Strengths and Weaknesses of 

Consumer Expenditure Surve

from a BLS Perspective

Thesia I. Garner

Robert McClelland

Di i i f P i d I d N b R h Division of Price and Index Number Research

William Passero

Division of Consumer Expenditures

Bureau of Labor Statistics

NBER/CRIW

J l 13 2009July 13, 2009
Outline

 Bk d acground BLS Internal Review of CE Data Comparisons

To other data sourcesCE to PCE 

 Conclusion
About BLS About BLS

 BLS is the principal fact BLS is the principal fact-finding agency for th

finding agency for th

Federal Government in the broad field of laboeconomics and statistics

 Independent national statistical agency that 

Collects, Processes,

Analyzes, and Disseminates 

Essential statistical data to Essential statistical data to

American public  State and local goverU.S. Congress  BusinessFederal agencies Federal agencies  Labor

(http://www.psb.bls.gov/whatisbls/strategic/mission
From the BLS Mission Stat

From the BLS Mission Stat

 BLS data must be BLS data must be

Relevant to current social and economic Timely in reflecting today in reflecting today s' rapidly chang

rapidly chang

economic conditions

Accurate and of consistently high statisti

quality

Impartial in both subject matter and 

presentation

 And must...

Maintain respondent confidentiality Maintain respondent confidentialityBe reliable
Mission of the Consume

E pendit e S e (CEE

xpenditur

e

Surv

ey (CE

 Produce and disseminate statistical da

Produce and disseminate statistical da

Consumer expendituresDemographic information Demographic informationRelated data needed by 

– Consumer Price Index– Other public and private data users 

 Design and manage the CE survey Provide education and assistance in th

of the data

 Conduct analytical studies
Goals and Uses of CE Da

Goals and Uses of CE Da

 Goals

 Provide biennial data for Consumer Price Index (C

revise expenditure weights

 Detailed information about the spending patterns 

Detailed information about the spending patterns 

types of households

 Used by:

 Bureau of Economic Anal

ysis

 Internal Revenue Service Census Bureau Department of Defense New York City government Other private and public researchers

 Potential future use

 Alternative poverty thresholds (pending federal leg
CE Scope and Covera

CE Scope and Covera

 U S civilian non U.S. civilian non

-institutionalized popu

institutionalized popu

Nationwide survey designed to be represe

 Data from consumer units (CUs)

People living at one address who share liv

expenses or are related by blood, marriagadoption, or other legal arrangement

Single person living alone or sharing a ho

with others but who is financially indepen



Two or more 

p gg ersons livin

g to

gether who 

financially dependent

CUs are similar to households
CE Data Collection CE Data Collection

 BLS t t ith th U S C BLS con

tracts with the 

U.S. 

Censu

Bureau to collect data



Two different surveys

Quarterly InterviewDiary

 Se

p p arate sam

ples
Data Collection: Interv

Data Collection: Interv

 Desi

gned to obtain information about:

 Large purchases (e.g., major appliances) Purchases that occur regularly (e.g., monthly pay

rent and utilities) rent and utilities)

 Excludes expenditures for: 

– Housekeeping supplies – Personal care products Personal care products– Non-prescription drugs

 Sample

 About 7,000 CUs Five consecutive quarters Goal: to collect data over a year of spending Goal: to collect data over

a year of spending

 Three-month recall period
Data Collection: Dia

Data Collection: Dia

 Designed to collect information a

Designed to collect information a

Frequent purchases (e.g., food and pers

items) 

Difficult to remember over longer period

(e.g., vending machine purchases)

Excludes expenditures for ou

t-o

f-town t

 Sample

About 7,000 CUs a yearCUs keep a diary for two consecutive on

periods 14 000 diaries a year periods 14,000 diaries

a year
Users: Data Access Users: Data Access

 T bl a es Public use data files Visiting researcher program Personal help Personal help

Phone Email
Publication Tables: Publication Tables:

“Integr

Integr

 Neither survey collects the entire unive

Neither survey collects the entire unive

expenditures 

Some data are only collected in one instru

Some data are only collected in one instru

Some data are collected in both; determin

source for use in publications

 Total and detailed expenditures publis

income and other demographic variab

 Estimates use CU population weights
BLS Internal Program Re

BLS Internal Program Re

 Purpose: to maintain high standards o

Purpose: to maintain high standards o

quality 

 Focus: programs responsible for produ

d t a

ta

 Procedure: subject matter experts from 

BLS programs examine issues such as BLS programs examine issues such as

Data collection and qualityData accessibilityManagement processes Management processes

