Studying Consumption with the Panel Study of Income Dynamics: Comparisons with the Consumer Expenditure Survey and an Application to the Intergenerational Transmission of Well-Being

This paper tests for the presence of habit formation using household data. A simple model of habit formation implies a condition relating the strength of habits to the evolution of consumption over time. When the condition is estimated with food consumption data from the Panel Study on Income Dynamics (PSID), the results yield no evidence of habit formation at the annual frequency. This finding is robust to a number of changes in the specification. It also holds for several proxies for nondurables and services consumption created by combining PSID variables with weights estimated from Consumer Expenditure Survey data. (JEL D12, D91, E21)

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Estimates of Annual Consumption Expenditures and Its Major Components in the PSID in Comparison to the CE

The American Economic Review ◽

10.1257/aer.104.5.132 ◽

2014 ◽

Vol 104 (5) ◽

pp. 132-135 ◽

Cited By ~ 21

Author(s):

Patricia Andreski ◽

Geng Li ◽

Mehmet Zahid Samancioglu ◽

Robert Schoeni

Keyword(s):

Data Collection ◽

Panel Study ◽

Household Surveys ◽

Consumer Expenditure ◽

Income Dynamics ◽

Consumption Expenditures ◽

Consumer Expenditure Survey ◽

Expenditure Data ◽

Annual Consumption ◽

The Mean

Comprehensive data on consumption expenditures have historically not been collected in US longitudinal household surveys. The Panel Study of Income Dynamics (PSID) expanded its expenditure data collection in 1999 and 2005. We examine these new expenditure data, highlighting several unique features of the PSID data. We then compare the PSID expenditure data with those in the Consumer Expenditure Survey (CE). We document that the PSID data cover nearly the entire scope of the CE data, and the mean statistics of total expenditures compare favorably between the two surveys. However, significant differences remain for certain expenditure categories.

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Consumption Mobility in the United States: Evidence from Two Panel Data Sets

Topics in Economic Analysis & Policy ◽

10.2202/1538-0653.1474 ◽

2006 ◽

Vol 6 (1) ◽

Cited By ~ 18

Author(s):

Jonathan D Fisher ◽

David S Johnson

Keyword(s):

Social Welfare Function ◽

Panel Study ◽

Data Use ◽

Well Being ◽

The United States ◽

Income Mobility ◽

Data Sets ◽

Consumer Expenditure ◽

Income Dynamics ◽

Total Consumption

Abstract This paper examines inequality and mobility using measures of income and consumption. Consumption is claimed to be a better measure of permanent income and thus well-being, but most studies of inequality and mobility using U.S. data use income.This paper uses cohort data from the Consumer Expenditure Surveys on total consumption to impute consumption in the Panel Study of Income Dynamics. Then, we use this imputed consumption and actual income from the PSID to examine changes in inequality and mobility. Similar to earlier findings, we show that there has been a large increase in income inequality but no concurrent increase in consumption inequality in the 1990s. Conversely, income mobility and consumption mobility are similar during this time period.Finally, we link the concepts of inequality and mobility using a social welfare function. The results suggest that income mobility and consumption mobility more than offset the increases in inequality.

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What Accounts for the Variation in Retirement Wealth Among U.S. Households?

The American Economic Review ◽

10.1257/aer.91.4.832 ◽

2001 ◽

Vol 91 (4) ◽

pp. 832-857 ◽

Cited By ~ 339

Author(s):

B. Douglas Bernheim ◽

Jonathan Skinner ◽

Steven Weinberg

Keyword(s):

Time Preference ◽

Panel Study ◽

Hyperbolic Discounting ◽

Risk Tolerance ◽

Wealth Accumulation ◽

Consumer Expenditure ◽

Income Dynamics ◽

Consumer Expenditure Survey ◽

Saving And Wealth ◽

Retirement Wealth

Even among households with similar socioeconomic characteristics, saving and wealth vary considerably. Life-cycle models attribute this variation to differences in time preference rates, risk tolerance, exposure to uncertainty, relative tastes for work and leisure at advanced ages, and income replacement rates. These factors have testable implications concerning the relation between accumulated wealth and the shape of the consumption profile. Using the Panel Study of Income Dynamics and the Consumer Expenditure Survey, we find little support for these implications. The data are instead consistent with “rule of thumb,” “mental accounting,” or hyperbolic discounting theories of wealth accumulation. (JEL D1, D91, E21)

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