Comparing characteristics and expenditures of consumer

units in selected income ranges

Summary 06-02 / January 2006 U.S. Department of Labor U.S. Bureau of Labor Statistics

Beginning with the publication

of the Consumer Expenditure

Survey (CE) 2003 data, several new,

higher income ranges were shown

for the first time. As incomes have

continued to rise over the years, the

larger number of higher income

consumer units1

 occurring in the

sample allowed for the publication

of these new classes. Using 2003

data, this article compares characteristics and expenditures of those

in the highest income range, $150,000

and over, with expenditures and

characteristics of those in the range

of less than $70,000. A majority

(63.9 percent) of consumer units in

the CE had an average annual

income of less than $70,000,

whereas a small number of consumer

units (3.5 percent) reported incomes

of $150,000 and over. As one

might expect, differences in demographics and in the way people

spend their money abound between

these two groups, although there

are some similarities as well.

Demographics. The less-than-

$70,000 group had fewer persons

per consumer unit than did the

$150,000-and-over group (2.3

versus 3.1) and fewer children under

18 years of age (0.6 versus 0.9).

The $150,000-and-over group had

more earners (1.9 versus 1.1) and a

larger number of vehicles (2.8 versus

1.7) per consumer unit than did the

less-than-$70,000 group. The

$150,000-and-over group had a 94-

percent rate of homeownership,

while the less-than-$70,000 group

had a 59-percent rate. Among the

less-than-$70,000 group, the highest

education level of the reference

person2 varied: 8 percent had an

elementary school education, 42

percent a high school education,

and 50 percent a college education.

This pattern differed from that of

the $150,000-and-over group,

among which 91 percent of the

reference persons had a college

education and just 8 percent had a

high school education.

Income and expenditures. Consumer units in the less-than-$70,000

group had an average annual income

before taxes of $29,793, while those

consumer units in the $150,000-

and-over group had an average

annual income before taxes of

$223,634—71⁄2 times that of the

lower income group. Average

annual expenditures for the lessthan-$70,000 group were $31,737,

while expenditures for the $150,000-

and-over group were $118,674—

31⁄2 times that of the lower income

group. In dollar amounts, the

$150,000-and-over group spent

more for every item examined than

did the less-than-$70,000 group.

It is interesting to compare the

expenditures of these two groups

on necessities, such as food, housing,

1

 A consumer unit is defined as

members of a household related by

blood, marriage, adoption, or some

other legal arrangement; a single

person living alone or sharing a

household with others, but who is

financially independent; or two or

more persons living together who

share responsibility for at least two

out of the three major types of

expenses: food, housing, and other

expenses.

2

 The reference person is the first

person mentioned by the respondent

when asked to “start with the name

of the person or one of the persons

who owns or rents the home.” It is

with respect to this person that the

relationship of the other consumer

unit members is determined.

clothing, transportation, and

healthcare. The less-than-$70,000

group allocates a share of 77.9

percent of total expenditures to

these items, while the $150,000-

and-over group allocates a share

of 63.0 percent to these items.

The less-than-$70,000 group

had total food expenditures of

$4,619, which constituted a

share of 14.6 percent of total

expenditures, and food-at-home

expenditures of $2,862 , which

represented a share of 9.0 percent

of total expenditures. Even

though the $150,000-and-over

group had larger dollar expenditures for both categories—

$11,435 on total food and $5,023

on food at home—expenditure

shares for the $150,000-and-over

group were less, with a share of

9.6 percent for total food and

4.2 percent for food at home.

Expenditures for food away

Continued on back

Footnotes

Chart 1. Expenditure shares on selected items, Consumer Expenditure Survey, 2003

Percent Percent

Food Housing Apparel and services Transportation Healthcare

0

5

10

15

20

25

30

35

0

5

10

15

20

25

30

35

Incomes of less than $70,000 Incomes of $150,000 and over
Number of consumer units

(in thousands) ......................... 73,824 4,002

Income before taxes ................... $29,793 $223,634

Average Number in consumer unit: 

Persons ................................... 2.3 3.1

Children under 18 years .......... 0.6 0.9

 Earners .................................... 1.1 1.9

Vehicles ................................... 1.7 2.8

 Percent distribution

Housing tenure:

Homeowner .............................. 59 94

 Renter ..................................... 41 6

Education of reference person: 

Elementary (1–8) .................... 8 (a)

High school (9–12) ................. 42 8

College ..................................... 50 91

Never attended and other ....... (a) (b)