 Output: report of strengths, weakness

recommendations for further action
CE P og am Re ie 2006 CE

P

rog

ram Re

view: 2006

-

 Strengths

 D t a

ta access

– Public use data– Outside researchers coming to BLS

 Production and planning tools Production and planning tools

*

– Database containing all development, research and 

project plans

– Web-based interface managing projects and reporti– Innovative methods for tracking multiple production 

Innovative methods for tracking multiple production 

– In-house training on how to use these tools

 Free microdata user workshops*

– Be

gan: 2006

– Next: July 29-31, 2009

 Regular interaction with users

*Recommended as BLS Best Practice
CE Program Review: Streng

Program conducts research on issues a

(continued)

 Program conducts research on issues a

data quality 

Declining response rates Declining response ratesUnder-reportingIncrease in 

p p hone interviews versus 

perso

interviews
CE P og am Re ie Weak

CE

P

rog

ram Re

view: Weak

 Biases in estimates due to: Biases in estimates, due to:

Consumer unit non-participationItem non-res

ponse

Measurement errorConditioned under-reporting

– “t i i ” d t t “ ” “training

” respon

den

ts 

to say 

“no

”

 Timeliness of data release  Jay will present more from the CE Prog

Review and plans to deal with weakne
Data comparisons: 

Why needed? Why needed?

 Such comparisons provide: Such comparisons provide:

A sense of degree and direction of possib

errors, rather than an exact measure of berrors, rather than an exact measure of b

Specific estimates from other sources are 

necessarily the “truth” 

 Data comparisons are employed to:

Assess the cumulative effects of non-sam

errors on qualit f CE d t lity o

f CE

d

a

ta

Develop methodological studies to improv
Comparisons: Issue

Comparisons: Issue

 Account for differences in content or co

(focus on components)

can be reconciledcannot be reconciled

 Source of data

Household survey

Census

Administrative

Trade association publications Trade association publications
Compa isons Othe Data S

Compa

risons: Other Data S

 Panel Study of Income Dynamics (PSID) Panel Study of Income Dynamics (PSID) Health and Retirement Survey Consumption 

Activities Mail Survey (HRS-CAMS)

 Medical Expenditure Panel Survey (MEPS) National Health Expenditure Accounts (NHEA Economic Research Service (ERS Economic Research Service (ERS

-USDA) Foo

USDA) Foo

 ACNielsen Homescan Survey Income and transfer comparisons

 PSID, SIPP, CPS

 Personal Consumption Expenditures (PCE)
Survey Covering All Expend

Catego ies PSID Catego

ries: PSID

 Panel Study of Income Dynamics (PSID

Panel Study of Income Dynamics (PSID

1999, 2001, 2003Sam

ple: all households and their member

panel

Collection of data by phone

Recent study: Charles et al (2007) Recent study: Charles et al. (2007)

– For comparable categories in 2003, PSID total 

spending 1% higher than CE total spending

– CE spending higher than PSID CE spending higher than PSID

• Housing (3%), Transportation (7%)

– PSID spending higher than CE

• Education (13%) Child care (26%) Health car

Education (13%), Child care (26%), Health car

Food (10 %)
Survey Covering All Expend

Catego ies HRS Catego

ries: HRS

-CAMS

 Health and Retirement Survey Consum

Health and Retirement Survey Consum

and Activities Mail Survey (HRS-CAMS)

Waves: 2001, , 2003 2005 Sample: respondents aged 51 and older a

members of their household

Collection of data by mail Collection of data by mailHurd and Rohwedder (2008)

– For comparable categories (October 2000-Sep

2001), average spending was

• 55-64 age group: 3.3% higher than CAMs• 65-74 age group: 12.0% higher than CE• 75 and over age group: 29 8% higher than CE 75 and over age group: 29.8% higher than CE
Comparisons: Health C

Comparisons: Health C

 Medical Expenditure Panel Survey (MEPS) Medical Expenditure Panel Survey (MEPS)

 1996-2006 Sample: same as CE Results

– Ratio of CE to MEPS total health care spending rang

0.68 to 0.93

 National Health Expenditure Accounts (NHEA

 1996-2006 Sample: all persons who are residents in U.S. inclu

military

 Results

– Ratios of CE to NHEA total health care spending ran

0.72 to 0.86

 Foster, g forthcomin

g MLR 2009
Comparisons: Food Comparisons: Food

 Economic Research Service (ERS Economic Research Service (ERS

-USDA

USDA

Data

Food ex

p y enditures b

y families and individ

ERS excludes food purchases with food st

and WIC vouchers

 Internal BLS comparison with CE Internal BLS comparison with CE

CE excludes food purchases with food sta2002 to 2007 2002 to 2007CE to ERS aggregate expenditures averag

