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The United States Department of Agriculture (USDA) prohibits discrimination in its programs on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, and marital or familial status. (Not ap prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact the USDA Office of Communications at (202) 720-5881 (voice) or (202) 720-7808 (TDD). To file a complaint, write the Secretary of Agriculture, U.S. Department of Agriculture, Washington, DC 20250, or call (202) 720-7327 (voice) or (202) 720-1127 (TDD). USDA is an equal employment opportunity employer. I F I A IMI I I L I y I I Editor Joan C. Courtless Editorial Assistant Jane W. Fleming E c Family Economics Review is written and published each quarter by the Family Economics Research Group, Agricultural Research Service. U.S. Department of Agriculture, Washington, DC. 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Family Economics Research Group, USDA/ARS, Federal Building. Room 439A, Hyattsville, MD 20782. Phone (301) 436-8461. N 0 M I C II II 1994 Vol.? No.3 Feature Articles s PROPER I Y Of THE LIBRARY AUG 15 1994 UniverSity of North Carolina at Greensboro 2 Expenditures on a Child by Families, 1993 Mark Lino 20 Income and Consumer Expenditures of Rural Elders F. N. Schwenk 28 Trends in Tobacco Use Joan C. Courtless Research Summaries 0 . r rr 40 Housing Vacancies and Home Ownership OF THE RY 42 Job-Related Education and Training '\ ;'; ~ 1994 Regular Items • Umver 1 1 ot I nrth f.arolin" ~t irE nstt r~l' 44 Recent Legislation Affecting Families 45 Data Sources 46 Charts From Federal Data Sources 48 Journal Abstracts and Book Summary 49 Poverty Thresholds 50 Cost of Food at Home 51 Consumer Prices 2 Feature Articles Expenditures on a Child by Families, 1993 By Mark Lino Economist Family Economics Research Group Child-rearing expenses consume a large proportion of a family's income. Using data from the 1990 Consumer Expenditure Survey, updated to 1993 dollars, this study examines expenditures on a child in husband-wife and single-parent families with two children. Estimates are provided for major components of the budget by age of child, family income, and region of residence. Overall expenses on a child increase with the age of the child and family income. Housing makes up the largest share of total expenditures on a child regardless of the child's age or household income. Families in the urban West generally have the highest child-rearing expenses. Also, families spend more or less on a child depending on the number of other children in the household and economies of scale. Results of this study should be of use in developing State child support guidelines and foster care payments as well as in family educational programs. [[] ince 1960, the Family Economics Research Group of the U.S. Department of Agriculture (USDA) has provided estimates of expenditures on a child from birth through age 17. These estimates are used in setting child support guidelines, foster care payments, and in educational programs on parenthood. Recent estimates have been based on 1987 expenditure data, updated using the Consumer Price Index (5,6). Because household expenditure patterns change, new estimates were derived using 1990 expenditure data updated to 1993 dollars. This study presents these new estimates for husbandwife and single-parent families. It briefly describes the data and methods used in calculating child-rearing expenses 1 and then discusses the estimated expenses. 1The report. "Expenditures on a Child by Familie , 1993: Technical Report," provides a more detailed description of the data and methodology. To obtain a copy, contact: USDA, ARS, Family Economics Research Group, Federal Building, Room 439A, 6505 Belcrest Rd. , HyattSv ille, MD 20782 (Telephone number: 30 1-436-8461 ). To partially adj ust for price differentials and varying patterns of expenditures, the child-rearing expense estimates for husband-wife families are provided for urban areas in four regions (Northeast, South, Midwest, and West) and rural areas throughout the United States-as well as for the United States overall.2 For single-parent families, estimates are provided only for the United States overall because of sample size limitations. Expenditures on a child are estimated for the major budgetary components: housing, food, transportation, clothing, health care, child care and education, and other miscellaneous goods and services. The box on p. 3 describes each expenditure component. 2Urban areas are defined as Metropolitan Statistical Areas (MSA' s) and other places of 2.500 or more people outside an MSA; rural areas are places of less than 2,500 people outside an MSA. Family Economics Review Source of Data Data used to estimate expenditures on a child are from the 1990 Consumer Expenditure Survey (CE), administered by the Bureau of Labor Statistics (BLS). The CE collects information on sociodemographic characteristics and income of households as well as expenditures. The CE, ongoing since 1980, interviews about 5,000 households each quarter over a 1-year period. Each quarter is deemed an independent sample by BLS, bringing the total number of households in the 1990 survey to about 20,000. From these households, the following husband-wife and single-parent families were selected for this study: those (l) with at least one own child age 17 or under in the household, (2) with six or fewer children, (3) with no other related or umelated people