Estimating Personal Consumption Rates for Husbands and Wives: A Comparison of Income-Strata and Microdata Models

Abstract

Various studies estimate personal consumption expenditures from Consumer Expenditure (CEX) data. Early analysis relied on CEX data that was aggregated across expenditure categories and income groupings, while later studies used microdata containing disaggregated expenditures across individual items for each surveyed household. These newer studies allocated expenditures for each item to relevant household members, but analyzed results aggregated across income strata. We extend the microdata analysis by examining personal consumption expenditures at the household level. Our results indicate that at all but the lowest incomes, personal consumption rates generated using microdata-level observations differ only slightly from existing models using income-strata data. Forensic experts accounting for personal consumption may, thus, feel comfortable using either method of analysis.