Expenditures of urban and rural 

consumers, 1972-73 to 1985

JOHN M. ROGERS

Social and economic comparisons of urban and rural populations 

have long been of interest to public policymakers. The migration 

of families between urban and rural areas, the financial problems 

of the American farmer, and the incidence of poverty by type of 

area are but a few of the urban versus rural topics that have 

received much attention.1 This report focuses on another 

socioeconomic aspect of the urban and rural populations: namely, 

how the expenditure patterns of the two populations compare. 2

Expenditures, income, and family characteristics are compared for 

1985, and changes in expenditure levels and expenditure shares 

between 1972-73 and 1985 are discussed using data from t he 

Bureau of Labor Statistics Consumer Expenditure (CE) Survey.

Method of the expenditure survey. Both urban and rural consumer 

units were sampled when the current, ongoing CE Survey began 

in 1980.3 However, because of Federal budget reductions, the 

rural portion of the sample was dropped in 1981-83. In January 

1984, the Bureau reintroduced the rural portion of the population 

in the survey sample. Now that data for both the urban and rural 

populations are again available, it is possible to compare the 

expenditures, income, and family characteristics of the two 

population groups. It also affords the opportunity of comparing 

recent urban versus rural data with earlier data.

The CE Survey consists of two separate components, each with 

its own questionnaire and sample: 1) a quarterly Interview survey 

in which expenditures and income of consumer units are obtained 

in five interviews conducted every 3 months and, 2) a Diary or 

recordkeeping survey completed by consumer units for two 

consecutive 1-week periods. The Interview survey is designed to 

obtain data on the types of expenditures which respondents can 

recall for a period of 3 months or longer. In general, these include 

relatively large expenditures, such as automobile purchases, and 

those that occur on a regular basis, such as rent or utility 

payments. Including "global estimates" of spending for food, 

about 95

John M. Rogers is an economist in the Office of Prices and Living 

Conditions, Bureau of Labor Statistics.

Reprinted from March 1988

Monthly Labor Review

percent of expenditures are covered in the Interview survey.

The Diary survey obtains data on small, frequently purchased items which normally are difficult liar respondents to 

recall, such as detailed food expenses. Data cited in this report are

from the Interview survey. Differences in expenditures and 

expenditure shares discussed here are heard on population 

estimates rather than sample estimates.

Urban versus rural. 1985. Income and demographic data collected 

in the expenditure survey show differences between the urban and 

rural populations that help explain some of the differences in 

expenditures of the two groups. 'fable I shows estimates for 1985, 

the most recent period for which data are available from the 

current survey, and liar 1972-73, the reference period of the last 

expenditure survey prior to the start of the current, continuing 

survey. Percent changes in expenditures between the two periods 

are presented, and a column showing changes in the BLS 

Consumer Price Index for All Urban Consumers (CPI-U) also is 

included so that changes in expenditures and prices can be 

compared. Comparisons for 1985 are discussed below while 

changes from 1972-73 to 1985 are examined in the following 

sections.

Rural consumer units accounted for about 16 percent of the 

total in 1985. However, the portion of the consumer units 

classified as rural varied substantially by region of the country. 

Almost 22 percent of the units in the South were rural, compared 

with only 9 percent of the units in the West. About 19 percent of 

units in the Midwest region and 12 percent in the Northeast were 

in rural areas. The data also show that urban consumer units 

averaged higher incomes in 1985 than did their rural counterparts. 

Urban consumer units had slightly fewer members and were 

headed by persons about 2 years younger than heads of rural units. 

The numbers of earners, children under age 18, and persons over 

65 were about the same for the two groups. Rural consumer units 

owned more vehicles per unit and were more likely to own their 

own homes. Total expenditures accounted for a larger proportion 

of total income of rural units than of urban units.

Expenditure levels of the two population groups showed 

substantial differences across expenditure components. As might 

be expected from their higher average incomes, urban consumer 

units had higher levels of total expenditures - they spent about 

$3,600 more on average than did rural units in 1985. Higher food, 

housing, and apparel expenditures accounted for much of the 

difference. However, despite

U.S. DEPARTMENT O F LABO R 

Bureau of Labor Statistics
lower average incomes; rural consumer units spent more for 

transportation, health care, tobacco, and life and other personal 

insurance than. did urban units.

Results show that, in 1985, urban consumer units spent more 

fur housing than did their rural counterparts, and the amount spent 

accounted for a larger share of total expenditures than that of rural 

units. Expenditure shares, the percent of total expenditures spent 

on each component, are shown in table 2. Urban consumer units 

spent an average of $7,005, or 31 percent of their total 

expenditures, on housing compared to an average of $5,064, or 26 

percent of the total, spent by rural units. A higher percentage of 

rural consumer units were homeowners and rural homeowners 

were more likely to have paid off their mortgages-38 percent 

having done so versus 21 percent of urban units, Despite lower 

total housing expenditures, rural units spent almost as much on 

fuels and utilities as urban units, $1,579 compared to $1,661. 