about 0.79
CE and PCE Compariso

CE and PCE Compariso

 Definitions of populations and expend Data sources and periodicity Data sources and periodicity Trends over time in levels and ratios  Example for total expenditures with Example for total expenditures with

adjustments for select differences

 Garner, Janini, Passero, Paszkiewicz, and Vendemia, 

Labor Review, September 2006
Issues in Comparing CE and 

 Populations In PCE but out of sco

pe for CE

 In CE but out of scope for PCE

Pa t y out o scope o C r

tly out

of scope for 

C

E

Non-profit institutions serving householdsEmployer payments 

 Components operationally defined diff
Basics

 CE  PCE

 Household Surveys Periodicity 

Annual

 PCE

 Establishment Surve Periodicity

– Annual Benchmark (detail– Quarterly– Monthly– Weekly

– Benchmark (detail– Annual– Quarterly

Weekly – Monthly

 Expenditures

– Value of goods and 

services purchased by 

Monthly

 Expenditures

– Value of goods an

purchased by the 

consumers

– Social Security 

contributions 

sector (excludes intransactions)
In PCE Out of Scope fo

In PCE Out of Scope fo

 Population 

 Employees of U.S. businesses working abroad and 

government and military personnel stationed abro

 Military living on-base in the U.S. All persons in institutions and the homeless for wh

ex

penditures are made

 Non-profit institutions serving households 

 Expenditures 

 Value of home production for own consumption on 

Value of home production for own consumption on 

 Standard clothing issued to military Services furnished without payment by financial in

except lif i t life insurance carriers
Further Differences

 PCE items partly out of scope for CE an

Further Differences

PCE items partly out of scope for CE an

defined differently

Health Care ExpendituresReligious and Welfare

 Defined differently Defined differently

Education expendituresLife insurance and 

p p ension 

plans

Owner-occupied housing expenditures
P i CE PCE C i 

Previous CE to PCE

Comparison 

 Houthakker and Taylor (1970) Slesnick (1992, 1998) Attanasio, Battistin, and Leicester (2006) Garner, Janini, Passero, Paszkiewicz, and 

Vendemia (2006) Vendemia (2006)

 Meyer and Sullivan (2009)
U d t f 2006 BLS St d U

p

d

a

te o

f 2006 BLS St

u

d

 Total Expenditures Comparables



To compare CE and PCE data, CE items are group

PCE detailed categories

 In many instances, there is no perfect match betw

CE and PCE items assigned to an aggregate categ

 In some cases, adjustments were made to publis

categories for greater comparability
2007 Aggregate and Ratio Com

2007 Aggregate and Ratio Com

Source All items 

($billions) 

 “Comparable” categor

($billions/% of all item

Consumer $5 743 $4,105 Expenditures $5,743 , (0.71) Personal Consumption E dit

$9,710 $5,066 

(0.52) Expenditures ( )

Ratio CE/PCE 0.59 0.81 
PCE Aggregates: All CE Aggregates: 

$9,000,000

$10,000,000

$9,000,000

$10,000,000

$6,000,000$7,000,000$8,000,000

$6,000,000$7,000,000$8,000,000

$3 000 000$4,000,000$5,000,000

$3 000 000$4,000,000$5,000,000

$1,000,000

$2,000,000

$3,000,000

$1,000,000

$2,000,000$3,000,000

$0

1992 1997 2002 2003 2004 2005 2006 2007

Tot al durables, nondurables, and servicesDurable goodsNondurable goods

$0

1992 1997 2002 2003 20

Tot al durables, nondDurable goods

Nondurable goods Nondurable goodsServices

Nondurable goodsServices
Ratios of Expenditures of Comparables to 

Dur abl es, Nondur abl es, and Ser vi ces

0.8001.000

Non-dur able Goods

0 800

1. 0 0 0

0.2000.4000.6000.800

0.2000.4000.6000 . 800

0.000

1992 1997 2002 2003 2004 2005 2006 2007

0.000

19 9 2 19 9 7 2 0 0 2 2 0 0 3 2 0 0 4 

Dur abl e Goods Ser vi ces

0 4000.6000.8001.000

0.6000.800

1. 0 0 0

0.0000.2000.400

1992 1997 2002 2003 2004 2005 2006 2007

0.0000.2000.400

19 9 2 19 9 7 2 0 0 2 2 0 0 3 2 0 0 4 

CE: Solid blue PCE: Stripped blue
PCE Aggregates: Comparables CE Aggregates: Comp

$5,000,000

$6,000,000

$5,000,000$6,000,000

$4,000,000

, ,

$4,000,000

$2,000,000$3,000,000

$2,000,000$3,000,000

$0

$1,000,000

$0

$1,000,000

1992 1997 2002 2003 2004 2005 2006 2007

Tot al durables, nondurables, and servicesDurable goodsNondurable goods

$0

1992 1997 2002 2003 20

Tot al durables, nonduDurable goodsNondurable goods ServicesServices
CE/PCE Ratios: All CE/PCE Ratios: Comp

