A century of family budgets in the United States

Throughout the past 100 years, family budgets have been produced using a variety of methodologies; these budgets are compared with new budgets that have been derived using actual expenditures of families and Lucilla Tan are economists in the Division of Consumer Expenditure Surveys, Bureau of Labor Statistics. T he measurement of family budgets and budget standards dates back to the late 19th century. Such budgets have been used to develop cost-of-living estimates, to assess wage rates, and to examine the standard of living. Early budget standards and family budgets were based on two different methodologies: expert decisions were devised to ascertain how much income a family might require to reach a certain level of living, and estimates were obtained on the actual purchasing behavior of particular families. The first, prescriptive, method was often used to determine the " sufficient " amount needed to provide a " standard of health and decency " or some other measure of the level of living. The second, descriptive, method was often used to describe consumer spending and to determine cost-of-living indexes. 1 Prescriptive and descriptive types of family budgets were constructed at the Bureau of Labor Statistics throughout most of the 1900s. Prescriptive budgets attempt to determine a set of goods and the expenditures for each of the goods that might enable a family to attain a certain standard of living. These types of budgets were first developed in 1908–09, and there have been many subsequent estimates of fair, modest, adequate , and even minimally sufficient budgets. The BLS family budget program produced budget standards (using a prescriptive method) from 1966 to 1981. Alternatively, descriptive budgets represent observed expenditures for particular families at some point in the distribution of income or expenditures. Each year, BLS produces average expenditures for various family types, which can be viewed as types of descriptive budgets. This article reviews the historical estimates of these budgets and presents a descriptive budget that is constructed using expenditure data. Inspiration came from results presented by Pe-ter Saunders at the 1998 International Association for Research on Income and Wealth Conference , in which he compared the budget stan-were constructed using the recommendations of the Expert Committee on Family Budget Revisions (Expert Committee), which was charged with reviewing and recommending revisions to the BLS family budget program. The article also presents a general description of family budgets and budget standards, reviews the history of …