1 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Are Expenditures Equal to Consumption? 

Research and Development at the BLS with Implications 

for Inequality and Poverty Measurement

Thesia I. Garner

Chief Researcher, Division of Price and Index Number Research (DPINR)

Co-authored with Jake Schild and Brett Matsumoto (DPINR)

JSM, August 10, 2022, 8:35 a.m. 

Session Number 376: Challenges in Measuring Consumption — Topic Contributed Papers

Sponsored by: Committee on Energy Statistics, Government Statistics Section, & Survey Research Methods Section

Discussant: Jean Opsomer, Westat
2 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Why Produce a Comprehensive Consumption Measure?

◼ Large demand for measure that reflects how people live, not just how they could live

◼ Period of COVID-19 showed us that more goods and services are produced by 

household members & consumption of these missing in current measures of 

economic well-being at the household level

◼ Supports work and recommendations 

 Interagency Technical Working Group (ITWG) on Evaluating Alternative Measures of 

Poverty (2020)

 CNSTAT Panel An Integrated System of U.S. Household Income, Wealth, and Consumption 

Data and Statistics to Inform Policy and Research (present)

 OECD expert groups on distributions of income, consumption, and wealth (micro and 

macro groups)

❖ NOTE: Have presented earlier work on progressions of our measure and used in inequality and 

poverty at various venues during 2022 (e.g., ASSA, APPAM, SGE, OECD, CNSTAT, FESAC)
3 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

BLS Initiative Focuses on Consumption as a Well-being 

Outcome as A Function of Resources and Processes

For other outcomes: https://www.oecdbetterlifeindex.org/

Available Resources

Income, in-kind 

transfers

Asset (financial)

Asset (nonfinancial)

Debt (access and 

use)

Time

Processes

Skills (e.g., education, 

financial management, 

efficiency in converting 

inputs to outcomes)

Degree of resource 

allocation (power)

Circumstances (CU 

composition, disability)

Preferences, subjective 

assessments of wellbeing

Outcomes (e.g.,)

1. Consumption

2. Health status

3. Material deprivation

4. Life satisfaction

5. Happiness
4 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Challenge

◼ Problem

 Consumer Expenditure Survey is not designed to measure consumption

◼ Potential solution 

 Identify goods and services for which consumption values missing

 Impute values

◼ Potential drawbacks

 Assumption regarding imputations can limit applications for use 

 Likely still missing top end of distribution
5 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Outline 

◼ Definitions of consumption expenditures/spending and consumption

 OECD Expert Group on Distribution of Household Income, Consumption and Wealth report (2013) 

 Interagency Technical Working Group (ITWG) on Evaluating Measures of Poverty report (2020)

◼ Our approach

◼ Analysis and results

 Inequality

 Poverty

◼ Summary and future work
6 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Consumption Expenditures versus Consumption

(based OECD Framework 2013)

Consumption 

Expenditures2

Consumption3

1. Direct monetary purchases in the market by consumers with special treatment for:1

Yes Yes

a. Purchase price of vehicles and durables Yes No

b. Health Yes Yes

c. Education Yes ??

2. Free or subsidized goods and services from an employer No Yes

3. Goods and services received from bartering No Yes

4. Goods produced from own consumption (e.g., from garden) No Yes

5. Own account production (production within household)

a. Service flows from owner-occupied housing No Yes

b. Service flows from stock of vehicles owned No Yes

c. Service flows from other consumer durable goods owned No Yes

d. Unpaid domestic services (e.g., childcare) No Yes

6. In-kind transfers (e.g., gifts received) from other households, businesses, non-profits No Yes

7. Social in-kind transfers of goods and services (STiK) No Yes

2 Includes goods and services 

given to people living outside the 

consumer units.

3 Excludes goods and services 

given to people living outside the 

consumer units.

1 For CE, includes “consumer unit-to-consumer unit” purchases; not included in OECD framework.
7 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Included in BLS Publication of Consumer Spending but not 

in Consumption Spending nor in Consumption

◼ Cash contributions

◼ Allocations to and purchases of life insurance

◼ Endowments

◼ Annuities

◼ Other personal insurance

◼ Retirement, pensions, and Social Security
8 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

ITWG Recommendation: What to Include in Consumption

◼ Expenditures

for own

consumption

◼ In-kind benefits

public and 

private

◼ Flow of services

◼ Health insurance

With and without
9 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Measures Produced for Analysis

Economic Well-being at 

Consumer Unit Level

Consumption

With Health 

Insurance

w/o Health 

Insurance

Consumption Spending

w/ OOP 

Health 

Spending

w/o OOP 

Health 

Spending

NOTE: None of these measures include “Education”
10 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Data Sources

