NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Is the Consumer Expenditure Survey Representative by Income?

John Sabelhaus, David Johnson, Stephen Ash, David Swanson, Thesia I. Garner, John Greenlees, Steve Henderson

Chapter in NBER book Improving the Measurement of Consumer Expenditures (2015), Christopher Carroll, Thomas Crossley, and John Sabelhaus, editors (p. 241 - 262)
Conference held December 2-3, 2011
Published in May 2015 by University of Chicago Press
© 2015 by the National Bureau of Economic Research
in NBER Book Series Studies in Income and Wealth

Aggregate under-reporting of household spending in the Consumer Expenditure Survey (CE) can result from two fundamental types of measurement errors: higher-income households (who presumably spend more than average) are under-represented in the CE estimation sample, or there is systematic under-reporting of spending by at least some CE survey respondents. Using a new data set linking CE units to zip-code level average Adjusted Gross Income (AGI), we show that the very highest-income households are less likely to respond to the survey when they are sampled, but unit non-response rates are not associated with income over most of the income distribution. Although increasing representation at the high end of the income distribution could in principle significantly raise aggregate CE spending, the low reported average propensity to spend for higher-income respondent households could account for at least as much of the aggregate shortfall in total spending.

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This paper was revised on July 16, 2014

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This chapter first appeared as NBER working paper w19589, Is the Consumer Expenditure Survey Representative by Income?, John Sabelhaus, David Johnson, Stephen Ash, David Swanson, Thesia Garner, John Greenlees, Steve Henderson
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