present in the household except own children, and (4) who were complete income reporters. Complete income reporters are households that provided values for major sources of income, such as wages and salaries, self-employment income, and Social Security income. Quarterly expenditures were annualized. The sample was weighted to reflect the U.S. population. Methodology The CE collects overall household expenditure data for some budgetary components (housing, food, transportation, health care, and other miscellaneous goods and services) and child-specific expenditure data for other components (clothing, child care, and education). Multivariate analysis was used to estimate household and child-specific expenditures, controlling for income level, family size, and age of the younger of two children so estimates could be made for families with these varying characteristics. Regional estimates were derived by controlling for region. The 1994 Vol. 7 No.3 Housing expenses include shelter (mortgage interest, property taxes, or rent; maintenance and repairs; and insurance), utilities (gas, elecuicity, fuel, telephone, and water), and house furnishings and equipment (furniture, floor coverings, major appliances, and small appliances). It should be noted that for homeowners, housing expenses do not include mortgage principal payments; such payments are considered in the CE to be a part of savings. Therefore, total dollars allocated to housing by homeowners are underestimated in this report. Food expenses include food and nonalcoholic beverages purchased at grocery stores, convenience stores, and specialty stores; dining out at restaurants; and school meals. Transportation expenses include the net outlay on purchase of new and used vehicles, vehicle finance charges, gasoline and motor oil, maintenance and repairs, insurance, and public transportation. Clothing expenses include children's apparel items such as diapers, shirts, pants, dresses, and suits; footwear; and clothing services such as dry cleaning, alteration and repair, and storage. Health care expenses include medical and dental services not covered by insurance, prescription drugs and medical supplies not covered by insurance, and health insurance premiums not paid by employer or other organization. Child care and education expenses include day care tuition and upplies; babysitting; and elementary and high school tuition, books, and supplies. Other miscellaneous expenses include personal care items, entertainment, and reading materials. three income groups of husband-wife households (1990 before-tax income under $28,900, between $28,900 and $48,900, and over $48,900) were determined by dividing the sample for the overall United States into equal thirds. For each income level, the estimates were for husband-wife families with two children, with the younger child in one of six age categories (0-2, 3-5, 6-8, 9-11, 12-14, and 15-17 years). Households with four members (two children) were selected as the standard since this was the average size of two-parent families in 1990. The focus was on the younger child in a household since the older child was sometimes over age 17. It should be noted that the estimates include two-parent households with and without pecific expenses; so for some families, the mean e timates may be higher or lower depending on whether they incur the expen e or not. This particularly applies to child care and education estimates-about 50 percent of families in the study had no expenditures for this budgetary component. Also, the estimates only cover out-ofpocket expenditures on a child made by the parents and not by others such as grandparents or friends. In addition, the three income categories were calculated for the overall United State by dividing the sample into equal thirds. Regional income categories are based on the e national income categories and may not represent equal thirds in each area. 3 After the various overall household and child- pecific expenditures were estimated, these total amounts were allocated among the four family member (husband, wife, older child, and younger child). Since the estimated expenditures for clothing and child care and education were only for children, allocations of these expenses were made by dividing the estimated expenditures by two (the number of children in the household). Because the CE did not collect expenditures on food and health care by family member, data from other Federal studies were used to apportion these budgetary components to a child by age. Food budget shares as a percentage of total food expenditures, for the younger child in a husband-wife household with two children, were determined using the 1992 USDA food plans (8). These shares were estimated by age of the child and household income level. The food budget shares were then applied to estimated household food expenditures to determine food expenses on a child. Health care shares as a percentage of total health care expenses for the younger child in a husband-wife household with two children were calculated from the 1987 National Medical Expenditure Survey (4). These shares were estimated by age of the child and applied to estimated household health care expenditures to determine expenses on a child. Unlike food and health care, no authoritative base exists for allocating estimated household expenditures on housing, transportation, and other miscellaneous goods and services among individual hou ehold members. Two of the most