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Summary
T
he Consumer Expenditure Surveys (CE) are the only source of in-
formation on the complete range of consumers’ expenditures and
incomes in the United States, as well as the characteristics of those
consumers. The CE consists of two separate surveys—a national sample of
households interviewed five times, at three-month intervals; and a separate
national sample of households that complete two consecutive one-week
expenditure diaries. For more than 40 years, these surveys, the responsibil-
ity of the Bureau of Labor Statistics (BLS), have been the principal source
of knowledge about changing patterns of consumer spending in the U.S.
population.
In February 2009, BLS initiated the Gemini Project, the aim of which
is to redesign the CE surveys to improve data quality through a verifiable
reduction in measurement error with a particular focus on underreporting.
The Gemini Project initiated a series of information-gathering meetings,
conference sessions, forums, and workshops to identify appropriate strate-
gies for improving CE data quality. As part of this effort, BLS requested
the National Academies’ Committee on National Statistics (CNSTAT) to
convene an expert panel to build upon the Gemini Project by conducting
further investigations and proposing redesign options for the CE surveys.
The charge to the Panel on Redesigning the BLS Consumer Expen-
diture Surveys includes reviewing the output of a Gemini-convened Data
User Needs Forum and Survey Methods Workshop and convening its own
Household Survey Producers Workshop to obtain further input. In addi-
tion, the panel was requested to commission options from contractors for
consideration in recommending possible redesigns. The panel was further
1
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2 MEASURING WHAT WE SPEND
asked by BLS to create potential redesigns that would put a greater em-
phasis on proactive data collection to improve measurement of consumer
expenditures. This report summarizes the deliberations and activities of
the panel. As summarized below and described more fully in its report, the
panel drew four conclusions about the uses of the CE and 16 conclusions
about why a redesign is needed. The panel also made 12 recommendations
about future directions.
PURPOSES OF THE CE SURVEYS
The CE serves several important purposes. The most visible is for
calculating the Consumer Price Index (CPI), one of the most widely used
statistics in the United States. Calculating the CPI involves multiple data
sources. The CE data provide budget shares (weights) for detailed expendi-
ture categories. Much of this detail is not available elsewhere.
Another important use is to provide data critical for administering
certain federal and state government programs. For the continuing admin-
istration of many of these programs, the CE is the only continuing source
of data with sufficient information on households’ demographic character-
istics, spending, and income.
In addition, the completeness of the CE in measuring household de-
mographics and consumer expenditures, in combination with repeated
measurement over a year for the same households, makes it a cornerstone
for policy analysis and economic research. Understanding the differential
effects of policies and events on consumer expenditures of all types, and
the consequences for people of different ages, races, and ethnicities, sizes
of households, and regions, relies upon the CE.
WHY THE CE INCLUDES TWO SURVEYS
The modern version of the CE, with its two independent surveys, was
first fielded in 1972–1973. It has been conducted annually since 1980 with
the same underlying design concept—different methods of data collection
to collect different kinds of data.
The Interview survey was designed to collect expenditures that could
be recalled for over three months. The focus was on large expenditures,
such as property, automobiles, and major appliances, as well as regular
expenditures, such as rent, utility bills, and insurance premiums. The Diary
survey, on the other hand, was designed to obtain expenditures for smaller,
frequently purchased items.
Over time, however, the Interview survey began to collect information
on small, frequently purchased items, while the Diary now collects infor-
mation on many larger items. Thus, the Interview and Diary now collect
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SUMMARY 3
information that allows estimates for certain expenditures to be made from
either source, using different question wordings and time periods. BLS
uses only data from a single source in its published estimates, selecting the
“best” source for each item.
Approximately 7,100 interviews, each of which averages about 60
minutes, are conducted each quarter in the Interview survey, with five
interviews for each household. Although most data are collected in house-
hold visits, an increasing proportion of the later interviews rely completely
or partly upon telephone interviews. One-fifth of the sample is new each
quarter, with a corresponding one-fifth of households completing the five-
interview sequence. The Diary survey collects usable data from 7,100
households per year, each keeping two one-week diaries. Diary placements
occur during 52 weeks of the year, with approximately 273 diaries being
completed each week.
