March CPS and IRS Tax Return Data," Working Papers 09-26, Center for Economic Studies, U.S. Census Bureau.
    3. Orazio Attanasio & Gabriella Berloffa & Richard Blundell & Ian Preston, 2002. "From Earnings Inequality to Consumption Inequality," Economic Journal, Royal Economic Society, vol. 112(478), pages C52-C59, March.
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