Consumer Expenditure Survey Anthology, 2008 87

Appendix: Description of

the Consumer

Expenditure Survey

The current Consumer Expenditure Survey (CE) program beganin 1980. Its principal objective

is to collect information on the buying

habits of American consumers. Consumer expenditure data are used in various types of research by government,

business, labor, and academic analysts.

Also, the data are required for periodic

revision of the Consumer Price Index

(CPI).

The survey, which is conducted by

the U.S. Census Bureau for the U.S.

Bureau of Labor Statistics, consists of

two components: A diary or recordkeeping survey completed by participating consumer units for two consecutive 1-week periods; and an interview survey in which expenditures of

consumer units are obtained in five interviews conducted at 3-month intervals.

Survey participants record dollar

amounts for goods and services purchased during the reporting period, regardless of whether payment is made

at the time of purchase. Expenditure

amounts include all sales and excise

taxes for items purchased by the consumer unit for itself or for others. Excluded from both surveys are all business-related expenditures and expenditures for which the consumer unit is

reimbursed.

Each component of the survey queries an independent sample of consumer units that is representative of the

U.S. population. In the Diary Survey,

about 7,000 consumer units are sampled

each year. Each consumer unit keeps a

diary for two 1-week periods, yielding

approximately 14,000 diaries a year. In

the Interview Survey, the sample is selected on a rotating panel basis, surveying about 7,000 consumer units

each quarter. Each consumer unit is

interviewed once per quarter, for five

consecutive quarters. Data are collected on an ongoing basis in 91 areas

of the United States.

The Interview Survey is designed

to capture expenditure data that respondents can reasonably recall for a period of 3 months or longer. In general,

data captured include relatively large

expenditures, such as spending on real

property, automobiles, and major appliances, and expenditures that occur

on a regular basis, such as spending

on rent, utilities, and insurance premiums. Also included are expenditures

incurred on leisure trips. Expenditures

on nonprescription drugs, household

supplies, and personal care items are

excluded. The Interview Survey collects detailed data on an estimated 60

to 70 percent of total household expenditures. Global estimates, that is, expenditures for a 3-month period, are

obtained for food and other related

items, accounting for an additional 20

to 25 percent of total expenditures.

The Diary Survey is designed to

capture expenditures on small, fre-
88 Consumer Expenditure Survey Anthology, 2008

quently purchased items that are normally difficult for respondents to recall.

Detailed records of expenses are kept

for food and beverages—both at home

and in eating places—tobacco, housekeeping supplies, nonprescription

drugs, and personal care products and

services. Expenditures incurred away

from home overnight or longer are excluded from the Diary Survey. Although the diary was designed to collect information on expenditures that

could not be recalled easily over a period of time, respondents are asked to

report all expenses (except overnight

travel expenses) that the consumer unit

incurs during the survey week.

Integrated data from the BLS Diary

and Interview Surveys provide a complete accounting of consumer expenditures and income, which neither survey component alone is designed to

do. Data on some expenditure items

are collected in only one of the components. For example, the Diary Survey

does not collect data on expenditures

for overnight travel or information on

third-party reimbursements of consumer expenditures, as the Interview

Survey does. Examples of expenditures

for which reimbursements are excluded

are medical care; automobile repair; and

construction, repairs, alterations, and

maintenance of property.

For items unique to one or the other

survey, the choice of which survey to

use as the source of data is obvious.

However, there is considerable overlap in coverage between the surveys.

Because of this overlap, integrating the

data presents the problem of determining the appropriate survey component

from which to select expenditure items.

When data are available from both survey sources, the more reliable of the

two (as determined by statistical methods) is selected. As a result, some

items are selected from the Interview

Survey and others from the Diary Survey.

Population coverage and the definition of components of the CE differ

from those of the CPI. Consumer expenditure data cover the total population, whereas the CPI covers only the

urban population. In addition, home

ownership is treated differently in these

two surveys. Actual expenditures of

homeowners are reported in the CE,

whereas the CPI uses a rental equivalence approach that attempts to measure the change in the cost of obtaining, in the rental marketplace, services

equivalent to those provided by owneroccupied homes.

Interpreting the data

Expenditures are averages for consumer units with specified characteristics, regardless of whether a particular

unit incurred an expense for a specific

item during the recordkeeping period.

The average expenditure for an item

may be considerably lower than the

expenditure by those consumer units

that actually purchased the item. The

less frequently an item is purchased,

the greater the difference between the

average for all consumer units and the

average for those purchasing the item.

Also, an individual consumer unit may

spend more or less than the average,

depending on its particular characteristics. Factors such as income, ages of

family members, geographic location,

taste, and personal preference influence expenditures. Furthermore, even

within groups with similar characteristics, the distribution of expenditures

varies substantially. These points

should be considered when relating

reported averages to individual circumstances.

In addition, sample surveys are subject to two types of errors: Sampling

and nonsampling. Sampling errors occur because the data are collected from

a representative sample rather than the

entire population. Nonsampling errors

result from the inability or unwillingness of respondents to provide correct

information, differences in interviewers’

abilities, mistakes in recording or coding, or other processing errors.

Glossary

Consumer unit. 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 three

major types of expenses: Food, housing, and other expenses. Students living in university-sponsored housing

are also included in the sample as separate consumer units.

Reference person. The first member

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

other members of the consumer unit is

determined.

Total expenditures. The transaction

costs, including excise and sales taxes,

of goods and services acquired during

the interview period. Estimates include

expenditures for gifts and contributions and payments for pensions and

personal insurance.

Income. The combined income earned

by all consumer unit members 14 years

or older during the 12 months preceding the interview. The components of

income are wages and salaries; selfemployment income; Social Security

and private and government retirement

income; interest, dividends, and rental

and other property income; unemployment and workers’ compensation and

veterans’ benefits; public assistance,

Supplemental Security Income, and

Food Stamps; rent or meals or both as

pay; and regular contributions for support, such as alimony and child support.

Quintiles of income before taxes.

Consumer units are ranked in ascending order of income value and divided

into five equal groups.