common approaches for allocating these expenses are the marginal cost method and the per capita method. The marginal cost method measures expenditures on a child as the difference in expenses between a couple with children and an 4 equivalent childless couple. The method depends on development of an equivalency measure; however, there is no universally accepted measure. Various measures have been proposed, each yielding different estimates of expenditures on children.3 Some of the marginal cost approaches assume that parents do not alter their expenditures on themselves after a child is added to a household. In addition, couples without children often buy homes larger than currently needed in anticipation of children. Comparing the expenditures of these couples to similar couples with a child could lead to underestimating the expenditures on a child. For these reasons, the per capita method was used for this study. The per capita method simply allocates expenses among household members in equal proportions. Although the per capita method has its limitations, these limitations were considered less severe than those of the marginal cost approach. A major limitation of the per capita method is that expenditures for an additional child may be less than average expenditures. Because of this, adjustment formulas for cases of one child or three or more children were devised for use when estimating expenditures on a child for households of different sizes. These formulas are discussed later on. Transportation expenses resulting from employment activities are not related to expenses on a child, so these costs were excluded from the estimated household transportation expenses using data from a 1990 study by the U.S. Department of Transportation (12 ). 3For a review of equivalency measures and estimates of expenditures on chi ldren resulting from them, see U.S. Department of Health and Human Services, Administration for Children and Families, 1990, Estimates of Expenditures on Children and Child Support Guidelines (II). Estimated Expenditures on a Child Estimates of family expenditures on the younger child in a husband-wife household with two children for the overall United States, urban regions of the country, and overall rural areas are presented in tables 3-9 on pp. 13-19. Income levels of households were updated to 1993 dollars using the all-items category of the CPI-U, and expenditures were updated using the CPI for the corresponding item (that is, the CPI's for housing, food, etc.). Regional estimates were updated to 1993 dollars using the regional CPI's. Given the large amount of information in the tables, the following subsections highlight the child-rearing expense estimates for the younger child in a two-child household for the overall United States by income level, budgetary component, and age of the child, as well as expense estimates by region. Income Level Estimated expenses on a child vary considerably by household income level (fig. 1). Depending on age of the child, the expenses range from $4,960 to $6,260 for families in the lowest income group ( 1993 before-tax income less than $32,000), from $6,870 to $8,300 for families in the middle income group ( 1993 before-tax income between $32,000 and $54,100), and from $10,210 to $1 I ,790 for families in the highest . income group ( 1993 before-tax income more than $54,100). On average, households in the lowest group spent 27 percent of their before-tax income on a child, those in the middle income group, 17 percent, and those in the highest income group, 13 percent. The range in these percentages would be narrower if after-tax income were considered, since a greater proportion of income in higher income households goes toward taxes. Family Economics Review Figure 1. Estimated 1993 annual family expenditures on a child, by before-tax income level and age of child1 Dollars 12,000 10,000 8,000 6,000 4,000 2,000 0 0-2 3-5 6-8 9-11 12-14 15-17 Age of child 0 Less than $32,000 $32,000-$54,100 • More than $54,1 00 1U.S. average for younger child in two-child family. Although families in the highest income group spent slightly less than twice the amount that families in the lowest income group spent on a child, on average, the amount varied by budgetary component. In general, expenses on a child for goods and services considered to be necessities (such as food) did not vary as much as those considered to be discretionary (such as other miscellaneous expenses) among households in the three income levels. For example, food expenses on a child age 15-17 averaged $1,490 in the lowest income group and $2, 140 in the highest income group, a 44-percent difference. Other miscellaneous expenses on the same age child averaged $540 in the lowest income group and $1,370 in the highest income group, a 154-percent difference. 1994 Vol. 7 No.3 Budgetary Component As a proportion of total child-rearing expenses, housing accounted for the largest share; figure 2 shows this for families in the middle income group. Based on an average for the six age groups, housing accounted for 31 percent of child-rearing expenses for a child in the lowest income group, 33 percent in the middle income group, and 36 percent in the highest income group. Food was the second largest average expense on a child for families regardless of income level, accounting for 20 percent of child-rearing expenses for a child in the lowest income group, 18 percent in the middle income group, and 16 percent in the highest income group. Transportation was the third largest child-rearing expense, making up 14 to 17 percent of child-rearing expenses across income levels. • In general, expenses on a child for goods and services considered to be necessities {such as food) did not vary as much as those considered to be discretionary {such as other miscellaneous expenses) ... 