1.10 1.10

0.90

1.00

0.90

1.00

0.700.80

0.700.80

0.60 0.600.50

1992 1997 2002 2003 2004 2005 2006 2007

Tot al durables, nondurables, and servicesDurable goodsNondurable goods

0.50

1992 1997 2002 2003 2004 

Tot al durables, nonduraDurable goods

Nondurable N d bl d goodsServices

Nondurable goodsServices
Future CE/PCE Comparis

Future CE/PCE Comparis

 C h i i i f th NI

Compre

hensive revision o

f the NI

July 2009PCE

 Revise concordance of CE items t

match new PCE classification stru

 Recalculate CE

/ p

PCE ratios incor

po

2002 benchmark PCE data

F
PCE reclassification: 

What s’ new?

 New structures for presenting PCE New structures for presenting PCE

Function – by type of expenditureProduct 

–

b

y y( ) durability

(Goods / Services)

 Full time series on new basis

1929 Annually, 1947 Quarterly, 1959 Mon

 No change in the production boundary No change in the production boundary McCull

y and Teensma, Survey of Current Business, Ma

F
PCE by function: Old to n

1 Personal consumption expenditures2 Food and tobacco3 Clothing accessories and jewelry

1 Personal consumption expenditures2 Household consumption expendit

Old New

3 Clothing, accessories, and jewelry4 Personal care5 Housing6 Household operation7 M di l 

3 Food and beverages purchased 

premise consumption

4 Clothing and footwear5 Housing and utilities

7

Medical care

8 Personal business9 Transportation

10 Recreation

11 Ed i d h

6 Furnishings, household equipm

routine household maintenanc

7 Health8 Trans

portation 11 Education and researc

h

12 Religious and welfare activities13 Foreign travel and other, net

p

9 Communication

10 Recreation11 Education

12 F d i d d 

Food services and accommo

d

a

13 Financial services and insuran14 Other goods and services

15 Net foreign travel and expend

abroad by U.S. residents 

16 Final consumption expenditures o

F
PCE by product: Old to ne

1 Goods2 Durable goods3 Motor vehicles and parts

1 Durable goods2 Motor vehicles and parts3 Furniture and household equipment

Old New

4 Furnishings and durable household 5 Recreational goods and vehicles6 Other durable goods7 Nondurable goods8 Food and beverages purchased for 

3 Furniture and household equipment4 Other5 Nondurable goods6 Food7 Clothing and shoes

8

consumption

9 Clothing and footwear

10 Gasoline and other energy goods11 Other non-durable goods12 Services

7 Clothing and shoes8 Gasoline, fuel oil, and other energy goods9 Other

10 Services11 Housin

g

13 Household consumption expenditures 14 Housing and utilities15 Health care16 Transportation services17 Recreational services

g

12 Household operation13 Transportation14 Medical care15 Recreation 17 Recreational services

18 Food services and accommodation19 Financial services and insurance20 Other services21 Final consumption expenditures of no

institutions serving households 

16 Other

22 Gross output of nonprofit institut23 Less: Receipts from sales of goods 

by nonprofit institutions

F
Conclusion

 CE expenditures compare favorably to expen

from other household surveys

 CE data comparisons with outside sources w

continue in the future 

 CE-PCE CE-MEPS comparisons of medical care data CE-CPS comparisons of income data Resumption of comparisons of CE and Residential 

Consumption Survey (RECS) data from Departmen

Energy

 CE-American Community Survey (ACS) compariso

and utilities data
Conclusion

 Rece t p o e e ts c ude nt improvements include

Move to CAPI (2003 for Interview; 2004 fIncome imputation (began 2004)

– CE/CPS l i CE/CPS total income 

• 2002-2003: 0.75• 2004-2006: 0.94

– CE/CPS ages and sala ies CE/CPS wages and salaries

• 2002-2003: 0.78• 2004-2006: 0.97 

Stabilized CE/PCE ratio > 81 for comparab

Stabilized CE/PCE ratio >.81 for comparab

beginning in 2002
Conclusion: Data Qua

Conclusion: Data Qua

 CE Program has significant strengths, 

some data quality issues remain, e.g.,

Under-reportingMeasurement errors

 Next presentation: What CE has done 

doing to address these issues
Contact Informatio

Thesia I. Garner

Senior Research Economist

Division of Price and Index Number Research

Bureau of Labor Statistics

202-691-6576

garner thesia@bls gov garner.thesia@bls.gov