Budget Allocation Patterns of U.S. Households across Income Levels in the 21st Century

Abstract

This study examined the budget allocation patterns of U.S. households during the period 2000–2015. Four household groups—classified based on their income levels in relation to the federal poverty level—are used for the analyses. Data from the quarterly interview component of the BLS Consumer Expenditure Survey were used in order to calculate households' annual expenditures in eight commodity groups: food, utilities, apparel and apparel services, transportation, medical care, shelter and household operations, other nondurable expenditures and services, and durable goods. An exact affine stone index (EASI) demand system was used to estimate demand relationships (i.e., price, income elasticities, and marginal effects). Overall, we find that budget allocation, consumers' responses to changes in prices and income, and the effects of sociodemographic characteristics on spending can be markedly different between income groups. The use of a representative or average household for demand analyses can mask substantial differences in economic behaviors between these four income groups.

Food demand estimation from consumption and expenditure data: Meat demand in Nigeria

“…For the demand system that used consumption data, the w h i variable was constructed using the q h i reported and the price predicted in Equation (3). Compensated, uncompensated, and expenditure elasticities were calculated using the parameters in Equation ( 5) (Lewbel and Pendakur 2009;Boonsaeng and Carpio 2020). The demand system was estimated by imposing homogeneity and symmetry restrictions.…”