5 6 Expenditures on a child were lower in the younger age categories and higher in the older age categories. This held across income groups ... ---------------------------------- Figure 2. Estimated 1993 family expenditures on a child through age 17, by budgetary share1 Food Other Child Care & Education Clothing Health 1U.S. average for middle income families (1993 before-tax income between $32,000 and $54,100). Clothing was the fourth largest expense on a child for families in the lowest income group (10 percent of child-rearing expenses), whereas other miscellaneous goods and services (personal care items, entertainment, and reading materials) made up the fourth largest expense on a child for families in the middle (10 percent of child-rearing expenses) and highest (12 percent) income groups. Clothing accounted for 8 and 7 percent of expenses on a child for families in the middle and highest income groups. These estimates of children's clothing expenses do not include clothing received in the form of gifts or hand-me-downs. Child care and education were 6 to 9 percent, and health care 5 to 7 percent of child-rearing expenses across income groups. For health care, these estimated expenditures include only out-of-pocket expenses and not that portion covered by health insurance. Age of Child Expenditures on a child were lower in the younger age categories and higher in the older age categories. This held across income groups (figure 3 depicts this for families in the middle income group) even though housing expenses, the highest child-rearing expenditure, generally declined as the child grew older. The decline in housing expenses reflects diminishing interest paid by homeowners over the life of a mortgage. Payments on p1incipal are not considered part of housing costs in the CE. Child-rearing food, transportation, clothing, and health care expenses generally increased over age of a chi ld for all three income levels. Transportation expenses were highest for a child age 15-17, when he or she would start driving. Child care and education expenses were highest for a child under age 6. Most of this expense may be attributable to child care at this age. The estimated expenses for child care and education may seem low for those with the expense. However, as previously discussed, households with and without the expense are included in the estimates. Family Economics Review Figure 3. Estimated 1993 annual family expenditures on a child, by age and budgetary share 1 Percent $6,870 $7,220 $7,460 100 $6,980 $7,390 $8,300 Other t----; Child Care & Education 80 Health Clothing 60 Transportation 40 Food 20 Housing 0 0-2 3-5 6-8 9-11 12-14 15-17 Age of child 1U.S. average for middle income families (1993 before-tax income between $32,000 and $54,100). Region Child-rearing expenses in the various regions of the country reflect patterns observed in the United States overall. In each region, expenses on a child increased with income level of the household and, generally, with age of the child. Overall child-rearing expenses were highest in the urban West, followed by the urban Northeast, urban South, and rural areas; figure 4 shows total child-rearing expenses by region and age of a child for middle income families. Child-rearing expenses were lowest in the urban Midwest; households in the urban Midwest had child-rearing expenses that averaged 2 to 3 percent below those of households in rural areas. This is contrary to previous estimates by the Family Economics Research Group where rural areas had the lowest child-rearing expense estimates and the urban Midwest the second lowest. 1994 Vol. 7 No. 3 Much of the difference in expenses on a child among regions was related to housing costs. Total housing expenses on a child were highest in the urban West and lowest in rural areas. However, child-rearing transportation expenses were highest for families in rural areas. This likely reflects the longer distances that must be traveled and the lack of public transportation in these areas. Adjustments for Older Children and Household Size The expense estimates on a child represent expenditures on the younger child at various ages in a husband-wife household with two children. It cannot be assumed that expenses for the older child are the same at these various ages. Expenses may vary by birth order. To determine whether a difference exists, the extent of this difference, and how the expenditures may be adjusted to estimate expenses on an older child, the method described on pp. 3-4 was repeated, with the focus being on the older child in each of the same age categories as used with the younger child. A family with two children was again used as the standard. Household income and region of residence were not held constant, so findings are applicable to all families . It was found that, on average, husbandwife household with two children spent about the same amount on a younger and older child (except for differences caused by age). So, the figures in tables 3-9 reflect expenditures on either child in a two-child family. Thus, annual expenditures on children in a husbandwife, two-child