empirical research on consumption primarily relied on aggregate data such as the National Income and Product Accounts (NIPA) tables. experiences income wealth health status and family structure. However historically only housing and food-related expenditure data were collected in the PSID. In light of the growing interest in household consumption behaviors the PSID expanded its questions on consumption expenditures significantly Azomycin in 1999 and even further in 2005. As a result the PSID now covers essentially all major expenditure categories that are included in the CE. In this article we describe the features of the PSID survey that make it a unique resource for studying household consumption. We then present statistical results that show that the PSID expenditure data compare favorably to their CE counterparts. We take the CE data as our reference point and a comparison benchmark because despite the fact that it has been demonstrated that estimates of aggregate consumption derived using the CE data fall short of estimates based on the NIPA data the CE remains the most comprehensive household expenditure survey. Moreover Bee Meyer and Sullivan (2012) documented that most of the major expenditure categories in the CE are fairly consistent with the NIPA estimate. I. The Two Surveys A. The PSID The PSID is the world’s longest running national longitudinal household survey. Started in 1968 the PSID was an annual survey through 1997 and a biennial survey afterward. A hallmark feature of the PSID sample design is that it follows not only the original 1968 sample but also their descendants as they grow up and form their own households. In addition the PSID has consistently achieved low sample attrition rates. As of the 2009 2009 survey the PSID collected data from nearly 8 700 households. Moreover rich information on health status and behaviors household balance sheets time use philanthropy child development and many other domains were added to the survey over time. In sum the Azomycin length of the panel its genealogical design and its broad content make it a unique data source for studying a wide array of topics on household behaviors. For example the PSID data allow analyses of the transmission of economic behavior and well-being-such as consumption saving and wealth accumulation-across generations. B. The CE The CE is a nationally representative survey with Azomycin a primary goal of collecting detailed data on household spending in order to inform estimates of the Consumer Price Index. The CE also collects key demographic and socioeconomic information of the surveyed household making it a valuable Rabbit Polyclonal to PTPRZ1. source for economic research. The CE has two components-an Interview Survey and a Diary Survey-that are administered to separate samples. The PSID is more comparable to the Interview Survey in terms of survey methodology because both surveys typically ask the consumers to recall their expenditures over the prior several months in contrast to the bookkeeping approach of the Diary Survey whose focus is on expenditure items that are frequently purchased such as food. Accordingly in this paper the PSID expenditure data are compared to data from the CE Interview Survey only. As of Azomycin 2010 about 7 0 consumer units were interviewed each quarter. Compared with the PSID the CE Interview Survey collects data at a higher frequency but maintains a much shorter longitudinal structure. II. Expenditure Data in the PSID The questions used in the PSID to collect consumption expenditure data and the years these questions was included in the survey are provided in online Appendix Table 1. Before 1999 the PSID collected only limited information on consumption expenditures. Partly because of its historical focus on poverty a select set of poverty-related spending items such Azomycin Azomycin as food and housing was collected in almost all waves. Earlier research used this limited set of data as a proxy for consumption behavior of the household (e.g. Hall and Mishkin 1982; Hotz Kydland and Sedlacek 1988; Zeldes 1989). The food and rental expenditure data also served as inputs for estimating total expenditure by means of using estimated coefficients from the CE data (Skinner 1987). To expand the coverage of expenditure data in PSID a series of new questions was added to the survey in 1999 to collect information regarding spending on healthcare education childcare transportation and utilities. Li et al. (2010) find that the.