Measuring Consumer Expenditures with Payment Diaries Measuring Consumer Expenditures with Payment Diaries

By Scott Schuh

Obtaining the best possible estimates of consumer expenditures is crucial to proper construction of consumption data and applied economic research on consumer behavior. Measuring consumer expenditures well is complex and difficult. The challenges, which are manifest in discrepancies between microeconomic and aggregate estimates of consumption and related data, confound efforts to understand households' responses to the recent financial crisis. One basic problem is that the leading U.S. data source, the Consumer Expenditure Survey, covers only about three-fifths of personal consumption expenditures. However, in a potentially promising development, Bagnall et al. (2016) report that aggregate payment values from individual consumer diaries conducted during the 2009–2012 period in seven industrial countries amounted to between 72 and 111 percent of national income estimates of consumption, suggesting that payments data might contribute to a solution. Though imperfect, these relatively high estimates merit further investigation.

This paper uses the Boston Fed's 2012 Diary of Consumer Payment Choice (DCPC) to describe and quantify the advantages of collecting consumer expenditure data using payment diaries that record daily authorizations by the type of payment instrument (cash, check, money order, debit or credit card, online banking, etc.) at the point-of-sale (POS), for bill payment (BP), and for all other payments.

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