For Most Goods and Services: 

U.S. Consumer Expenditure Survey Interview

◼ Time period: 2019Q2-2020Q1 to represent 2019 

◼ Interviewed up to 4 times, 3-month recall 

◼ Consumer unit (CU)

◼ Out-of-pocket spending for most goods and 

services

◼ Rental equivalence for owned shelter

◼ Rent paid & characteristics to impute market rents 

when in-kind rental assistance

◼ Stock of cars and trucks to produce flow of services

In-kind Employer Benefits

◼ Medical Expenditure Panel Survey (MEPS-IC) from 

the Agency for Healthcare Research and Quality: 

employer-provided health insurance

Other In-kind Federal Government Benefits

◼ CPS-ASEC (households/members): reported 

receipt of government provided in-kind 

benefits

 School meals (NSLP)

 Women, infants, and children (WIC) 

 LIHEAP (receipt and values)

◼ USDA: food assistance programs

◼ Center for Medicare and Medicaid Services 

(CMS) National Health Expenditure (NHE) 

 Medicare

 Medicaid
11 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Method to Produce Inequality and Poverty Statistics

◼ Apply equivalence scale to adjust for differences in consumer unit size

 3-parameter equivalence scale (same as used for SPM thresholds)

 Assign equivalized value to each person within CU (i.e., population weight=FINLWT21*CUsize) 

◼ Distributional and inequality analysis (consumer units and person population weighted)

 Rank people by equivalized values to derive cutoff points for deciles, weight by persons

 Aggregate inequality measures and results by deciles

◼ Poverty Analysis(population weighted)

 Relative poverty threshold as 60% of median equivalized measure values

 Absolute poverty threshold set as the same for all measures

 Poverty rates for total U.S. population and for subpopulations of the “poor”
12 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Results and Analysis

Basic statistics

Inequality and distributions

Poverty
13 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Moving from Expenditures to Consumption

Densities of Quarterly Equivalized Values: 2019

With OOP Health or Health Insurance

Spending Consumption

Mean $7,383 $10,233

Median $5,833 $9,222

Without Health

Spending Consumption

Mean $6,648 $7,523

Median $5,150 $6,443

NOTE: Based on quarterly adult equivalized values; population weighted (FINLW21*Cusize); consumption spending includes out-of-pocket spending on health insurance, goods, and services while consumption only includes health insurance; 

measures do not include Education; unweighted sample size=21270 (10 observations with 0 or negative values dropped)
14 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Moving from Expenditures to Consumption

Average Consumer Unit Shares: 2019

With OOP Health or Health Insurance

10.3%

6.4%

12.0%

9.5%

20.7%

13.6%

16.4%

14.4%

13.0%

17.7%

10.8%

27.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Consumption Spending Consumption

Utilities Renter shelter Food Transportation Owner shelter Health

Without Health

11.8%

9.1%

13.0% 13.3%

23.3%

18.9% 18.2%

19.6%

14.8%

24.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Consumption Spending Consumption

Utilities Renter shelter Food Transportation Owner shelter

NOTE: Based on quarterly values for Consumer Units, population weighted as (FINLWT21*CUs); measures do not include Education; unweighted sample size=21270 (10 observations with 0 or negative values dropped)
15 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Inequality and Distributional Analysis

Lorenz curves

Aggregate Inequality Indices

Deciles
16 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Lorenz Curves of Equivalized Consumption and Spending: 2019

0.424

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Cumulative Shares of Eq. CwH, C, CSpwH, or CSp

Decile cutoffs for the population based on Separate Ranks of Eq. CwH, C, CSpwH, or CSp

Perfect Equality

Consumption with Health Insurance

Consumption

Consumption Spending with Health

Consumption Spending no Health

NOTE: Based on quarterly equivalized values; consumption 

Spending includes out-of-pocket spending on health insurance, 

goods, and services while consumption only includes 

health insurance; measures do not include Education; 

based on adult equivalized values, population weighted 

(FINLWT21*Cusize); unweighted sample size=21270 

(10 observations with 0 or negative values dropped)

Example: 60% of the population accounts for 

42.4% of Consumption with Health Insurance
17 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Aggregate Inequality Indices for Consumption versus Consumption 