Most of the cost is associated with the Interview survey, which pro-
duces about 36,000 completed interviews per year, compared to about
14,000 one-week diaries. The “total” data collection cost for the CE sur-
veys in 2010 was $21.2 million, with the Interview survey costing $17
million, or about 80 percent of the total.
THE PANEL’S INVESTIGATION
The panel received input from a wide variety of sources. Investigations
conducted by the Gemini Project provided critical background. Several
panel members themselves use CE microdata. The panel also reviewed
published research and held a session at the 2011 CE Microdata Users’
Conference. The panel also studied the complexities of the CPI program
and how the CE supports it.
Based on these investigations, the panel makes the following conclu-
sions about the use of the CE. (The numbers represent the location of the
conclusion in the full report; thus, more background on the conclusions
below is in Chapter 4.)
C
onclusion 4-1: The CPI is a critical program for BLS and the nation.
This program requires an extensive amount of detail on expenditures,
at both the geographic and product level, in order to create its various
indices. The CPI is the current driver for the CE program with regard
for the level of detail it collects. The CPI uses over 800 different expen-
diture items to create budget shares. The current CE supplies data for
many of these budget shares. However, even with the level of detail that
it currently collects, the CE cannot supply all of the budget shares used
by the CPI. There are other data sources from which the CPI currently
generates budget shares.
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4 MEASURING WHAT WE SPEND
C
onclusion 4-2: The CPI does not utilize the panel nature of the current
CE. Instead the national and regional estimates employed by the CE
assume independence of households between quarters on the Interview
survey, and independence between weeks on the Diary survey.
C
onclusion 4-3: The administration of some federal programs depends
on specific details collected from the CE. There are currently no other
available sources of consistent data across years for some of these
programs.
C
onclusion 4-4: Economic researchers and policy analysts generally do
not use CE expenditure data at the same level of detail required by the
CPI. More aggregate measures of expenditures suffice for much of their
work. However, many do make use of two current features of the CE
microdata: an overall picture of expenditures, income, and household
demographics at the individual household level; and a panel component
with data collection at two or more points in time.
Most panel members experienced the CE Interview, the CE Diary, or
both as a respondent. These “field” experiences provided broad under-
standing when connected with insight from top methodological researchers
through the Gemini Project’s CE Methods Workshop (December 2010).
In addition, the panel studied findings from periodic debriefings of field
representatives on how respondents formulate answers (e.g., use of records
vs. no records) and the challenges respondents face in answering accurately.
The panel’s Household Survey Producers Workshop (June 2011) was
organized around several critical topics, including consumer expenditure
surveys in other countries and survey design experiences on other topics
and issues. The workshop brought together U.S. and international present-
ers; university, private-sector, and government-sector experiences; and data
collection experiences on a myriad of topics.
The next step was to commission two groups of researchers to develop
potential redesigns for the CE surveys. Their proposals encouraged outside-
the-box thinking on new collection strategies, technologies, and procedures.
The two proposals were presented at a Redesign Options Workshop orga-
nized by the panel in October 2011.
Thus, the panel was challenged to bring together the diverse experi-
ences of data users: from those who use it for the CPI to those who study
consumer behavior. It was further challenged by the work of statisticians
and survey methodologists who design sampling strategies and survey ques-
tionnaires to improve data quality in varied situations. In addition, it was
challenged by the practical requirements of data collection and new ideas
to improve data quality.
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SUMMARY 5
WHY THE CE NEEDS TO BE REDESIGNED
The CE surveys are long and arduous. In the Interview survey, the
typical respondent answers without being able to consult other members
of the household and only infrequently refers to records. The level of detail
exceeds what a person can recall for a three-month period. In the Diary
survey, respondents are asked to remember to record details of many small
purchases and to list each expenditure separately in a complicated booklet.
In addition, consumer spending has changed dramatically over the
past 30 years through such things as online shopping, electronic banking,
payroll deductions, and greater use of debit and credit cards. Shopping in
“big box” stores that sell a huge variety of items challenges people’s ability
to recall the amount spent on specific categories of expenditures.
Through comparisons, reported expenditures in both the Interview
and Diary surveys tend to be lower than the amounts suggested by the Per-
sonal Consumption Expenditures (PCE) data from the Bureau of Economic
Analysis. Although there are important conceptual differences between the
CE and PCE, the differences suggest both CE surveys underreport consumer
expenditures.