Average annual expenditures ..... $31,737 $118,674

Food ......................................... 4,619 14.6 11,435 9.6

Food at home ........................ 2,862 9.0 5,023 4.2

Food away from home ........... 1,757 5.5 6,411 5.4

Housing ........................................... 10,464 33.0 36,971 31.2

Shelter ........................................... 6,046 19.1 22,117 18.6

Utilities, fuels, and public

services ................................... 2,450 7.7 4,969 4.2

Household operations ................... 453 1.4 3,191 2.7

Household furnishings

and equipment ......................... 1,062 3.3 5,304 4.5

Apparel and services ...................... 1,314 4.1 5,083 4.3

Transportation ................................. 6,138 19.3 16,799 14.2

Vehicle purchases (net outlay) .... 2,884 9.1 7,683 6.5

 Cars and trucks, new ................. 1,299 4.1 6,003 5.1

 Cars and trucks, used ............... 1,538 4.8 1,636 1.4

Gasoline and motor oil .................. 1,134 3.6 2,133 1.8

Healthcare ....................................... 2,199 6.9 4,447 3.7

Health insurance ........................... 1,140 3.6 2,115 1.8

Entertainment .................................. 1,484 4.7 7,147 6.0

Education ........................................ 439 1.4 4,243 3.6

Cash contributions .......................... 896 2.8 8,534 7.2

Personal insurance and pensions .. 2,476 7.8 18,958 16.0

 Life and other personal

insurance ................................. 261 0.8 1,958 1.6

 Pensions and Social Security .... 2,215 7.0 17,001 14.3

a: value less than 0.5.

b: no data reported.

Less

than

$70,000

Less

than

 $70,000

Items Items

Table 1. Income before taxes: Average annual expenditures and characteristics and shares of average annual expenditures for

selected items, Consumer Expenditure Survey, 2003

from home differed for the two

groups, with the less-than-$70,000

group spending $1,757, or 38

percent of its food expenditures; the

$150,000-and-over group spent a

larger share of food expenditures,

56 percent, on food away from

home ($6,411). The less-than-

$70,000 group had shelter expenditures of $6,046, a share of

19.1 percent, while the $150,000-

and-over group had shelter expenditures of $22,117, which

accounted for a slightly lower share

of 18.6 percent. Similarly, for

expenditures on apparel and services, the less-than-$70,000 group

had expenditures of $1,314, which

represented a share of 4.1 percent

of total expenditures, whereas the

$150,000-and-over group had expenditures of $5,083, representing 4.3

percent of total expenditures. While

the $150,000-and-over group had

more vehicles per consumer unit

than did the less-than-$70,000

group (2.8 versus 1.7), the lower

income group allocated a share

double that of the $150,000-andover group for gasoline and motor

oil (3.6 percent versus 1.8 percent).

Share $150,000

 and

over

Share

$150,000

and

 over

Share Share

Expenditures on gasoline and motor

oil were $1,134 for the less-than-

$70,000 group and $2,133 for the

$150,000-and-over group. Similarly,

while the $150,000-and-over group

had larger expenditures on health

insurance than did the less-than-

$70,000 group ($2,115 versus $1,140),

the latter group allocated a share twice

as large as that of the former group

(3.6 percent versus 1.8 percent) for

health insurance.

Other large differences between

the two groups in expenditures and

in expenditure shares occurred for

spending on education, cash contributions, and personal insurance and

pensions—what could be considered more discretionary items.

Education spending includes items

such as school supplies and out-ofpocket college tuition. The $150,000-

and-over group had education expenditures almost 10 times that of

the less-than-$70,000 group ($4,243

versus $439), or 3.6 percent of total

expenditures for the former group

and 1.4 percent for the latter. Cash

contributions, including cash given

to members who are not part of the

consumer unit, such as students, and

alimony and child support, as well

as contributions to charities and

religious, educational, and political

organizations, follow a similar

pattern. The $150,000-and-over

group had expenditures of $8,534

on cash contributions, an amount

almost 10 times that of the expenditures on cash contributions of the

less-than-$70,000 group ($896);

expenditure shares for this item were

7.2 percent for the former group

and 2.8 percent for the latter.

Personal insurance and pensions

accounted for 7.8 percent ($2,476)

of total expenditures for the lessthan-$70,000 group. The $150,000-

and-over group allocated twice as

large a share, 16 percent, to this

item—more than 71⁄2 times the

dollar amount ($18,958) spent by

the lower income group.

It is interesting to note the similarities and differences between

these two groups. Though the dollar amounts of expenditures for the

two groups were different for

every item examined, expenditure

shares allocated by both groups for

shelter and apparel and services

were similar. However, expenditure shares for other necessities—

food, transportation, and healthcare—were dissimilar, as were shares

for more discretionary items—education, cash contributions, and personal insurance and pensions. The

less-than-$70,000 group allocates a

larger proportion of total expenditures

to necessities than does the $150,000-

and-over group.

This summary was prepared by

Meaghan Duetsch, an economist in

the Division of Consumer Expenditure Surveys of the Bureau of Labor

Statistics. For further information

about data presented here, contact the

Division of Consumer Expenditure

Surveys of the Bureau of Labor Statistics at (202) 691-6900 or by e-mail at

cexinfo@bls.gov. To find Consumer

Expenditure Survey data on the

Internet, go to www.bls.gov/cex, the

BLS Consumer Expenditure Survey

homepage. Material in this publication is in the public domain and,

with appropriate credit, may be reproduced without permission. This

information is available to sensoryimpaired individuals upon request.

Voice phone: (202) 691-800-877-

8339.