Monthly Labor Review • February 2010 29

Consumer Expenditures 

Geng Li, Robert F. 

Schoeni, Sheldon 

Danziger, and 

Kerwin Kofi Charles

Geng Li is an economist in 

the Household and Real 

Estate Finance Section, 

Division of Research and 

Statistics, Federal Reserve 

Board, Washington, DC; 

Robert F. Schoeni is a 

research professor, Institute for Social Research, 

University of Michigan, 

Ann Arbor, MI; Sheldon 

Danziger is H. J. Meyer 

Distinguished University 

Professor of Public Policy, 

Gerald R. Ford School of 

Public Policy, also at the 

University of Michigan; 

and Kerwin Kofi Charles 

is Edwin and Betty L. 

Bergman Distinguished 

Service Professor, Harris 

School of Public Policy 

Studies, University of Chicago, Chicago, IL. E-mail: 

Geng.Li@frb.gov

Consumption is a fundamental concept in economics, figuring prominently in the theoretical literature of 

both microeconomics and macroeconomics. 

However, data on consumption expenditures at the household level have been quite 

limited. The Consumer Expenditure Survey 

(ce), the modern version of which began 

regular data collection in 1980, is the most 

widely used data set for studying consumption in the United States. 

Another national survey that has collected data on some consumption expenditures over a long period is the Panel Study 

of Income Dynamics (psid).1

 Historically, 

this survey collected information only on 

food and housing expenditures. Beginning 

in 1999, however, the psid added questions 

about other expenditures, including spending on transportation, health care, education, 

utilities, and childcare. With this expanded 

set of questions on consumption expenditures, the psid covered more than 70 percent 

of the total outlays measured in the ce. 

Several features of the psid’s design make 

the survey a unique resource for studying 

consumption expenditure issues that cannot be addressed with the cross-sectional 

ce data. Among these features are the psid’s 

longitudinal design, the inclusion of consumption expenditure data on the parents 

and siblings of respondents, and many additional variables, including detailed information on health status, wealth, pensions, 

income, employment, and family structure.

This article describes the expanded expenditure data collected in the psid, outlines the 

questions that have been included in each 

wave, and examines item nonresponse. Because most empirical studies of consumption 

expenditures have used ce data, and because 

the ce remains the gold-standard source for 

information on consumption expenditures 

in any given period, benchmarking exercises are conducted to establish the quality 

of the psid expenditure data compared with 

the corresponding ce data. Specifically, estimates of total expenditures based on the 

psid are compared with those based on the 

ce, as are cross-sectional estimates of lifecycle expenditure patterns derived from the 

two surveys. Overall, the comparisons show 

that the psid expenditure data compare favorably with the ce data.

The data sets

The Panel Study of Income Dynamics. The 

psid began in 1968 with a sample of roughly 5,000 families, including a low-income 

oversample. The psid has a unique genealogical design. All 1968 family members 

New expenditure data in the psid:

comparisons with the ce

New data in the Panel Study of Income Dynamics (psid) align closely

with corresponding measures from the Consumer Expenditure Survey (ce),

for each broad category in the former; imputed total psid expenditures are

very close to total ce expenditures, and cross-sectional life-cycle estimates

of household expenditures are similar across the two surveys, both for

total expenditures and for the distinct categories
Consumer Expenditures

30 Monthly Labor Review • February 2010

living in households are followed in future waves. When 

children left their parents’ homes or when couples who 

were married in 1968 separated or divorced, both individuals were followed and continue to be interviewed today. In addition, children born to sample members after 

1968 are followed. Thus, since 1968, interviews have been 

completed with numerous members of the same extended 

families, including siblings, parents and adult children, 

and, in some cases, grandparents and grandchildren. 

The sample grew to nearly 10,000 households by 1997. 

Then, budget constraints resulted in about two-thirds of 

the low-income oversample being dropped, reducing the 

sample to about 6,500 families. Because sample members 

are followed when they leave the psid family and form 

a new one, 7,822 families completed interviews in 2003. 

Consistently high core response rates of 95 percent to 98 

percent, together with the fact that the sample is replenished through births and marriages, enable the psid, when 

weighted appropriately, to remain representative of the 

U.S. population.2

Families were interviewed annually from 1968 to 1997 

and every other year since 1997. The interviews, which 

averaged 72 minutes in 2003, are completed by telephone 

for 97 percent of the families and face to face for the other 

3 percent. Expenditures are reported for the family as a 

whole, with a psid family defined as a group of people 

living together. Family members are generally related by 

blood, marriage, or adoption, but unrelated persons can be 

part of a psid family if they permanently reside together 

and share both income and expenses. 

Exhibit 1 reports the spending questions from the 2003 

wave, along with an indication of whether the same or a 

similar question was asked in earlier waves. As mentioned, 

the psid included a few expenditure questions from the 

start. Spending on food eaten at home has been collected 

in all but three waves, spending on food away from home 

in all but four waves. Housing-related expenditures have 

been included in many waves, with data on mortgage payments collected in all but 6 years since 1968. Rental payments for housing and property taxes have been included 

in most waves. Utility payments were collected from 1981 

to 1983, dropped for 15 years, and added back in 1999. 

Childcare spending was asked in each wave since 1988 

and in several earlier years.

In 1999, the expenditure questions were expanded. 