C
onclusion 5-1: Underreporting of expenditures is a major quality
problem with the current CE, both for the Diary survey and the In-
terview survey. Small and irregular purchases, categories of goods for
specific family members, and items that may be considered socially
undesirable (alcohol and tobacco) appear to suffer from a greater per-
centage of underreporting than do larger and more regular purchases.
The Interview survey, originally designed for these larger categories,
appears to suffer less from underreporting than does the Diary survey
in the current design of these surveys.
Estimates derived from the Interview and Diary differ significantly for
many expenditure categories in part because many questions are posed in
quite different ways. For example, the Interview asks for an estimate of
the household’s weekly expense for grocery shopping and then for por-
tions spent for nongrocery items. In contrast, the Diary asks for a listing of
individual food items purchased for home consumption during a specific
week of the year.
C
onclusion 5-2: Differences exist between the current Interview and
Diary reports of expenditures. Differences in questions, context, and
mode are likely to contribute to these differences. The error structures
for the two surveys, and for different types of questions in the Inter-
view survey, may be different. Because of these differences we cannot
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6 MEASURING WHAT WE SPEND
conclude whether a recall interview or a diary is inherently a better
mode for obtaining the most accurate expenditure data across a wide
range of items. Both have real drawbacks, and a new design will need
to draw from the best (or least problematic) aspects of both methods.
Sources of Underreporting in the Interview
The panel’s review suggests underreporting of expenditures may stem
from a number of considerations, rather than a single cause. Asking respon-
dents to spend more than five hours over the course of a year answering
detailed questions about their expenditures is a substantial burden. The
field representative, concerned about the respondent’s willingness to agree
to additional interviews, may be hesitant to press too hard for accurate
recall or the use of records. Under these conditions, it seems likely that the
field representative and respondent both benefit from keeping the interview
as short and pleasant as possible.
C
onclusion 5-3: Motivational factors of both the respondent and field
representative appear to negatively influence the quality of the CE
Interview data. This leads the panel to the judgment that a changed
incentive and support structure for both respondents and field represen-
tatives will be needed for a future CE redesign to motivate high-quality
reporting and reduce fatigue.
It becomes apparent to Interview respondents that answering “Yes” to
a particular question (e.g., “Did you purchase any pants, jeans, or shorts?”)
leads to being asked a number of detailed, follow-up questions. The respon-
dent is then asked whether they purchased other “pants, jeans, or shorts,”
and the cycle begins again.
C
onclusion 5-4: The current structure of the Interview questionnaire
cycles down through global screening questions, and asks multiple ad-
ditional questions when the respondent answers “Yes” to a screening
question. As this cycle repeats itself, a respondent “learns” and may
be tempted not to report an expenditure in order to avoid further
questions.
Recall of specific detailed expenditures is further complicated because
the item may be only one of several items in a single purchase. The diverse
ways of purchasing, paying, or authorizing payment and the challenge of
connecting specific expenditures to any payment records seem likely to
encourage estimation rather than exact reporting.
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SUMMARY 7
C
onclusion 5-5: The current design of the CE Interview questionnaire
makes the cognitive task of recalling expenditures difficult and encour-
ages estimation.
Some questions on the Interview survey are particularly difficult, such
as asking respondents to report exact amounts of savings or value of assets
now compared to one year earlier and exact dates of purchases for specific
items. Even respondents who keep meticulous records may find that their
records are not organized to allow honest answers to some questions.
C
onclusion 5-6: Some questions on the current CE Interview question-
naire are very difficult to answer accurately, even with records.
It is not possible for many people to recall exact dates and amounts
of expenditures over three months. Whereas certain items (e.g., house pay-
ments) may not vary and thus can be remembered, others (e.g., clothing
and food away from home) may vary dramatically.
C
onclusion 5-7: Three months is long for accurate recall of many items
on the CE Interview survey. This situation is exacerbated by the ancil-
lary details that are collected about each recalled expense. Errors of
omission are likely to occur, and are a contributing factor to the under-
reporting of expenditures on this survey. Short recall periods, however,
may produce more variability in the estimates and provide difficulties
for economic research.
Field representatives report the use of records in the interview var-
ies greatly. However, the proportion of respondents who never or only
sometimes use records far exceeds the proportion that always or almost
always does. Records are used even less when the interview is conducted
by telephone.
