Chapter 16.
Consumer Expenditures and Income

The Current Survey
The need for more timely data than could be supplied by surveys conducted every 10 to 12 years, intensified by the rapidly changing economic conditions of the 1970s, led to the initiation of the current continuing survey in late 1979. Since then, data have been available annually. The objectives of the survey remain the same: to provide the basis for revising the weights and associated pricing samples for the CPI and to meet the need for timely and detailed information on the spending patterns of different types of families.

Like the 1972-73 survey, the current survey consists of two separate surveys, each with a different data collection technique and sample. In the Interview Survey, each family in the sample is interviewed every 3 months over five calendar quarters. The sample for each quarter is divided into three panels, with consumer units being interviewed every 3 months in the same panel of every quarter. The Diary (or recordkeeping) Survey is completed at home by the respondent family for two consecutive 1-week periods.

The sample housing unit is notified in advance by a letter informing the occupants about the purpose of the survey and the upcoming visit by the interviewer. Both the Interview and the Diary Survey are conducted primarily by personal visits with some telephone usage. The interviewer uses a structured questionnaire to collect both the demographic and expenditure data in the Interview Survey. The demographic data in the Diary Survey are collected by the interviewer, whereas the expenditure data are entered on the diary form by the respondent. If, after attempts to contact the household, no adult is available, both surveys accept responses from any eligible household member who is at least 16 years old.

The unit for which expenditure reports are collected is the set of eligible individuals constituting a consumer unit, which is defined as (1) all members of a particular housing unit who are related by blood, marriage, adoption, or some other legal arrangement, such as foster children; (2) a person living alone or sharing a household with others, or living as a roomer in a private home, lodging house, or in permanent living quarters in a hotel or motel, but who is financially independent; or (3) two or more unrelated persons living together who pool their income to make joint expenditure decisions. Students living in university-sponsored housing are also included in the sample as separate consumer units.

Survey participants report dollar amounts for goods and services purchased during the reporting period whether payment was or was not made at the time of purchase. The expenditure amounts include all sales and excise taxes for all 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 family is reimbursed.

The Interview Survey collects detailed data on an estimated 60 to 70 percent of total family expenditures. In addition, global estimates—that is, estimated average expenditures for a 3-month period—are obtained for food and other selected items. These global estimates account for an additional 20 to 25 percent of total expenditures. On the average, it takes approximately 65 minutes to complete the interview.

In the Diary Survey, detailed data are collected on all expenditures made by consumer units during their participation in the survey. It is estimated that it takes approximately 25 minutes over three visits for the interviewer to collect the demographic data and to instruct the respondent on how to keep the diary. It is also estimated that it takes the respondent about 12 minutes each day to complete the diary.

Quality control is provided by a reinterview program, which constitutes a means of evaluating the performance of the individual interviewer to determine how well the procedures are being carried out in the field. The reinterview is conducted by a member of the supervisory staff. A subsample of approximately 8 percent of households in the Interview Survey and 11 percent in the Diary Survey is reinterviewed on an ongoing basis.

All data collected in both surveys are subject to Census Bureau and BLS confidentiality requirements that prevent the disclosure of the respondents’ identities. All employees have taken an oath to that effect.

Interview survey
The Interview Survey is designed to collect data on the types of expenditures respondents can be expected to recall for a period of 3 months or longer. In general, expenditures reported in the Interview Survey are either relatively large, such as for property, automobiles, or major appliances, or occur on a fairly regular basis, such as for rent, utility bills, or insurance premiums.

Each occupied sample unit is interviewed once per quarter for five consecutive quarters. After the fifth interview, the sample unit is dropped from the survey and replaced by a new sample unit. For the survey as a whole, 20 percent of the sample is replaced each quarter. New families are introduced into the sample on a regular basis as other families complete their participation. Data collected in each quarter are considered independently, so that estimates are not dependent upon a family participating in the survey for a full five quarters.

For the initial interview, information is collected on demographic and family characteristics and on the inventory of major durable goods of each consumer unit. Expenditure information is also collected in this interview, using a 1-month recall, but is used, along with the inventory information, solely for bounding purposes, that is, to classify the unit for analysis and to prevent duplicate reporting of expenditures in subsequent interviews.