Four questions on out-of-pocket spending for health 

care were added: hospital and nursing home care, doctor’s 

visits, prescription drugs, and insurance premiums.3

 Assessments of educational expenses include payments for 

tuition, books, supplies, and room and board. Transportation-related expenses (for up to three owned or leased vehicles) include outlays on vehicles, vehicle loan and lease 

payments, downpayments on vehicles, vehicle insurance 

payments, gasoline, repairs and maintenance, parking, bus 

fares, and taxicabs.

The period over which psid expenditures are reported—weekly, monthly, or yearly—varies across spending 

categories. Even when a preferred period is specified in 

the questionnaire, respondents usually are allowed to report spending over alternative periods if doing so facilitates recall. Table 1 summarizes item nonresponse rates 

and the period of reported spending for the 1999, 2001, 

and 2003 waves. For food at home, respondents are asked 

to report the amount they currently spend in an average 

week, but they are allowed to report annual or monthly 

amounts. Because the question mentions “average week” 

in each of the 1999, 2001, and 2003 waves, 89 percent 

of respondents report a weekly amount. Questions about 

spending on food delivered and food away from home are 

asked right after the question about food at home, but 

the question does not specify that they be reported for 

an average week. As a result, 48 percent and 68 percent, 

respectively, of respondents report these expenditures as 

weekly amounts. 

Education and child care spending are reported on an 

annual basis for the previous calendar year (that is, in the 

2001 interview, respondents report spending for calendar 

year 2000), whereas health care spending is reported for 

the previous 2 calendar years combined. Most housing 

and transportation expenses refer to current spending and 

typically are reported for an average month. Respondents 

are asked to report annual spending for home and vehicle 

insurance and for property taxes because these payments 

are not typically made on a monthly basis. 

Item nonresponse is low in the psid. (See column 1 of 

table 1). In most spending categories, less than 2 percent 

of families failed to report a valid response. Nonresponse 

was highest for housing insurance and health insurance 

payments, at 8 percent and 11 percent, respectively. For 

food, the most extensively studied expenditure, 1.3 percent had invalid responses for food at home, while 0.9 

percent had invalid responses for food eaten away from 

home.4

The Consumer Expenditure Survey. In addition to fulfilling its role as the official source for the Consumer Price 

Index, the ce is used to answer various important research 

questions about household consumption. For example, 

David Cutler and Lawrence Katz used ce data to describe 

the dispersion of total expenditures in the U.S. popula-
Monthly Labor Review • February 2010 31

Table 1. Item nonresponse and time period of reporting in the Panel Survey of Income Dynamics, average for 1999–20031

Expenditure category

Percent of 

families 

with valid 

response

 Are 

unfolding 

brackets 

used?

Period of spending

Asked in the 

survey

Actually reported by respondent , percent

Weekly Biweekly Monthly Annually Other

Food:

 At home..................................................................... 98.7 No weekly 89.4 2.1 7.9 0.5 0.0

 Away from home................................................... 99.1 No not defined 68.3 2.2 27.7 1.7 .0

 Delivered................................................................... 99.9 No not defined 48.0 6.9 41.3 3.7 .0

Housing:

 Mortgage................................................................... 99.3 No monthly .0 .0 100.0 .0 .0

 Rent.............................................................................. 99.0 No monthly .4 .1 99.3 .3 .0

 Insurance................................................................... 91.7 No annual .0 .0 .0 100.0 .0

 Property tax.............................................................. 93.9 No annual .0 .0 .0 100.0 .0

 Electricity.................................................................... 96.6 No monthly .0 .0 99.2 .7 .1

 Heat.............................................................................. 95.2 No monthly .0 .0 91.3 8.0 .8

 Water............................................................................ 96.0 No monthly .0 .0 86.7 9.8 3.4

 Other utility............................................................... 99.8 No monthly .0 .0 97.2 2.2 .6

Transportation:

 Loan payment......................................................... 99.1 No monthly .0 .0 96.2 .4 3.4

 Downpayment........................................................ 98.1 No annual .0 .0 .0 2100.0 .0

 Lease payment........................................................ 99.9 No monthly .0 .0 98.8 .1 1.1

 Insurance.................................................................... 92.9 No annual .0 .0 22.1 77.9 .0

 Gasoline...................................................................... 97.8 No monthly .0 .0 100.0 .0 .0

 Repairs......................................................................... 99.0 No monthly .0 .0 100.0 .0 .0

 Other vehicle expenses....................................... 99.1 No monthly .0 .0 100.0 .0 .0

 Parking........................................................................ 99.6 No monthly .0 .0 100.0 .0 .0

 Bus and train............................................................ 99.7 No monthly .0 .0 100.0 .0 .0

 Taxicab......................................................................... 99.8 No monthly .0 .0 100.0 .0 .0

 Other transportation............................................ 99.8 No monthly .0 .0 100.0 .0 .0

Education..................................................................... 99.2 No annual .0 .0 .0 100.0 .0

Child care..................................................................... 99.3 No annual .0 .0 .0 100.0 .0

Health care:

 Hospital and nursing home care.................... 99.6 Yes (3) (

3

) (

3

) (

3

) (

3

) (

3

)

 Doctor’s visits........................................................... 99.3 Yes (3) (

3

) (

3

) (

3

) (

3

) (

3

)

 Prescription drugs in-home medical care, 

special facilities......

99.3 Yes (3) (

3

) (

3

) (

3

) (

3

) (

3

)

 Insurance premiums............................................ 88.8 Yes (3) (

3

) (

3

) (

3

) (

3

) (

3

)

1 Weights are not used to calculate values in table.

2 Survey asks about down payments in the previous two calendar years, but 

one can identify the date of each down payment to determine the amount in 

the previous calendar year. 