C
onclusion 5-8: The use of records is extremely important to report-
ing expenditures and income accurately. The use of records on the
current CE is far less than optimal and varies across the population. A
redesigned CE would need to include features that maximize the use
of records where at all feasible and that work to maximize accuracy of
recall when records are unavailable.
Field representatives attempt to interview the person most knowledge-
able about expenditures. Most interviews do not involve others, and the
respondent may not know certain expenditures made by other adult or
teenage household members.
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8 MEASURING WHAT WE SPEND
C
onclusion 5-9: The use of proxy reporting on the CE Interview is
problematic, and is a potential cause of underreporting of expenditures.
About one-third of the CE interviews, especially the later ones, are
completed by telephone. These interviews result in fewer positive answers
to screener questions and do not benefit from an information booklet de-
signed to encourage recall when the field representative visits the household.
C
onclusion 5-10: Telephone interviews appear to obtain a lower qual-
ity of responses than the face-to-face interviews on the CE, but a sub-
stantial part of the CE data are collected over the telephone.
Sources of Underreporting in the Diary
The Diary survey uses a proactive process that involves instructing re-
spondents to report expenditures by all members of the household, asking
that they record expenditures daily, and providing detailed instructions on
how to complete the diary. However, evidence that important categories of
expenditures are less well reported in the Diary than the Interview suggests
the full potential of the Diary is not being realized. As with the Interview,
several factors may affect the accuracy of Diary reporting.
Diary reporting asks for expenditures in four categories, with each
entry asking for multiple pieces of information, placing considerable bur-
den on respondents. Many find it time-consuming and difficult to partition
receipts into the requested categories. Motivation to complete the diary
appears to decline over the two-week period.
C
onclusion 5-11: A major concern with the Diary survey is that re-
spondents appear to suffer diary fatigue and lack motivation to report
expenditures throughout the two-week data collection period, and
especially to go through the process of recording all items in a large
shopping trip.
Field representatives report some respondents see the 44-page diary as
too difficult to complete. They are asked by the field representative to col-
lect receipts, to be recorded in the diary during the second household visit.
C
onclusion 5-12: A lot of information is conveyed to the diary respon-
dent in a short amount of time. The organization of the diary booklet
may result in considerable frustration among some individuals, who
feel they cannot master the instructions. They choose instead to collect
receipts and leave them for the field representative to enter during the
follow-up visit.
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SUMMARY 9
The request to record expenditures by day and into broad categories
requires respondents to flip pages back and forth as they move between
instruction and recording pages. The diary lacks a clear navigational path,
and the visual layout makes completing the diary difficult.
C
onclusion 5-13: It is likely that the current organization of recording
expense items by “day of the week” makes it more difficult for some
respondents to review their diary entries and assess whether an expen-
diture has been missed.
The Diary survey has a short reporting period, which creates concerns
regarding the collection of larger and less frequent expense items. Also it
is difficult to get a picture of an individual household’s normal spending
pattern in only two weeks.
It is not known to what extent respondents seek or are able to obtain
expenditures from other household members. Even if others are willing to
provide such information, they may not provide it to the respondent in a
timely manner.
C
onclusion 5-14: Although the diary protocol encourages respondents
to obtain information and record expenditures by other household
members during the two weeks, it is unclear how much of this happens.
Response Rates Have Declined
Response rates in 2010 for the Interview survey were 73 percent and
for the Diary survey, 72 percent. These rates have declined over time, as
have response rates to most household surveys. Low response from high-
income groups is a concern for both surveys.
C
onclusion 5-15: Nonresponse is a continuing issue for the CE as it
is for most household surveys. The panel nature of the CE is not suf-
ficiently exploited for evaluating and correcting either for nonresponse
bias in patterns of expenditure or for lower compliance in the second
wave of the Diary survey. Nonresponse in the highest income group
may be a major contributing factor to underestimates of expenditures.
In assessing both the response and nonresponse issues, concerns exist
about both the Interview and Diary modes. The panel did not conclude that
one mode is intrinsically better or worse. However, it believes that differ-
ent approaches to the use of both methods have the potential to mitigate
these problems.
