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The Validity of Consumption Data

The Validity of Consumption Data

Are the Consumer Expenditure Interview and Diary Surveys Informative?

(p.204) 7 The Validity of Consumption Data
Improving the Measurement of Consumer Expenditures
Adam BeeBruce D. MeyerJames X. Sullivan
University of Chicago Press

We examine the quality of data in the Consumer Expenditure (CE) Survey. We compare reported spending on goods and services to comparable national income account data separately for the two components of the CE—the Interview Survey and the Diary Survey—rather than a combination as in past comparisons. We find that most of the largest consumption categories are measured well in the Interview Survey. Other large categories are reported at a low rate or their ratio to the national accounts declines over time. For the Diary Survey, there is no large category that is both measured well and reported at a higher rate than in the Interview Survey. We also compare durables in the CE to other sources. This evidence suggests the CE performs fairly well and appears to be fairly representative, although there is evidence of underrepresentation at the top of the income distribution and under-reporting of income and expenditures at the top. We then examine the precision of the two surveys and the frequency of no spending. In the Diary Survey, we find much greater dispersion in spending, and the dispersion relative to the Interview Survey varies across goods and over time.

Keywords:   consumer expenditure survey, CE, interview survey, diary survey, income under-reporting, expenditure under-reporting, measurement error

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