Consumption and Age

The Consumer Expenditure Survey (CEX), sponsored by the U.S. Bureau of Labor Statistics, is the primary source of information on U.S. consumption at the household level. Through indepth interviews with a large representative sample of U.S. households, the survey gathers spending data on nearly one thousand different products and services, focusing on consumer units, which are defined as all members of a particular housing unit related by blood, marriage, adoption, or other legal arrangement. The survey collects data only from consumer units that have independent living status. Residents of retirement communities are included in the survey, but long-term-care facility residents are excluded. There are thirteen major expenditure categories in the CEX: food at home, food away from home, alcohol and tobacco, housing, apparel and apparel services, transportation, health care, entertainment, personal care, reading materials and education, cash contributions, personal insurance, and miscellaneous.

Geoffrey Paulin used CEX data from 1984 to 1996 to analyze expenditure trends for different age groups and to test whether tastes and preferences changed over time for older consumers. He found that the change in average annual expenditures between 1984 and 1997 (in 1997 dollars) was as follows: for families under age 65 there was a 1.5 percent increase; for families 65 to 74 there was a 13.6 percent increase; and for families 75 and older there was a 18.0 percent increase. In other words, younger families had relatively stable expenditure levels, but real expenditures rose substantially for those over 65. Paulin also analyzed the change in income before taxes between 1984 and 1997 (in 1997 dollars) and found that families under age 65 had a 10.9 percent increase, families 65 to 74 had a 13.2 percent increase, and families 75 and older had a 7.4 percent increase.

Paulin investigated whether older consumers had different tastes, preferences, or physical needs than younger consumers by analyzing trends for several of the thirteen major expenditure categories. He found that older consumers purchased different amounts than younger consumers, but in most cases the trend of expenditures was similar for older and younger consumers. There was one interesting exception: recreation. All age groups exhibited a real decrease in spending for recreation during the 1990–1991 recession. In 1997, however, the recreation expenditures for younger consumers were down about 1 percent from their 1991 value, but they had risen substantially for older consumers. In fact, they had risen 19 percent for those age 65 to 74 and 28 percent for those at least 75 years old.

In another study, three of the thirteen CEX categories (food away from home, entertainment, and health care) were selected by Cheryl Russell to highlight changes in average spending by the various age categories between 1987 and 1997 for all households. The data show that most households, especially younger households, reduced spending on food away from home in 1997, compared to 1987. Households 65 to 74 and over 75 had increases of 21.6 percent and 24.2 percent, respectively, for health care expenditures when 1987 and 1997 were compared. Households 75 and over showed greatly increased spending on entertainment—almost double the 1987 level (up 97.9 percent). It is important to note that Russell compared spending in two different years, 1987 and 1997, while Paulin analyzed the period from 1984 to 1997.