These costs accounted for a larger share of rural consumers.' 

housing costs than of urban consumers'-31 percent versus 24 

percent. The higher share spent by rural consumer units may he 

partially explained by the fact that

renter families frequently do not pay directly fur fuels and 

utilities-payments are included in the rent-and a higher 

proportion of urban families are renter families.

Rural consumer spent a larger share of their total unit 

expenditures on transportation, 25 percent versus 20 percent spent 

by urban consumers, due largely to higher expenditures for 

vehicles and gasoline. This is as expected, because rural 

consumers own more vehicles than do urban consumers-2.4 per 

consumer unit compared to 1.8 owned by urban consumers. Also, 

rural consumers probably drive longer distances than do urban 

consumer.

Rural consumers also spent more per unit on health care than 

did urban consumers-$1,168 versus $ 1,011. This accounted for 

about 6 percent of rural consumers' total unit expenditures versus 

4 percent of urban consumers' total. Higher health care 

expenditures by rural consumers can be attributed to their being 

older, on average, than urban consumers. Also, data from the 

survey show that rural consumer units more frequently paid the 

full cost of their health insurance policies while employers more 

frequently paid the costs for policies for urban consumers.
Changes from 1972-73 to 1985. There was little change between 

1972-73 and 1985 in the proportion of the total population that 

was rural. The average size of the consumer unit and the average 

age of the consumer unit head decreased slightly for both urban 

and rural consumers over the period.

Increased expenditures for housing and transportation were 

primarily responsible for the overall increase in spending between 

1972-73 and 1985 for both urban and rural consumer units. (See. 

table 1.) Expenditures for some other components increased at a 

faster rate, but housing and transportation accounted for much of 

the increase because they were a larger share of consumers' total 

spending and they rose faster than the average. Among the 

housing subcomponents, expenditures on owned dwellings rose 

faster than average total expenditures for both urban and rural 

consumer units, while expenditures on rented dwellings rose at a 

slower rate than the total. Among the transportation 

subcomponents, expenditures on vehicles increased at a faster rate 

than total expenditures and somewhat more for rural than for 

urban units. Gasoline and motor oil expenditures increased at a 

slightly faster rate than total expenditures for both urban and rural 

consumers. Gasoline price increases that contributed to sharp 

increases in expenditures in the

1970's were offset by subsequent price decreases and 6y 

conservation measures. Prices for motor fuel, motor oil, coolant, 

and other products rose 241 percent between 1973 and 1981 as 

measured by the CPI, then dropped about 9 percent between 1981 

and 1985; the net change from 1973 to 1985 was 211 percent. 

Also, average fuel consumption per automobile dropped by 24 

percent from 1973 to 1984 while the average mileage per gallon 

for automobiles improved 28 percent over that period. 4

Expenditures on some components, such as vehicles mentioned 

previously, rose at different rates for urban consumers than they 

did for rural consumers. Expenditures for alcoholic beverages rose 

at a faster rate for rural consumer units than for urban units 

between 1972-73 and 1985. However, this component is 

historically underreported so that changes may reflect better 

reporting rather than actual increases alone. Expenditures for other 

lodging (which include expenses for vacation homes and lodging 

while out of town) rose faster for urban than for rural units, as did 

expenditures for miscellaneous goods and services (which include 

bank fees, legal and accounting fees, funerals, cemetery lots, union 

dues, occupational expenses, and finance charges other than for 

mortgages and vehicles).
Changes in expenditure shares. Changes in the shares of total 

expenditures spent on different components are used to show how 

consumers' expenditure patterns change over time. Increases or 

decreases in shares show changes in the way consumer units 

allocate their expenditures on individual components relative t o 

the change in total expenditures. Changes in shares can take place 

gradually over a period of years as consumers alter their 

expenditures in response to changes in tastes, preferences, or 

lifestyle, or in response to sudden economic changes. For 

example, the share of the food dollar spent on food at home has 

been declining over time and can be attributed in part to the 

increase in the number of two-earner households. Families have 

had to adjust their schedules to meet job requirements, which has 

resulted in multiple-earner families taking more meals outside the 

home. An example of a more sudden change was the sharp 

increase in expenditures on gasoline in the 1970's as a result of the 

1973-74 oil embargo that depleted supplies and forced up prices.