family may be estimated by summing the expenses for the two appropriate age categories. For example, annual expenditures on children ages 9-11 and 15-17 in a husband-wife family in the middle income group for the overall United States would be $15,280 ($6,980 + $8,300). The estimates should also be adjusted if a household has only one child or more than two children. Families will spend more or less on a child depending on the number of other children in the household and economies of scale. To derive these adjustments, multivariate analysis was used to estimate expenditures for each budgetary component controlling for household size and age of the younger child, but not household income level and region of the country, so the results are applicable to all families. These expenditures were then assigned to a child using the method previou ly described. Compared with expenditures for each child in a husband-wife, twochild family, husband-wife households with one child spent an average of 26 percent more on the single child, and those with three or more children spent an average of 22 percent less on each child. 7 Therefore, to adju t the figures in table 3-9 to estimate annual overall expenditures on an only child, 26 percent should be added to the total expense for the child's age category. To estimate expenditures on three or more children, 22 percent should be subtracted from the total expense for each child's age category and the e totals should be summed. As an example of adjustments needed for different numbers of children, the total expenses for a middle income family in the overall United States on a child age 15-17 with no siblings would be $10,460 ($8,300 x 1.26) and the total expense on three children ages 3-5, 12-14, and 15-17 would be $17,870 (($7,220 + $7,390 + $8,300) X .78). Expenditures by Single-Parent Families The estimates of expenditures on a child by husband-wife families do not apply to single-parent families, which account for an increasing percentage of families with children. Therefore, separate estimates of child-rearing expenses in single-parent households were made using CE data. Most si ngleparent families in the survey (91 percent) were headed by a woman. The method used in determining childrearing expenses for two-parent households was followed. Multivariate analysis was used to estimate expenditures for each budgetary component, controlling for income level, household size (a single parent with two children was used as the standard), and age of the younger child (the same age categories as used with children in two-parent families). Income groups of single-parent households (1990 before-tax income under $28,900 and $28,900 and over) were selected to correspond with the income groups used in estimating child-rearing expenditure in husband-wife households. This income includes child support payments. The two higher 8 Figure 4. Estimated 1993 annual family expenditures on a child, by region and age 1 1993 dollars 9,000 8,500 8,000 7,500 ·-- ---- 7,000 6,500 j(' _, -" ---- A / / ,-11 / // 6,000 ';;--::;:---::;-;:------:;:-;::------;:::--:;-7----:;-;::--:;-::----:;-;::~ 0-2 3-5 6-8 9-11 12-14 15-17 Age of child Urban Midwest Rural Urban South Urban Northeast Urban West - - 1U.S. average for middle income families in 1993. income groups of two-parent fami lies ( 1990 before-tax income between $28,900 and $48,900 and over $48,900) were combined because only 16 percent of single-parent households had a 1990 before-tax income of $28,900 and over. The sample was weighted to reflect the U.S. population. Children's clothing and child care and education expenditures were divided between the two children in the oneparent household. For food and health care, household member shares were calculated for a three-member household (single parent and two children, with the younger child in one of the six age categories) using the USDA food plans and the 1987 National Medical Expenditure Survey findings. These shares for the younger child in a singleparent family were then applied to estimated food and health care expenditures to determine expenses on the younger child in each age category. • - Housing, transportation, and other miscellaneous expenditures were allocated among household members on a per capita basis. Transportation expenses were adjusted to account for nonemployment-related activities in single-parent families. Income and expenses were updated to 1993 dollars. Child-rearing expense estimates forsingle- parent families are in table 9. For the lower income group ( 1993 before-tax incomes less than $32,000), a comparison of estimated expenditures on the younger child in a single-parent family with two children with those in a husband-wife family is presented in table I; as previously discussed, 84 percent of single-parent familie and 33 percent of husband-wife fami lies were in this lower income group. More single-parent than husband-wife families fell in the bottom range of this lower income group. Average income for single-parent families in the lower Family Economics Review Table 1. A comparison of estimated 1993 expenditures on a child by single-parent and husband-wife families 1 Single-parent Husband-wife Age of child households households 0-2 $4,310 $4,960 3-5 4,970 5,260 6-8 5,710 5,520 9- II 4,980 5,070 12- 14 5,350 5,500 15 - 17 6,400 6,260 Total (0 - 17) $95,160 $97,710 1 Estimate> are for the younger child in a two-child family in the overall United States with 1993 