The ability to link CE data to relevant administrative data sources (such
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10 MEASURING WHAT WE SPEND
as IRS data or data on program participation) could provide additional
richness for economic research as well as providing potential avenues to
investigate the impact of nonresponse on the survey results.
C
onclusion 5-16: For economic analyses, data on income, saving, and
employment status are important to be collected on the CE along with
expenditure data. Aligning these data over time periods, and collecting
information on major life events of the household, will help researchers
understand changes in income and expenditures of a household over
time. Linkage of the CE data to relevant administrative data (such as
the IRS and program participation) would provide additional richness,
and possibly provide avenues to investigate the effect of nonresponse.
PATHWAY TO A NEW SURVEY
The current detail and requirements imposed by the multiple and diver-
gent CE data uses are difficult to satisfy efficiently within a single design,
and the panel believes that tradeoffs must be made. The panel recommends
a major redesign of the CE, with the first step to determine priorities among
the data requirements of the many uses of the CE so tradeoffs can be made
in a planned and transparent manner. Such prioritization is the responsi-
bility of BLS and is beyond what would be appropriate or realistic for the
panel to undertake.
R
ecommendation 6-1: It is critical that BLS prioritize the many uses of
the CE data so that it can make appropriate tradeoffs as it considers
redesign options. Improved data quality for data users and a reduction
in burden for data providers should be very high on its priority list.
R
ecommendation 6-2: The panel recommends that BLS implement a
major redesign of the CE. The cognitive and motivational issues asso
ciated with the current Diary and Interview surveys cannot be fixed
through a series of minor changes.
The panel’s most effective course of action (prior to BLS’ priority-
setting) is to suggest alternative designs to achieve different prioritized
objectives. The panel developed three distinct prototype designs:
• Design A focuses on obtaining expenditure data at a detailed level
through a “supported journal,” a diary-type self-administered data
collection with tools that reduce recordkeeping while encouraging
the entry of expenditures when memory is fresh and receipts avail-
able. Design A also has a self-administered recall survey to collect
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SUMMARY 11
larger and recurring expenses. It collects a complete picture of
household expenses over six months, with reporting periods vary-
ing by expense group.
• Design B uses a recall interview coupled with a short supported
journal. It provides data for 96 expenditure categories (rather than
the more detailed expenses provided by Design A) and collects
complete expenditures over an 18-month period in three waves. It
builds a dataset particularly useful for economic and policy analy-
sis. This design also involves a small follow-on survey used to help
understand measurement errors in the main survey.
• Design C incorporates elements of both Designs A and B. It col-
lects the detail of expense items as in Design A while providing
a household profile for six months. To do both, it uses a more
complex sample design and employs modeling, collecting different
information from different households.
The panel wishes to state clearly that evidence on how well each of
the proposed prototypes would work is missing. The process of selecting a
prototype or components of a prototype should be based not only on BLS’
prioritization of goals, but also on empirical evidence that the proposed
procedures can meet those goals.
R
ecommendation 6-3: After a preliminary prioritization of goals of the
new CE, the panel recommends that BLS fund two or three major fea-
sibility studies to thoroughly investigate the performance of key aspects
of the proposed designs. These studies will help provide the empirical
basis for final decision making.
The panel offers the following recommendation that should be viewed
in the context of BLS’ prioritization of the CE goals.
R
ecommendation 6-4: A broader set of nonexpenditure items on the
CE that are synchronized with expenditures will greatly improve the
quality of data for research purposes as well as the range of important
issues that can be investigated with the data. The BLS should pay close
attention to these issues in the redesign of the survey.
All three designs feature tablet computers with wireless phone cards as
an essential ingredient. The report offers guidelines on the development and
use of tablets in data collection, but stresses the untested assumptions that
must be addressed before proceeding with using this tool. The panel also
recognizes some households will need paper instruments. These instruments
need to be redesigned to align with the tablets for multimode collection.
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12 MEASURING WHAT WE SPEND
R
ecommendation 6-5: A tablet computer should be utilized as a tool
in supported self-administration. However, a paper option should con-
tinue to be available for respondents who cannot or will not use a tablet
computer. Visual design principles should be applied to redesigning the
paper instrument in a way that improves the ease of self-administration
and is aligned with the tablet modules.