Spending with and without OOP Health or Health Insurance: 2019

Consumption

With Health Insurance

Gini 0.25

Thiel 0.11

Mean log deviation 0.11

90/10 ratio 3.04

Without Health Insurance

Gini 0.30

Thiel 0.16

Mean log deviation 0.15

90/10 ratio 3.55

Consumption Spending

With OOP Health Expenditures

Gini 0.35

Thiel 0.23

Mean log deviation 0.21

90/10 ratio 4.42

Without OOP Health Expenditures

Gini 0.36

Thiel 0.24

Mean log deviation 0.22

90/10 ratio 4.63

NOTE: Based on quarterly adult equivalized values; population weighted (FINLWT21*Cusize); consumption spending includes out-of-pocket spending on health insurance, goods, and services while consumption only includes health insurance; measures

do not include Education; unweighted sample size=21270 (10 observations with 0 or negative values dropped)
18 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Distribution of CUs by Age of Reference Person within Deciles of 

Consumption with and without Health Insurance: 2019

Consumption With Health Insurance Deciles Consumption without Health Insurance Deciles

79.0%

74.7%

78.0%

74.9%

74.7%

73.7%

74.2%

71.8%

71.2%

68.8%

21.0%

25.3%

22.0%

25.1%

25.3%

26.3%

25.8%

28.2%

28.8%

31.2%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

1

2

3

4

5

6

7

8

9

10

Population Distribution within Deciles

Decile

93.9%

88.8%

86.2%

84.1%

80.8%

74.9%

68.1%

64.9%

60.1%

54.6%

6.1%

11.2%

13.8%

15.9%

19.2%

25.1%

31.9%

35.1%

39.9%

45.4%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

1

2

3

4

5

6

7

8

9

10

Population Distribution within Deciles

Decile

Age Reference

Person < 65

Age Reference

Person >= 65

NOTE: Deciles based on adult equivalized values and distributions are for Consumer Units, population weighted (FINLWT21*Cusize); unweighted sample size=21270 (10 observations with 0 or negative values dropped)
19 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Shares of Aggregate Imputations within Deciles of 

Consumption with Health Insurance: 2019

3.5% 2.1% 1.6% 1.3% 1.0% 0.9% 0.6% 0.4% 0.2% 0.1%

2.5% 2.0% 2.3% 2.2% 1.8% 2.6% 2.1% 1.9% 1.4% 0.4%

21.4%

18.2% 17.0% 17.9% 18.8% 19.3% 20.0% 21.0% 23.5% 26.8%

72.3% 77.5% 78.9% 78.6% 78.3% 77.2% 77.3% 76.7% 74.9% 72.7%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0-10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70-80% 80-90% 90-100%

Shares of Total Imputations

Deciles of Equivalized Consumption with Health Insurance

Health Insurance

Vehicle Flow of Services

LIHEAP

Rental Assistance

NSLP+WIC

NOTE: Percentage shares based on aggregate Consumer Unit consumption with health insurance within deciles; Education is not included in the consumption measure; aggregates are based on 

CU weighted (FINLWT21) values; deciles are based on ranking of quarterly equivalized values with cutoffs based on person weighting (FINLWT(Cusize)
20 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Shares of Aggregate Health Insurance Imputations within

Deciles of Consumption with Health Insurance: 2019

36.9% 36.9% 39.0% 40.7% 45.3% 43.5% 41.3% 41.8% 42.7% 39.6%

3.1% 2.6% 1.9% 1.7%

1.5%

0.8%

1.1% 1.0% 0.8%

0.8%

13.8% 17.0%

19.7%

22.2%

25.8% 33.5% 39.6%

47.1%

51.5% 57.2%

40.7% 40.6% 37.6% 34.4%

26.4% 21.0% 17.0%

9.3% 4.2%

1.2% 1.8% 1.0% 1.1% 0.8% 0.4% 0.6% 0.3% 0.7% 0.3% 0.8% 0.3% 0.7% 0.1% 0.7%

4.3% 0.0% 0.7% 1.7% 0.0% 0.6%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0-10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70-80% 80-90% 90-100%

Shares of Total Health Insurance Imputations

Deciles of Equivalized Consumption with Health Insurance

Other

CHIP

Medicaid

Medicare

Individual Purchase ACA

Employer Share

NOTE: Percentage shares based on aggregate Consumer Unit health insurance imputations within consumption with health insurance deciles; Education is not included in the consumption measure; aggregates are based on 

CU weighted (FINLWT21) values; deciles are based on ranking of quarterly equivalized values with cutoffs based on person weighting (FINLWT(Cusize)
21 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Poverty Measurement and Analysis
22 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Thresholds Based on Relative Concept

◼ For this study: thresholds defined in 2 different ways

1. Purely relative as 60% of median (i.e., threshold is a function of the same “measure”)

2. Absolute threshold for all measures set at relative threshold for “Consumption without Health 

Insurance” 

