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

36 Pages Posted: 11 Jul 2007

See all articles by Geng Li

Geng Li

Federal Reserve Board

Kerwin Kofi Charles

University of Chicago - Harris School of Public Policy

Sheldon Danziger

Russell Sage Foundation; G.R. Ford School of Public Policy

Robert F. Schoeni

University of Michigan at Ann Arbor - Survey Research Center

Date Written: April 2007

Abstract

Beginning in 1999, the Panel Study of Income Dynamics (PSID) added new questions about several categories of consumption expenditure. The PSID now covers items that constitute more than seventy percent of total expenditure measured in the Consumer Expenditure Survey (CE). We show that expenditure for each of the broad categories in the PSID aligns closely with corresponding measures from the CE. Using the new PSID data, we impute total expenditure in the PSID and show that this is also very close to total measured CE expenditure. For several distinct categories and for total consumption, we show that cross-sectional life cycle estimates of household expenditure activity are very similar across the two surveys. Finally, we illustrate the unique research value of the PSID for studying consumption by exploiting the survey's longitudinal design and genealogical structure to estimate the intergenerational elasticity of consumption expenditure, which is found to be in the range of 0.32-0.34.

Keywords: Panel Study of Income Dynamics, Consumer Expenditure Survey, Intergenerational Consumption Correlation

JEL Classification: C63, C61, E52

Suggested Citation

Li, Geng and Charles, Kerwin Kofi and Danziger, Sheldon and Schoeni, Robert F., 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 (April 2007). FEDS Working Paper No. 2007-16, Available at SSRN: https://ssrn.com/abstract=999549 or http://dx.doi.org/10.2139/ssrn.999549

Geng Li (Contact Author)

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Kerwin Kofi Charles

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States
(773) 834-8922 (Phone)

Sheldon Danziger

Russell Sage Foundation

112 East 64th St
NEW YORK, NY 10065
United States

G.R. Ford School of Public Policy

112 East 64th St
NEW YORK, NY 10065
United States

Robert F. Schoeni

University of Michigan at Ann Arbor - Survey Research Center ( email )

Ann Arbor, MI 48106-1248
United States

HOME PAGE: http://www-personal.umich.edu/~bschoeni/

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