The panel presents a general roadmap for BLS to follow to complete the
redesign of the CE. First, it recommends BLS develop a targeted and tightly
focused plan to achieve a redesign within the next five years, a roadmap
that should be completed and made public within six months. The Gemini
Project is in place to do this.
R
ecommendation 6-6: BLS should develop a preliminary roadmap
for redesign of the CE within six months. This preliminary roadmap
would include a prioritization of the uses of the CE, an articulation
of the basic CE design alternative that is envisioned with the redesign,
and a listing of decision points and highest priority research efforts that
would inform those decisions.
Another key element of the prototypes is the use of incentives to mo-
tivate respondents to complete data collection and provide accurate data.
The panel recommends an appropriate incentive program be a fundamental
part of the future CE program. The report provides guidelines for devel-
oping an incentive structure, but the details can only be determined with
appropriate CE-specific research.
R
ecommendation 6-7: A critical element of any CE redesign should be
the use of incentives. The incentive structure should be developed, and
tested, based on careful consideration of the form, value, and frequency
of incentives. Serious consideration should be given to the use of differ-
ential incentives based on different levels of burden and/or differential
response propensities.
The panel had numerous discussions about alternative data sources
as a replacement or adjunct to collecting survey data. Although the use of
such information at the aggregate or the micro (respondent/household) level
holds great promise, the panel also recognized such use is accompanied by
risk, particularly from a cost/quality tradeoff perspective. A serious risk
and concern is over the continued availability of outside sources over time.
The panel decided not to recommend specific external datasets in its three
prototypes. However, the panel encourages BLS to continue to explore
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SUMMARY 13
administrative data sources for the future and provides general guidelines
for doing that.
R
ecommendation 6-8: BLS should pursue a long-term research agenda
that integrates new technology and administrative data sources as part
of a continuous process improvement. The introduction of these ele-
ments should create reductions in data collection and processing costs,
measurement error, and/or the statistical variance and complexity of
the CPI estimate. The agenda should address the robustness of new
technology and a cost/quality/risk trade-off of using external data.
The panel points to the value of a strong internal BLS research staff. It
recommends further development and expansion of their research capabili-
ties in order to respond to the rapidly changing contextual landscape for
conducting national surveys.
R
ecommendation 6-9: BLS should increase the size and capability of
its research staff to be able to effectively respond to changes in the
contextual landscape for conducting national surveys and maintain
(or improve) the quality of survey data and estimates. Of particular
importance is to facilitate ongoing development of novel survey and
statistical methods, to build the capacity for newer model-assisted and
model-based estimation strategies required for today’s more complex
survey designs and nonsampling error problems, and to build better
bridges between researchers, operations staff, and experts in other
organizations that face similar problems.
Facing the demands of the immediate redesign of the CE and use of tab-
let computers, the panel recommends BLS find additional expertise through
outside experts and organizations.
R
ecommendation 6-10: BLS should seek to engage outside experts and
organizations with experience in combining the development of tablet
computer applications along with appropriate survey methods in de-
veloping such applications.
Finally, as described above, all three prototypes propose procedures
and techniques that have not been researched, designed, and tested. The
prototypes are contingent upon new research undertakings. Much “rel-
evant” background theory and research exist, for which the BLS research
program and Gemini Project deserve praise. However, they do not provide
enough specific answers for these new options. Considerable investment
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14 MEASURING WHAT WE SPEND
must be made in researching elements of the proposed designs, to find spe-
cific procedures that are not only workable, but also most effective. These
prototypes are not operationally ready—much targeted research needs to
be done.
R
ecommendation 6-11: BLS should engage in a program of targeted
research on the topics listed in this report that will inform the specific
redesign of the CE.
R
ecommendation 6-12: BLS should fund a “methods panel” (a sample
of at least 500 households) as part of the CE base, which can be used
for continued testing of methods and technologies. Thus the CE would
never again be in the position of maintaining a static design with evi-
dence of decreasing quality for 40 years.
In summary, the CE performs an extremely important role in helping
understand the consumption patterns of American households and more
appropriately targeting critical policies and programs. The current CE
d
esign has been in place for four decades, and change is needed. The change
should begin with BLS prioritizing the many uses of the CE so a new design
can most efficiently and effectively target those priorities. The panel offers
three prototype designs and considerable guidance in moving toward that
ultimate redesign.