The second through fifth interviews use uniform questionnaires to collect expenditure information in each quarter. Data collected in these questionnaires, which are arranged by major expenditure component (for example, housing, transportation, healthcare, and education), form the basis of the expenditure estimates derived from the Interview Survey. Wage, salary, and other information on the employment of each member of a consumer unit is also collected or updated during each of these interviews. The expenditure data are collected via two major types of questions. The first set of questions asks the consumer unit member for the month of purchase directly for each reported expenditure. The second asks for a quarterly amount of expenditures. The use of these two types of questions varies, depending on the types of expenditures collected. Approximately 65 percent of the data are collected using the direct monthly method, whereas about 35 percent are collected with the quarterly recall approach.

In the fifth and final interview, an annual supplement is used to obtain a financial profile of the consumer unit. This profile consists of information on the income of the consumer unit as a whole, including unemployment compensation; income from royalties, dividends, and estates; alimony and child support; and so forth. A 12-month recall period is used to collect income- and asset-type data.

Diary survey
The primary objective of the Diary Survey is to obtain expenditure data on small, frequently purchased items, which are normally difficult to recall. These items include food and beverage expenditures, at home and in eating places; housekeeping supplies and services; nonprescription drugs; and personal care products and services. The Diary Survey is not limited to these types of expenditures, but, rather, includes all expenses that the consumer unit incurs during the survey week. Expenses incurred by family members while away from home overnight and for credit and installment plan payments are excluded.

Two separate questionnaires are used to collect Diary data: a Household Characteristics Questionnaire and a Record of Daily Expenses. In the Household Characteristics Questionnaire, the interviewer records information pertaining to age, sex, race, marital status, and family composition, as well as information on the work experience and earnings of each member of the consumer unit. This socioeconomic information is used by the Bureau to classify the consumer unit for publication of statistical tables and for economic analysis. Data on household characteristics also provide the link in the integration of Diary expenditure data with Interview expenditure data that permits the publication of a full profile of consumer expenditures by demographic characteristics.

The daily expense record is designed as a self-reporting, product-oriented diary on which respondents record a detailed description of all expenses for two consecutive 1-week periods. Data collected each week are considered independently. The diary is divided by day of purchase and by four classifications of goods and services—food away from home, food at home, clothing, and all other goods and services—a breakdown designed to aid the respondent in recording the entire consumer unit’s daily purchases. The items reported are subsequently coded by the Census Bureau so that BLS can aggregate individual purchases for representation in the CPI and for presentation in statistical tables.

Integrated survey data
The 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. Some expenditure items are collected only by either the Diary or Interview Survey. For example, the Diary collects data on detailed food expenditures and items such as postage and nonprescription drugs, which are not collected in the Interview. The Interview collects data on expenditures for overnight travel and information on reimbursements, such as for medical-care costs or automobile repairs, which are not collected in the Diary. Data on average annual expenditures that come exclusively from the Interview Survey, including global estimates such as those for food and alcoholic beverages, average about 95 percent of the total estimated spending, based on integrated Diary and Interview data. 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 the overlap, the integration of the data presents the problem of determining the appropriate survey component from which to select the expenditure items. When data are available from both survey sources, the more reliable of the two is selected as determined by statistical methods. The selection of the survey source is evaluated periodically.

Data collection and processing
Due to differences in format and design, the Interview Survey and the Diary Survey are collected and processed separately. The U.S. Census Bureau, under contract with BLS, carries out data collection for both. In addition to its collection duties, the Census Bureau does field editing and coding, checks consistency, ensures quality control, and transmits the data to BLS. In preparing the data for analysis and publication, BLS performs additional review and editing procedures.

Quarterly Interview Survey. Beginning April 2003, Census Field Representatives (FR) started collecting the Interview data using a Computer Assisted Personal Interview (CAPI) instrument. This was a major improvement from the paper and pencil data collection that had been in place since 1980. The CAPI instrument enforces question skip patterns, allows for data confirmation of high expenditure values, and reduces processing time. The FR performs some coding of expenses—by selecting from a predetermined list—for vehicle make and model, trip destination, and job types for alterations, maintenance and repair.

