Research Cases

Measuring Consumer Expenditures with Payment Diary Surveys

By August, 2017 No Comments
Farmers Market

Scott Schuh Ph.D.Director, Consumer Payments Research Center; Senior Economist and Policy Advisor, Research Department, Federal Reserve Bank of Boston

Date Published
August, 2017

This paper describes and quantifies the advantages of collecting consumer expenditures using payment diaries that track expenditures by the instrument (cash, check, debit or credit card, online banking, etc.) used at the point of sale and bill payment. An important advantage of measuring consumer expenditures by payment instrument, rather than at the level of individual goods and services, is that aggregation into lumpy purchases (“baskets”) significantly increases the coverage (inclusion) of all types of consumer expenditures at the individual consumer and aggregate levels. The Boston Federal Reserve’s 2012 Diary of Consumer Payment Choice (DCPC) produced relatively accurate estimates of U.S. consumer behavior: 1) expenditures equal to 95 percent of (comparably defined) after-tax personal income from the National Income Accounts (NIA); and 2) consumption equal to 89 percent of (comparably defined) NIA consumption. These DCPC estimates are markedly closer to NIA estimates than the Consumer Expenditure Survey (CEX) and other similar surveys. The Human Project allows for the automated collection of expenditures that makes reporting spending considerably easier for study participants and results in richer and more accurate information.

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