3

 Previous two calendar years combined.

tion across various years.5 The ce consists of the quarterly 

Interview Survey and the Diary survey, which together 

provide data on the buying habits of consumers, including 

expenditures, income, and basic demographic characteristics.6

 The Diary Survey collects data on all spending during each day for two consecutive 1-week periods, focusing 

on frequently purchased items such as food, tobacco, and 

personal-care products. The Interview Survey, conducted 

in person, consists of five interviews 3 months apart, with 

key expenditure data collected in the last four interviews, 

covering a 12-month period. In both the surveys, expenditures are reported for the “consumer unit.”7

 The sample 

frame includes noninstitutionalized persons.

This article compares the psid with the Interview Survey and shows that psid expenditures provide a good approximation to reported Interview Survey expenditures. 

Since the first quarter of 1999, the Interview Survey has 

been given to 7,000 to 8,000 households each quarter, 

with respondents reporting spending during the previous 

3 months. The survey measures 578 separate categories at 

the Universal Classification Code (ucc) level, covering 

about 95 percent of total spending; among excluded items 

are spending on nonprescription drugs, household supplies, and personal care.8

 The response (consumer unit cooperation) rate was 80 percent in 2000.9

 Because it is psid

and Interview Survey expenditures, and not consumption, 
Consumer Expenditures

32 Monthly Labor Review • February 2010

Exhibit 1. Expenditures data collected in the PSID: 1968–2003

Domain Question in 2003 Waves Available

Food:

 At home F17 and F18: In addition to what you buy with food stamps, [you and anyone else in your family/you] do spend 

 any money on food that you use at home? How much do you spend on that food in an average week? 

1968–2003, 

except '73, '88, '89 

 Delivered F19 and F20: Do you have any food delivered to the door which isn't included in that? How much do you spend 

 on that food?

1968, 1994–2003

 Away from home F21: About how much do [you and anyone else in your family/you] spend eating out? 1969–2003, 

except '73, '88, '89

Health care:

 Hospital and nursing 

 home

H64: About how much did you pay out-of-pocket for nursing home and hospital bills in 2001 and 2002 com-

 bined? 

1999–2003

 Doctor H70: About how much did you pay out-of-pocket for doctor, outpatient surgery, dental bills in 2001 and 2002

 combined? 

1999–2003

 Prescription drugs H76: About how much did you pay out-of-pocket for prescriptions, in–home medical care, special facilities, and 

 other services in 2001 and 2002 combined?

1999–2003

 Insurance H63: Altogether, how much did [you/your family] pay for health insurance premiums, in 2001 and 2002 com-

 bined, for (all of) the health insurance or health care coverage(s) you just mentioned? Please include 

 amounts you had automatically deducted from your pay, as well as amounts you paid directly.

1999–2003

Housing:

 Mortgage A25: How much are your monthly mortgage payments? 

A30: Do your payments include insurance premiums?

A29: Do your payments include property tax? 

1968–2003, 

except '73, '74, '75, 

'82, '88, '89

 Rent A31: About how much rent do you pay a month? 1968–2003, 

except '88, '89 

 Insurance A22: How much is your total yearly homeowner's insurance premium? 1991–2003

 Property tax A21: About how much are your total yearly property taxes, including city, county, and school taxes? 1968–2003, 

except '78, '88, '89

 Electricity A48: The next few questions are about amounts paid for utilities, such as electricity and water. How much 

 [do you/does your family] usually pay for electricity per month on average? 

1981–83, 

1999–2003

 Heat A49: How much for gas or other types of heating fuel per month? 1981–83, 

1999–2003

 Water and sewer A50: How much [do you/does your family] usually pay for water and sewer per month? 1981–83, 

1999–2003

 Other utilities A51, A52, and A53: And do you have any other utility expenses? What were those other utilities expenses? On 

 average, how much are these other utility expenses per month? [Cable, garbage, phone, sewer]

1981–83,

 1999–2003

Transportation:

 Vehicle loan payment V20: How much are your payments and how often are they made? 1968, 1999–2003

 Down payment V17: How much did you put down in cash? (Asked up to three times if the household has multiple vehicles? 1999–2003

 Vehicle lease payment V24: How much was your initial outlay for that lease—including your down payment and any fees?

V25: How much are your payments and how often are they made? (Asked up to three times if the household

 has multiple vehicles)? 

 Other vehicle expendi-

 tures

X3: (Other than the car payments you already told me about,) how much did you pay in car payments? 1999–2003

 Insurance X1: How much do [you/you and your family living there] pay for car insurance [per year/for all your vehicles per 

 year]? 

1968, 1999–2003

 Gasoline X4: In the last month how much did [you/you and your family living there] pay for each of these transportation

 related expenses?

1999–2003

 Repairs and mainte-

 nance

X4: 1999–2003

 Parking and carpool X4: 1999–2003

 Bus fares and train fares X4: 1999–2003

 Taxicabs X4: 1999–2003

 Other transportation X4: 1999–2003

Education X6 and X7: In 2002, did [you/you and your family living there] have any school-related expenses such as

 - Purchase or rental of books, supplies, uniforms, or equipment including computers and software 

-Tuition or tutoring not including any amounts for day care or nursery school. I will ask you about those later; 

-Room and board for a family member who is away at school? How much in total were these expenses?