beforetax income less than $32,000. income group was $13,700, compared with $20,000 for husband-wife families in this income group. However, total expenditures on a child through age 17 were, on average, only 3 percent lower in single-parent households than in twoparent households. Single-parent families in this lower income group, therefore, spend a larger proportion of their income on children. On average, housing and clothing expenses were higher, whereas transportation, health care, child care and education, and other miscellaneous expenditures on a child were lower in single-parent than in husband-wife households. Childrelated food expenditures were similar, on average, in single-parent and in twoparent families. For the higher income group of singleparent families (1993 before-tax income of $32,000 or over), child-rearing expense estimates were about the same as those for two-parent households in the before-tax income group of $54,100 or over: Total expenses for the younger child through age 17 were $192,930 for single-parent families versus $192,780 for husband-wife families. Therefore, child-rearing expenses for the higher income group of single-parent families 1994 Vol. 7 No. 3 also consume a larger proportion of income than in husband-wife families. It appears that expenditures on children do not differ very much between singleparent and husband-wife households. What differs is household income levels. As single-parent families have one less potential earner (the absent partner), on average, their total household income is lower and child-rearing expenses are a greater percentage of this income. Estimates only cover out-of-pocket child-rearing expenditures made by the parent with primary care of the child and do not include child-related expenditures made by the parent without primary care or others, such as grandparents. Such expenditures could not be estimated from the data. Overall expenses by both parents on a child in a single-parent household, therefore, are likely greater than this study's estimates. To determine the extent of the difference in expenditures on an older child in single-parent households, the previous procedure was essentially repeated with the focus being on the older child. A family with two children was used as the standard. On average, single-parent households with two children spent about 8 percent le s on the older than 0 It appears that expenditures on children do not differ very much between single-parent and husband-wife households. What differs is household income levels. 9 on the younger child (in addition to differences caused by age). This contrasts with husband-wife households that spent about the same amount on the older and younger child. A with husband-wife households, more or less is spent if a single-parent household has only one child or three or more children. To determine these differences, multivariate analysis was used to estimate expenditures for each budgetary component controlling for household size and age of the younger child. These expenditures were then assigned to a child using the previous method. Compared with expenditures for the younger child in a single-parent, twochild family, single-parent households with one child spent about 37 percent more on the single child, and those with three or more children spent about 28 percent less on each child. Comparisons With Past Estimates The child-rearing expense estimates presented in this study are based on data from the 1990 CE updated to 1993 dollars. Previous expense estimates of the Family Economics Research Group were based on the 1987 CE updated to 1992 prices (9). Table 2 compares the 1992 and 1993 overall U.S. estimates of expenditures on the younger child in a two-child household for husband-wife and single-parent families. The before-tax income of the bottom third income group was slightly lower in 1993 than in 1992. This represents a decline in real income for lower income families. For husband-wife households in the lower income group, although the real income of these families declined, estimated expenses on children increased by about 6 percent from 1992 to 1993. This increase was greater than the inflation rate of 3 percent over this period (1 0). 10 ---- ------------------------~~~ Table 2. Comparison of estimated 1992 and 1993 total (from birth to age 18) expenditures on a child by husband-wife and single-parent families, overall United States 1 1992 1993 Before-tax income Total expenditures Before-tax income Total expenditures Husband-wife families Less than $32,100 $92,070 Less than $32,000 $97,710 $32,100 to $51,900 $128,670 $32,000 to $54, I 00 $132,660 More than $51 ,900 $180,690 More than $54,100 $192,780 Single-parent families Less than $32,100 $96,630 Less than $32,000 $95,160 $32,100 or more $179,730 $32,000 or more $192,930 1 Estimates are forthe younger child in a two-child family. The middle income group of husbandwife families experienced a 3-percent increase in child-rearing expenses and the higher income group a 7-percent increase. In addition to increases in expenditures by husband-wife families on the younger child in a two-child household, there have been changes in expenses on the older child and expenses on an only child or three or more children. Findings based on the 1987 CE showed that husband-wife households spent about 3 percent more on an older child than a younger child (in addition to differences caused by age). In contrast, when the 1990 CE and more