Data are electronically transferred from the FR’s laptop at completion of the interview to the Census Master Control System. The Census Bureau’s Demographics Surveys Division then reformats the data into SAS® datasets and does some special processing for output to BLS (such as converting missing values to special characters and merging data records into the required BLS output structure.) Some data, like vehicle and mortgage records, are copied into an input file that is loaded on the laptops for subsequent interviews the next quarter. This way, a few fields are updated each quarter, rather than recollecting the entire data record.

At BLS, a series of automated edits are applied to monthly data. These edits check for inconsistencies, identify missing expenditure amounts for later imputation, impute missing demographic variables, calculate weights, and adjust data to include sales tax and exclude business expenses or reimbursed expenditures.

Monthly data files are then combined into quarterly databases, and a more extensive data review is carried out. This step includes a review of the following: Counts and means by region, family relationship coding inconsistencies, and selected extreme values for expenditure and income categories. Other adjustments convert mortgage and vehicle payments into principal and interest (using associated data on the interest rate and term of the loan). In addition, BLS verifies the various data transformations it performs. Cases of questionable data values or relationships are investigated, and errors are corrected prior to release of the data for public use.

Three major types of data adjustment routines—imputation, allocation, and time adjustment—improve estimates derived from the Interview Survey. Data imputation routines account for missing or invalid entries and affect all fields in the database, except assets. Missing or invalid attributes or expenditures are imputed. Allocation routines are applied when respondents provide insufficient detail to meet tabulation requirements. For example, combined expenditures for the fuels and utilities group are allocated among the components of that group, such as gas and electricity. Time adjustment routines are used to classify expenditures by month, prior to aggregation of the data to calendar-year expenditures. Tabulations are made before and after the data adjustment routines, to analyze the results.

The Survey implemented multiple imputations of income data starting with the publication of the 2004 data. Prior to that, only income data collected from complete income reporters were published. However, even complete income reporters did not provide information on all sources of income for which they reported receipt. With the collection of bracketed income data starting in 2001 this problem was reduced, but not eliminated. A limitation is that bracketed data only provide a range in which income falls, rather than a precise value for that income. In contrast, imputation allows income values to be estimated when they are not reported. In multiple imputations, several estimates are made for the same consumer unit, and the average of these estimates is published.

Diary Survey. At the beginning of the 2-week collection period, the Census Bureau interviewer, using the Household Characteristics Questionnaire (a CAPI instrument), records demographic information on members of each sampled consumer unit. At this time, the interviewer also leaves the Diary questionnaire—or daily expenditure record—with the consumer unit, to record expenditures for the week.

At the end of the first week, the interviewer collects the diary, reviews the entries, answers any questions, and leaves a second diary. The interviewer picks up the second diary at the end of the second week and reviews the entries. During this time, the interviewer again uses the Household Characteristics Questionnaire to collect previous-year information on work experience and income. Each week of a consumer unit’s participation in the survey is treated as a separate occurrence.

The Census Bureau performs preliminary processing activities, including a number of data edits and adjustments. Data in the diaries are reviewed during a field edit for completeness and consistency. All notes are reviewed, so expenditure data can be transcribed to the questionnaire for keying. In addition, item codes are assigned to reported expenditure items, household and consumer unit codes are assigned to each household member, and industry and occupation codes are entered for each working member. After an initial clerical screening, data are key-entered into electronic formats and a computer file of the database containing these data is produced and transmitted monthly to BLS, along with image files of questionnaires.

Data are then processed by computer to calculate population weights based on BLS specifications, impute demographic characteristics for missing or inconsistent demographic data, impute values for weeks worked when nonresponse is encountered, and apply appropriate sales taxes to the expenditure items.

Using three monthly diary data files, BLS creates a quarterly data base and screens it for invalid coding and inconsistent relationships, as well as for extreme values recorded or keyed erroneously. BLS then corrects any coding and extreme-value errors found.

Two types of data adjustment routines—allocation and imputation—improve the Diary Survey estimates. Allocation routines transform reports of nonspecific items into specific ones. For example, when respondents report expenditures for meat rather than beef or pork, allocations are made, using proportions derived from item-specific reports in other completed diaries. BLS imputes missing attributes, such as age or sex or package type, needed for mapping Diary expenditures. Income data from the Diary Survey are processed in the same way as in the Interview Survey.

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