1999–2003

See footnotes at end of table.
Monthly Labor Review • February 2010 33

that are being compared, expenditures on durables are not 

converted into flows of services received.10 

A comparison of psid and ce expenditures

Consumption expenditures in both data sets were annualized. For the psid, if an amount was reported for a period 

of less than 1 year, it was inflated by the reciprocal of the 

fraction of the year that the report covers. If the report was 

for more than 1 year, the amount was deflated, effectively 

assuming that spending was uniform over the period. For 

the ce, bls procedures for calculating the weighted mean 

across interviews were followed.11

There are many reasonable approaches to imputing values for families with item nonresponse. However, given 

the psid’s low rate of nonresponse, estimates of spending 

are relatively insensitive to the choice of imputation strategy. Table 2 reports average psid spending for each category when the missing data are dropped (implicitly assuming that spending for families with item nonresponse 

is equal to the average among families that responded) 

and when the missing data are imputed with the use of 

a model that includes a third-order polynomial in age 

and an unrestricted spline for family size. The imputation 

models were fit separately for each expenditure category 

listed in table 2 using ordinary least squares. 

The ce measures far more spending categories than the 

psid does. Accordingly, we mapped the ucc codes from 

the ce into the psid categories. Details of this mapping 

are given in exhibit 2. The mapping was determined by 

having two coders independently map the ucc codes into 

the psid categories. Differences were reconciled through 

close inspection of each ucc. 

For each psid category, average spending for the psid

and the ce in 2001 is shown in the first and third columns of table 3; subsequent columns report comparisons 

for 1999 and 2003. Estimates for certain subcategories are 

significantly different in some cases, most likely because 

of respondent misallocation of spending into narrowly 

defined categories. These differences aside, total spending 

in each major category aligns fairly closely across the two 

surveys, especially considering the differences in survey 

design. For example, in 2001 total spending on food in 

the psid is 8 percent higher than in the ce, total housing 

aligns exactly, and total transportation spending is 5 percent lower. These three categories account for 86 percent 

of spending measured in the psid. 

The gaps are larger for spending on health care, education, and child care, with psid respondents reporting higher amounts in each case. In mapping education expenditures between the two surveys, the ce uccs of computers, 

computer systems, and related hardware for nonbusiness 

use, and those of computer software and accessories for 

nonbusiness use (but not limited to school-related use) 

were included, which would lead to a higher estimate for 

the ce than the psid. Moreover, ce ucc 660900—supplies 

and equipment expenses for “other schools,” such as business, secretarial, technical, and trade schools—also was 

included, to match with the psid category “other schoolrelated expenditures.” However, this ucc also covers such 

expenses for daycare centers and nursery schools, which, 

alternatively, can be counted as child care expenses. In this 

article, these expenditures are characterized as school related. However, even given this potential inconsistency, 

the psid education expenditure estimate is still higher 

than that of the ce. 

With all psid categories combined, annual spending 

totals $25,961, a figure that is 2 percent greater than ce

spending. (See table 3.) Estimates for 1999 and 2003 are 

similar, with psid total spending 4 percent lower than ce

spending in 1999 and 1 percent higher in 2003.

Spending on categories included in the psid totals 

X8, X9, and X10: In 2002, were there any other school-related expenses not already covered in the previous 

 question? What other types of school-related expenses did you have? Altogether, how much were these 

 other expenses?

Child Care F7: How much did [you/you and your family living there] pay for child care in 2002? 1970, '71, '72, '76, 

'77, '79, '85, 1988–

2003

Exhibit 1. Continued—Expenditures data collected in the PSID: 1968–2003

Domain Question in 2003 Waves Available

1

 Mortgage payment question, A25, was asked for up to two mortgages.

2

 Vehicle loan and lease payment questions, V17, V20, V24 and V25, were 

asked up to three times if the household has multiple vehicles. Other vehicle 

lease and loan related payment information was asked in question X3. X3 

will be positive if, for example, the household has four or more vehicles.
Consumer Expenditures

34 Monthly Labor Review • February 2010

Table 2. Average spending before and after imputation for item nonresponse, Panel Study of Income Dynamics, 2001 wave

Inputation

Before imputation After imputation

Number of 

families with 

valid responses

Percent of 

families with 

spending 

greater than 0

Unconditional 

mean

Number of 

families

Unconditional 

mean

Unconditional 

mean after 

trimming top 

1 percent

Food, total........................................................................... 7,228 98.8 5,936 7,406 5,899 5,724

At home............................................................................ 7,276 97.1 3,990 7,406 3,969 3,881

Away from home......................................................... 7,318 89.9 1,829 7,406 1,825 1,770

Delivered.......................................................................... 7,397 13.1 105 7,406 105 81

Housing, total.................................................................... 5,841 100.0 10,783 7,406 1,0471 9,777

 Mortgage........................................................................... 6,543 42.2 4,493 7,406 4,737 4,153

 Rent..................................................................................... 7,337 33.9 2,006 7,406 2,014 1,789

 Insurance......................................................................... 6,822 54.5 363 7,406 376 344

 Property tax.................................................................... 6,977 56.1 1,210 7,406 1,224 1,107

 Utilities1

............................................................................. 6,867 92.8 2,128 7,406 2,120 2,048

Transportation, total....................................................... 6,496 84.0 5,892 7,406 5,921 5,471

Loan payment................................................................. 7,246 27.7 1,188 7,406 1,192 1,072

Downpayment1............................................................ 7,219 19.8 1,363 7,406 1,367 996

Lease payment1............................................................. 7,365 5.4 393 7,406 392 256