◼ Adult equivalized relative thresholds 

 Consumption spending with and without OOP health expenditures

 Consumption with and without health insurance 

 3-parameter equivalence scale (as used to produce SPM)

◼ Show “annualized” relative thresholds equivalized to those for 2 adults and 2 children 

◼ No geographic adjustment

➢ NOTE: these thresholds DO NOT represent a level of “needs”; they represent a point 

in a distribution
23 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Annualized 2A+2C Relative Poverty Thresholds and Person Poverty Rates: 2019

$26,669

$30,206

$33,364

$47,758

18.0% 18.1%

15.2%

11.6%

30.2%

22.9%

2.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Consumption Spending no Health Consumption Spendng with OOP Health Consumption no Health Consumption with Health Insurance

Relative Annualized Thresholds (equiv to 2A2C) Poverty Rates -Relative Poverty Rates - Anchored

Absolute: based on anchor to consumption_4 poverty rate

Relative: based on threshold for each measure

NOTE: Thresholds based on quarterly adult equivalized values; population weighted (FINLWT21*Cusize); consumption spending includes out-of-pocket spending on health insurance, goods, and services while consumption only includes health insurance;

measures do not include Education; unweighted sample size=21270 (10 observations with 0 or negative values dropped)
24 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Demographic Characteristics of the U.S. Population 

Compared to Study-defined “Poor”: 2019

Characteristic of Consumer Unit U.S. Population Below Consumption without 

Health Insurance Threshold

Below Consumption with 

Health Insurance Threshold

Age of Reference Person for CU

Less than Age 65 81.3% 83.1% 93.6%

Greater than or Equal 65 18.7% 16.9% 6.4%

With Imputation

LIHEAP 3.3% 10.7% 4.2%

NSLP 30.7% 52.5% 45.4%

WIC (including infant formula rebate) 4.0% 12.1% 5.9%

Rental assistance 3.8% 11.2% 3.4%

Health insurance 90.2% NA 36.2%

Vehicle flow of services (positive values) 88.2% 73.0% 73.7%

NOTE: Thresholds based on quarterly adult equivalized values; population weighted (FINLWT21*Cusize); consumption spending includes out-of-pocket spending on health insurance, goods, and services while consumption only includes health insurance;

measures do not include Education; unweighted sample size=21270 (10 observations with 0 or negative values dropped)
25 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Public Assistance and Health Imputations of the U.S. Population 

Compared to “Poor”: 2019

Characteristic of Consumer Unit U.S. Population Below Consumption without 

Health Insurance Threshold

Below Consumption with 

Health Insurance Threshold

With Health Insurance Imputation by Type

Employer provided only 45.0% 21.4% 25.8%

Individual ACA only 1.8% 1.4% 4.3%

Medicare only 12.5% 12.3% 6.3%

Medicaid only 11.0% 29.4% 17.1%

CHIP only 0.8% 2.2% 4.2%

Other only 1.3% 0.8% 2.2%

No Health Insurance Imputation 0.0% 0.0% 0.0%

& with OOP health insurance premium 3.5% 1.6% 7.3%

& without OOP health insurance premium 6.2% 9.6% 28.1%

NOTE: Thresholds based on quarterly adult equivalized values; population weighted (FINLWT21*Cusize); consumption spending includes out-of-pocket spending on health insurance, goods, and services while consumption only includes health insurance;

measures do not include Education; unweighted sample size=21270 (10 observations with 0 or negative values dropped)
26 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Summary

◼ Broader consumption measure more in-line with the theoretical 

measurement objective than measures based on total expenditures or 

consumption spending alone

◼ As move from consumption spending to consumption

 More equal distributions

 Lower poverty rate based on consumption with health insurance when using a 

relative threshold 

Consumer Expenditures ≠ Consumption Spending ≠ Consumption
27 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Future Work

◼ Imputations

 Health insurance subnational

 Rents for CUs living rent-free

◼ Address issue of health insurance imputations pushing people over an anchored 

poverty line

◼ Evaluate options to include education

◼ Add value of home production for own consumption

◼ Continue with inequality and poverty analyses

◼ Add more years to our analysis

◼ Progress will be posted on https://www.bls.gov/cex/consumption-home.htm
28 — U.S. BUREAU OF LABOR STATISTICS • bls.gov

Contact

Thesia I. Garner

Chief Researcher, Division of Price and Index Number Research (DPINR)

Bureau of Labor Statistics

Washington, DC 20212

Garner.Thesia@BLS.gov