Data in table 2 show how expenditure shares for urban and 

rural consumer units changed between 1972-73 and 1985. Shares 

are also shown for 1980 because, for some components such as 

food and gasoline, the shares over the entire period from 1972-73 

to 1985 were not steadily increasing or decreasing. Food 

expenditure shares for urban and rural consumer units each 

increased about 1 percentage point between 1972-73 and 1980. 

Subsequently, food expenditure increases slowed relative to 

increases in expenditures for other goods and services, and this is 

reflected in the drop in food expenditure shares between 1980 and 

1985:

Food expenditure shares dropped for both urban and rural 

consumer units, but more for rural units than urban. In 1972-73, 

food accounted for a larger share of rural consumers' total unit 

expenditures than of urban consumers' --- percent versus 18 

percent-but, by 1985, this difference had almost disappeared. The 

decline in food expenditure shares from 1980 to 1985 was 

accounted for, entirely by the drop in the food at home 

component, as expenditure shares for food away from home 

actually increased slightly over the period. As a result, food away 

from home accounted for

an increasing portion of overall food expenditures. The drop in 

expenditure shares for food at home corresponds to the slower 

price rise of food at home items relative to the price increases of 

all goods and services. From 1980 to 1985, food at home prices as 

measured by the CPI-U rose only 18 percent compared to a 

31-percent increase in the All-Items CPI-U.

Housing expenditure shares increased steadily from 1972-73 to 

1985 for both urban and rural consumer units; the share that 

urban units spent on housing rose about 3 percentage points, from 

28 percent in 1972-73 to 31 percent in 1985, while rural units' 

share rose about 2 percentage points, from 25 percent to 27 

percent over the period. The percentage of units that were 

homeowners rose about 3 percentage points for both urban and 

rural consumers.

Transportation expenditure shares rose over the period 1972-73 

to 1985, but more for rural than for urban consumer units. Shares 

rose from 22 to 25 percent for rural units compared to an increase 

from 19 to 20 percent for their urban counterparts. The sharp 

increase in gasoline prices contributed to a rise in gasoline 

expenditure shares from 1972-73 to 1980. However, the 

subsequent decline in prices, coupled with conservation measures, 

resulted in gasoline shares dropping to about the same level as in 

197273 by 1985. Increases in expenditures on vehicles were 

responsible for the larger increases in the overall transportation 

component for rural consumers than for urban consumers. Vehicle 

shares dropped slightly from 1972-73 to 1980 for both urban and 

rural consumer units. However, they then rose sharply from 1980 

to 1985 and more rapidly for rural than for urban units. Other 

transportation components accounted for about the same share of 

total expenditures in 1985 as in 1972-73.

Expenditure shares for retirement, pensions, and Social 

Security also increased from 1972-73 to 1985: Shares rose about 3 

percentage points for both urban and rural consumer units, with 

much of the increase occurring between 1980 and 1985. Over that 

period, the annual maximum taxable earnings for Social Security 

rose from $25,900 to $39.600 and the employee contribution rate 

rose from 6.13 percent to 7.05 percent.5

This report shows that there are differences in the way that urban 

and rural consumers allocate their expenditure budgets. Also, the 

differences in expenditure shares between the two groups are not 

static, but rather fluctuate in response to socioeconomic changes. 

As more data become available, analysts will have the opportunity 

to compare and follow changes in expenditure patterns of the two 

groups. The data provided by the Consumer Expenditure Survey 

can be of help in developing. economic programs specific to each 

of the two different population groups.
FOOTNOTES

1

See Kathleen K. Scholl, “Income and Poverty Rates: Farm and 

Non-farm Residence,” Family Economics Review. no. 1, 1983, 

pp. 16-19: and Kathleen K. Scholl, "Economic Outlook for Farm 

Families: 1986." in U.S. Department of Agriculture, Outlook ‘86: 

Proceedings. Agricultural Outlook Conference, Dec. 4. 1985, pp. 

279-88.

2Urban, as defined in this survey, includes the rural population 

within metropolitan areas.

3A consumer unit comprises: 1) all members of a particular 

household related by blood, marriage, adoption, or other legal 

arrangements: 2) a person living alone or sharing a household with 

others or living as a roomer

in a private home or lodging house grin permanent living quarters 

in a hotel or motel but who is financially independent; or 3) two or 

more persons living together who pool their income to make pint 

expenditure decisions. For the purposes of this report, consumers 

and consumer units may be used interchangeably. 

4Data on fuel consumption are from Statistical Abstract of the 

United States. 1487 (Bureau of the Census, 1987), p. 590, table 

1032. "Domestic Motor Fuel Consumption. By Type of Vehicle: 

1970 to 1984."

5Data are from Statistical Abstract of the United States, 1987, p. 

348, table 586, "Social Security (OASDHI)---Contribution Rates: 

1970 to 1990."