Insurance........................................................................... 6,871 83.5 1,163 7,406 1,158 1,073

Gasoline............................................................................. 7,264 84.6 1,343 7,406 1,342 1,259

Repairs................................................................................ 7,332 40.5 110 7,406 110 90

Other vehicle expenses.............................................. 7,338 24.1 97 7,406 97 84

Parking................................................................................ 7,374 6.2 46 7,406 46 24

Bus and train.................................................................... 7,383 4.7 42 7,406 42 18

Taxicab................................................................................ 7,383 2.4 15 7,406 15 4

Other transportation................................................... 7,387 3.1 160 7,406 160 46

Education.............................................................................. 7,362 32.9 1,199 7,406 1,199 831

Child care.............................................................................. 7,379 14.9 341 7,406 342 234

Health care, total............................................................... 6,746 88.4 2,100 7,406 2,129 1,873

 Hospital and nursing home...................................... 7,383 27.2 310 7,406 311 147

 Doctor................................................................................. 7,366 68.7 427 7,406 426 351

 Prescriptions, in-home medical care, 

special facilities............................................................. 7,370 74.2 338 7,406 339 272

 Insurance......................................................................... 6,770 63.6 1,056 7,406 1,052 974

1 PSID family weights are used to calculate means and percents.

2 For utilities, downpayments, and leases, the proportion with valid responses reported in table 1 multipled by the sample size (7,406) does not equal the 

number of families with valid responses reported here. For utilities, if any individual component does not have a valid response, total utilities are counted 

as not having a valid response. For vehicles, some households can have multiple cars. In table 1, if the family reports one valid downpayment for a car, it is 

counted as valid. Here, the sum of all car downpayments for cars is reported, 

and if any car downpayments is invalid, the sum is invalid. The same is true of 

lease payments.

$25,340, as measured by the ce in 2001. This figure accounts for 72 percent of total spending across all ce categories, including those not collected in the psid (not 

shown in tables). This spending gap falls largely into five 

categories not measured in the 1999, 2001, or 2003 psid

waves: home repairs and maintenance ($1,200 in the 2001 

ce), household furnishing and equipment ($1,400), clothing and apparel ($1,300), trips and vacations ($1,300), and 

recreation and entertainment ($1,200). To capture spending on these items, questions were added to the 2005 and 

subsequent waves of the psid.

Life-cycle expenditure profiles. Chart 1 displays weighted 

cross-sectional life-cycle expenditure profiles from both 

the psid and the ce surveys.12 The chart also shows the 

95-percent confidence interval for the psid expenditures. 

For each data source, two different measures of expenditures are plotted, by the age of the family head. The first 

measure is the total of the expenditure categories collected in the psid. The second measures total expenditures—

for the psid, the imputed value of total expenditures; for 

the ce, the sum of all expenditure categories. The threeage-group moving average for each single year of age (for 
Monthly Labor Review • February 2010 35

example, 25 to 27 years, 26 to 28 years, 27 to 29 years 

and so forth.) is calculated for each year (1999, 2001, and 

2003) and then averaged across the years. Chart 1 does 

not control for any household characteristics (for instance, 

gender of head of household and family size). The profiles represent how, at a given point in time, consumption 

expenditures differ for family heads at different points in 

Table 3. Estimated expenditures in the Panel Survey of Income Dynamics (PSID) and the Consumer Expenditure Survey (CE), 2001, 

 and means and ratios of means, 1999, 2001, and 20031

Expenditure category

2001

1999 2003

PSID CE

Unconditional 

mean

Percent of 

total expenditures

Unconditional 

mean

Percent 

of total 

expenditures

Ratio of 

means, 

PSID/CE

Unconditional 

mean, 

PSID

Ratio of 

means, 

PSID/CE

Unconditional 

mean, PSID

Ratio of 

means, 

PSID/CE

 Total.............................................. 25,961 100.0 25,340 100.0 1.02 22,449 0.96 26,994 1.01

Food

 Total food................................................ 5,899 22.7 5,482 21.6 1.08 5,397 1.03 6,058 1.10

 At home............................................... 3,969 15.3 3,817 15.1 1.04 3,735 1.04 4,070 1.06

 Away from home............................. 1,825 7.0 1,339 5.3 1.36 1,575 1.16 1,858 1.35

 Delivered.............................................. 105 .4 (

2

) (

2

) (

2

) 87 (

2

) 130 (

2

)

 Alcohol.................................................. (

2

) (

2

) 326 1.3 (

2

) (

2

) (

2

) (

2

) (

2

)

Housing

 Total housing........................................ 10,471 40.3 10,482 41.4 1.00 8,931 .94 10,764 .97

 Mortgage............................................ 4,737 18.2 3,737 1.5 1.27 3,773 1.10 4,762 1.17

 Rent........................................................ 2,014 7.8 2,096 8.3 .96 1,918 .96 2,053 .96

 Insurance............................................. 376 1.4 256 1.0 1.47 334 1.40 447 1.51

 Property tax........................................ 1,224 4.7 1,291 5.1 .95 1,046 .87 1,331 .95

 Utility...................................................... 2,120 8.2 2,206 8.7 .96 1,860 1.02 2,171 .95

 Telephone............................................ (

2

) (

2

) 896 3.5 (

2

) (

2

) (

2

) (

2

) (

2

)

Transportation

 Total transportation............................ 5,921 2.3 6,251 24.7 .95 4,994 .86 6,148 .94

 Loan payment.................................... 1,192 4.6 1,514 6.0 .79 1,071 .76 1,403 .80

