Consumption and Age

Some researchers have focused more specifically on older households. For example, Mohamed Abdel-Ghany and Deanna Sharpe compared expenditures of households with 65 to 74 year olds and households with members 75 and over using the 1990 CEX data. They found that expenditures for food at home, housing, transportation, and health care made up the largest share of expenses for both groups. Housing was the largest expenditure for each group. Transportation was the second highest expenditure for the 65 to 74 age group, and health care was the second highest expenditure for households 75 and over. In general, urban residents spent relatively more than rural households for food at home, housing, entertainment, and personal care, and relatively less for transportation and health care. The investigators suggested that rural residents may grow some of their own food, reducing expenditure for food at home, and urban residents may use public transportation and have a shorter distance to travel, reducing transportation costs.

Abdel-Ghany and Sharpe also found that households headed by college graduates spent relatively more than households headed by those who did not complete high school on items associated with an active social life: food away from home, alcohol and tobacco, apparel and apparel services, entertainment, and personal care. The results suggest that education influences consumers' tastes and preferences. Racial differences were observed as well. Compared to older white households, older African-American households spent significantly more on personal insurance and significantly less on food away from home and entertainment.

Compared to married-couple households, households headed by unmarried females spent significantly more for apparel and apparel services and significantly less on food at home, food away from home, alcohol and tobacco, health care, and personal care. Spending by households headed by unmarried males varied by age. The 65 to 74 year old unmarried-male households spent relatively more on food away from home, entertainment, and personal insurance; and significantly less on food at home, health care, and personal care, than did married couples age 65 to 74. Households headed by unmarried males age 75 and over spent significantly more on alcohol and tobacco and personal insurance than did married-couple households of the same age.

Based on their results, Abdel-Ghany and Sharpe concluded that households of 65 to 74 year olds had higher marginal propensities to spend for food at home, food away from home, alcohol and tobacco, transportation, entertainment, and personal insurance, compared to the 75 and over group. The 65 to 74 age group had a lower propensity to spend for housing, apparel and apparel services, health care, and personal care, compared to the 75 and over group.

In his study of CEX data from 1984 and 1997, Paulin observed that health care expenditures rose substantially for all groups during this period. His findings showed that those 65 and older, who made up about 20 percent of the sample being studied, accounted for nearly one-third of total health expenditures. He noted that health expenditure shares were most volatile for those age 75 and older. All groups spent a larger share of their health care dollars on health insurance in 1997, compared to 1984. Expenditures for drugs appeared to trend upward slightly as a share of the health care budget, at least for those 65 and older, but shares were most volatile for the 75 and older group.