Measuring What We Spend Toward a New Consumer Expenditure Survey (2013) / Chapter Skim
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2 The Many Uses of the Consumer Expenditure Surveys
2 The Many Uses of the Consumer Expenditure Surveys
Pages 21-36
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From page 21... ...
calculates this index by "observing prices for a sample of goods and services that consumers purchase, and then creating aggregate estimates of price change using average expenditure 21
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Types of Data Required by the CPI Currently, the CE provides the CPI with expenditure data for urban consumer units, along with the demographic information necessary to implement the coverage definitions of the indexes described above. Demographic Data For the CPI-U, the CE must (1)
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The CPI-U does not require expenditure data for investments, life insurance, interest payment, charitable contributions, or business expenses. Point-of-Purchase Data Although the CE currently collects a limited amount of information on where consumers purchase goods and services, the CPI does not currently use any of these outlet data.
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From page 24... ...
Periodicity Except for calculation of the C-CPI-U, the CPI program requires only annual expenditure estimates from the CE. Annual expenditure estimates needed to calculate the CPI-U, CPI-W, and CPI-E indexes are estimated by averaging annual expenditure budget shares over two consecutive years.
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. THE CE PROVIDES DATA CRITICAL IN ADMINISTERING GOVERNMENT PROGRAMS The CE data provide an overall picture of consumer expenditures for the nation.
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BLS combines this information with CE data to calculate household-level sales tax estimates. BLS provides these estimates, along with variables such as household income and family size, back to the IRS.
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This new Supplemental Poverty Measure uses actual expenditure data for food, shelter, clothing, and utilities to d erive poverty thresholds that are compared to measurements of disposable income from the Current Population Survey. This Supplemental Poverty Measure is currently being computed in addition to the historical measure (Short, 2010)
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From page 28... ...
They used econometric techniques that addressed the complexity introduced by a progressive step function of marginal tax rates to obtain consistent estimates. They then used the estimated parameters to shed light on the impacts of four alternative tax policies on the level of charitable giving.
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by gender and marital status. Not surprisingly, households headed by unmarried men spend a higher percent of their food expenditures on commercially prepared food.
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African American households purchase more pork and chicken than do Hispanics. Marriage and Cohabitation Make a Difference Households headed by single mothers, and how their income and consumption changed as a group between 1993 and 2003, were studied by Meyer and Sullivan (2008)
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Subsequent studies using the CE focused on clearly predictable changes in household income to avoid the many potential statistical pitfalls that may arise when predicting income changes for households using econometric methods. Some studies continue to find results that are consistent with the LCPIH.
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An alternative model that is an important economic benchmark for understanding the amount of risk that households face is the model of full insurance. In this model, individual households are fully insured against their own household-level changes in income, although aggregate-level income changes will influence household consumption (e.g., a village that pools all of its resources in each year and then redistributes them across all households in the village)
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From page 33... ...
The difference: Poor families decreased their expenditures on food by about the same amount as they increased expenditure on home fuels, but richer families made no change in food expenditures during these same periods. The authors concluded that social programs need to understand this phenomenon and provide special assistance during cold-weather periods.
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They also examined credit card debt by various household characteristics. Grant (2007)
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He found Internet expenses have an effect on expenditures of recorded music. Charitable and Political Giving by Households There is a U-shape relationship between charitable giving and household income, with households at both the lower and higher income ranges giving a higher percentage of their income to charity than middle-income households.
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From page 36... ...
SUMMARY For over a century, the collection of consumer expenditures on the CE and its predecessor surveys has played an irreplaceable role in understanding the market basket of goods and services that consumers purchase. While providing budget shares for the CPI remains a vital reason for the collection of consumer expenditures, a number of prominent uses of these data have emerged since the inception of these surveys.
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