 Downpayment.................................. 1,367 5.3 1,214 4.8 1.13 1,186 .98 1,237 .96

 Lease payment.................................. 392 1.5 340 1.3 1.15 291 .96 227 .96

 Insurance.............................................. 1,158 4.5 819 3.2 1.41 1,085 1.13 1,475 1.63

 Gasoline................................................ 1,342 5.2 1,268 5.0 1.06 979 .94 1,315 1.00

 Repairs................................................... 110 .42 631 2.5 .17 89 .14 100 .17

 Other vehicle expenses................ 97 .37 (

2

) (

2

) (

2

) 95 (

2

) 103 (

2

)

 Parking.................................................. 46 .18 28 .10 1.64 34 1.36 43 1.54

 Bus and train...................................... 42 .16 98 .40 0.43 35 .38 58 .70

 Taxicab.................................................. 15 .06 17 .10 0.88 11 .65 24 1.50

 Other transportation..................... 160 .62 (

2

) (

2

) (

2

) 118 (

2

) 163 (

2

)

 Public transportation.................... (

2

) (

2

) 322 1.3 (

2

) (

2

) (

2

) (

2

) (

2

)

Education................................................. 1,199 4.6 914 3.6 1.31 1,030 1.16 1,217 1.13

Childcare................................................... 342 1.3 273 1.1 1.25 274 1.21 346 1.26

Health care

 Total health care.................................. 2,129 8.2 1,938 .40 1.10 1,823 1.04 2,461 1.14

 Hospital and nursing home........ 311 1.2 109 1.8 2.85 315 3.08 354 3.03

 Doctor................................................... 426 1.6 455 .94 368 .85 480 1.04

 Prescriptions, in-home medical

 care, special facilities.................... 339 1.3 364 1.4 .93 272 .83 412 .87

 Insurance.............................................. 1,052 4.1 952 3.8 1.11 868 .97 1,215 1.09

1

 Weights are used to calculate all estimates. 2

 Not applicable. 

the life cycle and thus reflect changes in household size, 

composition, and other factors over the life cycle. 

The chart shows that, for the categories measured in 

the psid, the life-cycle expenditure profiles in the two data 

sets are similar. The lower profiles show that spending in 

the categories measured in the psid rise through the late 

forties or early fifties and then fall almost monotonically 
Consumer Expenditures

36 Monthly Labor Review • February 2010

 Chart 1. Life-cycle expenditure profiles for PSID and CE, average for 1999, 2001, and 2003 combined

Thousands 

of dollars

NOTE: Shaded areas represent 95-percent confidence interval for PSID.

Thousands 

of dollars

24

60

10

20

25

30

35

40

45

50

55

15

60

10

20

25

30

35

40

45

50

55

15

27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75

PSID (PSID-measured components)

CE (PSID-measured components)

PSID (CE-total, including imputed components for PSID)

CE (Total)

Age, years

through the mid-seventies. The one period when the patterns for the two data sources diverge somewhat is in the 

early fifties, and this is due almost entirely to the gap in 

education expenditures at those ages. Notice that, despite 

this slight divergence, the ce series lies almost everywhere 

within the 95-percent confidence band of the psid series. 

The upper two profiles display total spending. For the 

ce, the data are total measured expenditures, including 

categories not measured in the psid. For the psid, total 

spending is imputed with a strategy developed by Jonathan Skinner.13 The ce data are used to estimate a regression of total expenditures on the expenditure categories 

measured in the psid. Then, the coefficients from that regression are used together with psid data to predict total 

psid expenditures. The value of R-squared from the imputation regression is 0.89; the estimated coefficients are 

reported in table 4. 

Chart 1 shows that total ce expenditures and imputed total psid expenditures are similar. The profiles imply 

spending of roughly $30,000 per year in the late twenties, 

increasing to above $40,000 in the late forties (ce) and 

early fifties (psid). Spending falls thereafter, so that by the 

late sixties it is about the same as the level experienced 

by families headed by people in their midtwenties. The 

two series are generally very close, with the ce series lying within the 95-percent confidence interval for the psid

throughout virtually the entire life cycle. The point estimate of the psid series is often somewhat higher than that 

of the ce after middle age, but the difference is typically 

statistically insignificant. The slightly higher point estimate of the imputed expenditure in the psid is consistent 

with what Jonathan Fisher and David Johnson found. 

Expanding the Skinner imputation strategy by including demographic characteristics, they also report a slightly 

higher imputed total consumption in the psid than in the 

ce.

14 On balance, both their results and the ones presented 

here indicate that, measured against the benchmark of the 

ce, the psid expenditure data provide a high-quality estimate of household expenditure behavior. 

This article has demonstrated that psid and ce estimates of expenditures in most broad categories align 

closely despite substantial differences in their instruments 

and design features. Also, cross-sectional lifecycle consumption expenditure profiles are similar in the two surveys. Because the psid expanded the set of questions on 

consumption expenditures 1999, it now gives a very good 

approximation of the consumption expenditures provided 
Monthly Labor Review • February 2010 37

by the ce. 

Most likely, the ce will remain the primary data set 

for cross-sectional analyses. The survey collects detailed 

expenditure data on a continuous quarterly basis, so ce

data permit highly accurate assessments of year-to-year 

Exhibit 2. Mapping of Universal Classification Codes from Consumer Expenditure Survey into Panel Survey of Income

 Dynamics Categories

Panel Survey of Income Dynamics 

Consumption Category Consumer Expenditure Survey Universal Classification Codes

Food1

.

