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Imputing household spending in the Panel Study of Income Dynamics: a comparison of approaches

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  • Daniel H. Cooper

Abstract

One of the drawbacks of using household surveys to investigate macroeconomic issues has been a lack of a dataset that contains both adequate household expenditure data and comprehensive household wealth and income data. This paper compares alternative methods of imputing household expenditures in the Panel Study of Income Dynamics (PSID)?that of Blundell et al. (2006) and Cooper ( 2009). It also analyzes the additional expenditure questions included in the PSID starting in 1999 and expanded in 2005. The paper finds that the Blundell et al. (2006) method works well for imputing households' nondurable expenditures between 1980 and 2007. The results further show that the imputation method in Cooper (2009) dominates that of Blundell et al. (2006) for generating data on households? total expenditures. The decision of which imputation approach to use or whether to use the actual PSID expenditure data from 1999 to 2007 will depend on the user?s research question(s) and analysis goals.

Suggested Citation

  • Daniel H. Cooper, 2010. "Imputing household spending in the Panel Study of Income Dynamics: a comparison of approaches," Working Papers 10-12, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:10-12
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    References listed on IDEAS

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    1. Joachim Winter, 2004. "Response bias in survey-based measures of household consumption," Economics Bulletin, AccessEcon, vol. 3(9), pages 1-12.
    2. Ziliak, James P., 1998. "Does the choice of consumption measure matter? An application to the permanent-income hypothesis," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 201-216, February.
    3. Kerwin Kofi Charles & Sheldon Danziger & Geng Li & Robert F. Schoeni, 2006. "Studying consumption with the Panel Study of Income Dynamics: comparisons with the Consumer Expenditure Survey and an application to the intergenerational transmission of well-being," Finance and Economics Discussion Series 2007-16, Board of Governors of the Federal Reserve System (U.S.).
    4. Skinner, Jonathan, 1987. "A superior measure of consumption from the panel study of income dynamics," Economics Letters, Elsevier, vol. 23(2), pages 213-216.
    5. Richard Blundell & Luigi Pistaferri & Ian Preston, 2004. "Imputing consumption in the PSID using food demand estimates from the CEX," IFS Working Papers W04/27, Institute for Fiscal Studies.
    6. Daniel H. Cooper, 2009. "Impending U.S. spending bust?: the role of housing wealth as borrowing collateral," Public Policy Discussion Paper 09-9, Federal Reserve Bank of Boston.
    7. repec:ebl:ecbull:v:3:y:2004:i:9:p:1-12 is not listed on IDEAS
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    Cited by:

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    2. Gerencia de Riesgo Asobancaria, 2011. "Estimación de la Carga Financiera en Colombia," Temas de Estabilidad Financiera 056, Banco de la Republica de Colombia.
    3. Barry Z. Cynamon & Steven M. Fazzari, 2017. "Household Income, Demand, and Saving: Deriving Macro Data With Micro Data Concepts," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(1), pages 53-69, March.
    4. Petach, Luke & Tavani, Daniele, 2017. "Keeping up with the Joneses: Other-regarding Preferences and Endogenous Growth," EconStor Preprints 169416, ZBW - Leibniz Information Centre for Economics.
    5. Petach, Luke A. & Tavani, Daniele, 2021. "Consumption externalities and growth: Theory and evidence for the United States," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 976-997.

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