The Benefits of Panel Data in Consumer Expenditure Surveys

This chapter explains why the collection of panel (re-interview) data on a comprehensive measure of household expenditures is of great value both for measuring budget shares (the core mission of a Consumer Expenditure survey) and for the most important research and public policy uses to which CE data can be applied, including construction of spending based measures of poverty and inequality and estimating the effects of fiscal policy. Specifically, collection of panel data (1) improves measurement of expenditure data, feeding into the core mission of the CE Survey, (2) increases the range and quality of group-specific price indexes that can be constructed, (3) permits reasonably reliable measurement of consumption inequality, and relative standards of living, (4) expands the range and improves the power of analyses of household spending, and (5) allows the measurement of dynamic responses like the propensities to consume that are crucial to the analysis of many economic events and policies.