 At home 190904, 790220, 790230

 Delivered

 Away from home 190901, 190902, 190903, 790410, 790430, 800700

Health care

 Hospital and nursing home 570110, 570210, 570220, 570230

 Doctor 560110, 560210, 560310, 560330, 560400

 Prescription drugs 340906, 540000, 550110, 550320, 550330, 550340, 570901, 570903, 570240

 Insurance. 580111, 580112, 580113, 580114, 580311, 580312, 580901, 580903, 580904, 580905, 580906

Housing

 Mortgage 220311, 220312, 220321, 220322, 830201, 830202

 Rent 210110, 800710 

 Insurance 220121, 220122

 Property tax 220211, 220212

 Utilities2 250111, 250112, 250113, 250114, 250211, 250212, 250213, 250214, 250221, 250222, 250223, 

250224, 250901, 250902, 250903, 250904, 260111, 260112, 260113, 260114, 260211, 260212, 

260213, 260214, 270211, 270212, 270213, 270214, 270310, 270411, 270412, 270413, 270414, 

270901, 270902, 270903, 270904 

Transportation.

 Vehicle loan payment 870103, 870104, 870203, 870204

 Downpayment 870101, 870102, 870201, 870202

 Vehicle lease payment 450310, 450313, 450314, 450410, 450413, 450414

 Insurance 450311, 450411, 500110

 Gasoline 470111, 470112, 470113

 Repairs 470220, 470211, 470212, 480110, 480213, 480214, 490110, 490211, 490212, 490221, 490231,

490232, 490311, 490312, 490313, 490314, 490318, 490319, 490411, 490412, 490413, 490501,

490502, 490900, 520410 

 Other vehicle payments

 Parking 520531, 520532

 Bus 530311, 530312, 530501, 530902, 530210

 Taxicab 530411, 530412

 Other transportation 520511, 520512, 520521, 520522, 520542, 520902, 520903, 520904, 520905, 520906, 520907,

530110, 530901 

Education

Schooling 190901, 210310, 370903, 390901, 660110, 660210, 660310, 660900, 670110, 670210, 670901, 670902, 800802, 800804

 Other school-related expenditures 690111, 690112

Childcare 340211, 340212, 670310

 

1

 The Universal Classification Codes of alcoholic beverages consumed at 

home, in restaurants, and on trips—200900, 790310, 790320, and 790420—

are also included to match with the PSID total food expenditure, although 

these UCCs are not assigned to food at home or food away from home. 2

 The Universal Classification Codes of telephone services—270101 and 

270102—are included in order to match the PSID total housing expenditures.

3

 The Consumer Expenditure Survey has Universal Classification Codes 

for expenditures on motorcycles, mopeds, scooters, and private airplanes. The Panel Survey of Income Dynamics explicitly asked households 

not to include these payments when they report vehicle expenditures. 

 4 Universal Classification Codes 450311 and 450411 encompass other charges 

on leased vehicles, such as maintenance charges.

changes in expenditures across the population. Also, 

because the ce has collected comprehensive expenditure 

data for more than two decades, long-term trends can 

only be analyzed with that survey. 

Still, given the psid’s longitudinal nature, its genealogical 
Consumer Expenditures

38 Monthly Labor Review • February 2010

Table 4. Ordinary least square model of total Consumer Expenditure

 survey expenditures used to impute total expenditures in the

 Panel Study of Income Dynamics

 Imputation Coefficient p-value

Spending on:

 Constant.................................................................. –2546 <0.0001

 Food at home........................................................ 1.19 <0.0001

 Food away............................................................... 2.35 <0.0001

 Mortgage................................................................ 1.01 <0.0001

 Rent............................................................................ 1.16 <0.0001

 Home insurance................................................... 2.10 <0.0001

 Property tax............................................................ 2.62 <0.0001

 Utilities...................................................................... 2.00 <0.0001

 Transportation....................................................... 1.26 <0.0001

 Education................................................................ 1.18 <0.0001

 Child care................................................................. 1.59 <0.0001

 Health care.............................................................. 1.42 <0.0001

design, and the wealth of information it provides on 

labor market and demographic variables, several new 

areas of research can be advanced with the use of psid

consumption expenditure data. For example, previous 

research using cross-sectional data has documented that 

income-poor families consume substantially more than 

their annual income.15 Does this result hold when both 

income and consumption expenditures are measured over 

multiple years? Similarly, a large literature documents a 

strong intergenerational relationship between wealth and 

income.16 Is there a similar intergenerational pattern for 

consumption expenditure? Using the PSID to answer these 

and other questions will greatly enrich our understanding 

of consumption behavior and provide a useful complement 

to research that analyzes the CE. 

Notes

ACKNOWLEDGMENTS: This research was supported in part by a grant 

to the National Poverty Center at the University of Michigan from the 

Assistant Secretary for Planning and Evaluation, U. S. Department of 

Health and Human Services. We thank Laurie Pounder and Jonathan 

Fisher for assisting with the validation of the mapping of Universal 

Classification Codes from the CE into the PSID. We also thank Richard 

Bavier, Rebecca Blank, Jonathan Fisher, Gary Solon, James Sullivan, 

the editor and an anonymous referee of the Monthly Labor Review, 

and seminar participants at the Bureau of Labor Statistics and the 

NBER Summer Institute for comments on a previous draft. Address 

correspondence to Geng Li, Mail Stop #93, Federal Reserve Board, 

Washington, DC 20551, Geng.Li@frb.gov. Any views expressed in this 

article are those of the authors and not necessarily those of the Federal 

Reserve Board or any sponsoring agency or organization.

1 The 2001 and 2003 Consumption and Activities Mail Surveys, supplements to the Health and Retirement Study, gathered comprehensive assessments of expenditures of people 50 years and older, allowing 

longitudinal analyses of consumption in this panel study. 

2 John Fitzgerald, Peter Gottschalk, and Robert Moffitt, “An Analysis of 

Sample Attrition in Panel Data,” Journal of Human Resources, Spring 1998, 

pp. 251–99; and Sean Becketti, William Gould, Lee Lillard, and Finis 

Welch, “The Panel Study of Income Dynamics after Fourteen Years: An 

Evaluation,” Journal of Labor Economics, October 1988, pp. 472–92.

3 The use of so-called unfolding brackets in the PSID questions on 

wealth has been found to reduce item nonresponse substantially. (See 

Thomas Juster and James P. Smith, “Improving Quality of Economic 

Data: Lessons from the HRS and AHEAD,” Journal of the American 

Statistical Association, March,1997, pp. 1268–78.). The health care 

expenditure questions added in 1999 also offer respondents unfolding brackets. For example, if the respondent says “don’t know” when 

asked the amount spent on prescription drugs, in-home medical care, 

special facilities, and other services combined, the respondent is asked, 

“Would it amount to $5,000 or more?” If the respondent says “yes,” 

then he or she is asked in subsequent questions whether it is more than 

$10,000 and then more than $20,000. If the respondent says “no,” then 

he or she is asked in subsequent questions whether it was more than 

$1,000. If the respondent says “no” again, he or she is then asked if the 

amount was more than $500. If the respondent continues to respond 

“don’t know,” the series of questions is terminated.

4 Over the 1999, 2001, and 2003 waves analyzed in this article, 15 respondents had expenditures in one category that were several orders of 

magnitude larger than the average spending across all families for that 

category. In these cases, the value was assumed to be invalid and was 

imputed using the same approach used for item nonresponse (described 

subsequently).

5 David Cutler and Lawrence Katz, “Rising Inequality? Changes in the 

Distribution of Income and Consumption in the 1980s,” American Economic Review, May 1992, pp. 546–51. 

6 Consumer Expenditure Survey Anthology, 2003, Report 967 (Bureau of 

Labor Statistics, 2003), on the Internet at www.bls.gov/cex/csxanthol03.

pdf (visited March 3, 2010).

7 A consumer unit is defined as (1) all members of a household who are 

related by blood, marriage, adoption, or some other legal arrangement; (2) 

a person living alone or sharing a household with others, living as a roomer 

in a private home or lodging house, or living permanently in a hotel or 

motel, but who is financially independent; or (3) two or more persons 

living together who combine their incomes and make joint expenditure 

decisions. Financial independence is determined by three expense categories: housing, food, and other living expenses. To be considered financially 

independent, the respondent must provide expenditures, either entirely or 

in part, in at least two of the three categories. 

8 Consumer Expenditure Survey, 2000: Interview Survey and Detailed 

Expenditure Files (Bureau of Labor Statistics, 2002), distributed by Interuniversity Consortium for Political and Social Research, Ann Arbor, MI, 

2002.

9 Ibid., p. 247.

10 Note that the conventional method for imputing consumption expenditure is to apply a linear transformation to the stock of durable goods. 

If expenditure outlays on durables are similar across the two surveys, it is 

likely that the stock of durables and the flows of services would be similar 

across the surveys as well.

11 Because of the evolving structure of the CE sample design, the weight 

assigned to each consumer unit changes over quarters. Therefore, the 

annual weighted mean is computed by adding four quarterly weighted 
Monthly Labor Review • February 2010 39

means together. (For details, see Consumer Expenditure Survey, 2000.)

12 Comparisons of life-cycle profiles for detailed expenditure categories 

are reported in Kerwin Kofi Charles, Sheldon Danziger, Geng Li, and 

Robert Schoeni, Studying Consumption with the Panel Study of Income Dynamics: Comparisons with the Consumer Expenditure Survey and an Application to the Intergenerational Transmission of Well-being, Finance and Economics Discussion Series (Washington, DC, Federal Reserve Board, 2007).

13 Jonathan Skinner, “A Superior Measure of Consumption from the 

Panel Study of Income Dynamics,” Economics Letters, February 1987, 

pp. 213–16. 

14 Jonathan D. Fisher and David S. Johnson, “Consumption Mobility in the United States: Evidence from Two Panel Data Sets,” Topics in 

Economic Analysis and Policy, vol. 6, no. 1, 2006, Article 16, on the Internet at www.bepress.com/bejeap/topics/vol6/iss1/art16 (visited March 

4, 2010). Another distinction between Fisher and Johnson’s imputation 

and the one presented here is that they focus on consumption, instead of 

expenditure, by replacing durable goods and housing expenditures with 

estimated service flows.

15 Bruce Meyer and James Sullivan, "Changes in the Consumption, 

Income, and Well-Being of Single Mother Headed Families," American 

Economic Review, December 2008, pp. 2221–41. 

16 See Gary Solon, “Intergenerational Income Mobility in the United 

States,” American Economic Review, June 1992, pp. 393–408; and Kerwin 

Kofi Charles and Erik Hurst, The Correlation of Wealth Across Generations,” Journal of Political Economy, December 2003, pp. 1155–82.