current data for allocating various budgetary components were used, no difference in expenses between the older and younger child was found. Also, using the 1990 CE, husband-wife families spent 26 percent more on an only child than on a child in a two-child family, compared with 21 p·ercent more using the 1987 CE. Husband-wife families with three or more children spent 22 percent less on each child using either the 1987 or the 1990 CE. Based on the more recent expenditure data and more recent sources for allocating food, transportation, and health care expenses, single-parent families in the lower income group spent 2 percent less on a younger child in a two-child family in 1993 than in 1992, whereas those in the higher income group spent 7 percent more. Single-parent families spent 8 percent less on an older child using the 1990 CE, compared with 11 percent less using the 1987 CE. Using either the 1987 or the 1990 CE, single-parent households spent 37 percent more on an only child than on a child in a twochild family. In cases of three or more children, single-parent families spent 28 percent less on each child than in a two-child family using the 1990 CE, whereas they spent 26 percent less on each child using the 1987 CE. These differences in child-rearing expense estimates show the need to update such estimates using the most recent expenditure data and the most recent studies to allocate various budgetary components among family members. Parental expenditures on children not only change with the general cost of living but with different economic and social conditions. Family Economics Review Estimating Future Costs The estimates presented in this study represent household expenditures on a child of a certain age in 1993. To estimate these expenses for the first 17 years, future price changes need to be incorporated in the figures. To do this, a future cost formula is used such that: CJ= Cp(l + i)" where: Cj= projected future annual dollar expenditure on a child of a particular age Cp =present (1993) annual dollar expenditure on a child of a particular age i =projected annual inflation (or deflation) n = number of years from present until child will reach a particular age An example of estimated future Estimated annual expenditures on a child born in 1993, by income group1 expenditures on the younger child in a husband-wife family with two Income group children for each of the three in- Year Age Lowest Middle Highest come groups for the overall United States is presented. The example assumes a child is born in 1993, 1993 <1 $4,960 $6,870 $10,210 reaching age 17 in the year 2010, 1994 1 5,260 7,280 10,820 and the average annual inflation 1995 2 5,570 7,720 11,470 rate over this time is 6 percent (the average annual inflation rate over 1996 3 6,260 8,600 12,660 the past 20 years) (10). As can be 1997 4 6,640 9,120 13,420 seen, total family expenses on a 1998 5 7,040 9,660 14,230 child through age 17 would be $170,920,$231,140, and $334,590 1999 6 7,830 10,580 15,250 for households in the lowest, mid- 2000 7 8,300 11 ,220 16,160 die, and highest income groups, 2001 8 8,800 11,890 17,130 respectively. In 1993 dollar values, these figures would be $97,710, 2002 9 8,570 11,790 17,230 $132,660, and $192,780. 2003 10 9,080 12,500 18,270 Inflation rates other than 6 percent 2004 11 9,620 13,250 19,360 could be substituted into the for- 2005 12 11 ,070 14,870 21,490 mula if projections of these rates 2006 13 11,730 15,760 22,780 vary in the future. Also, it is some-what unrealistic to assume that 2007 14 12,430 16,710 24,150 households remain in one income 2008 15 15,000 19,890 28,260 category as a child grows older. For 2009 16 15,900 21,080 29,950 most families, income rises over 2010 17 16,860 22,350 31,750 time. In addition, such projections assume child-rearing expenditures Total $170,920 $231,140 $334,590 change only with inflation. Com-parisons of the estimates using the 1 Estimates are for the younger child in a husband-wife family with two chi ldren for the overall United 1987 CE and 1990 CE show that States. parental expenditure patterns change over time. 1994 Vol. 7 No.3 11 Other Expenditures on Children Expenditures on a child estimated in this study were composed of direct parental expenses made on a child through age 17 for seven major budgetary components. These direct expenditures excluded costs related to childbirth and prenatal health care. In 1991, these particular health care costs averaged $4,720 for a normal delivery and $7,826 for a cesarean delivery (3). These costs may be reduced by health insurance. One of the largest expenses related to a child after age 17 is for a college education. The College Board (2) estimated that in 1993-94, average annual tuition and fees were $2,240 at 4-year public colleges and $9,516 at 4-year private colleges; annual room and board was $3,566 at 4-year public colleges and $4,226 at 4-year private colleges. For 2-year colleges in 1993-94, average annual tuition and fees were $1,271 at public colleges and $5,991 at private ones; annual room and board was $3,820 at 2-year private colleges (no estimates were given for 2-year public colleges). Other parental expenses on a child after age 17 could include those associated with a child living at home and gifts and contributions to a child after this age. Indirect costs involved in the rearing of children were also not included in the estimates. Although these costs are typically more difficult to measure than direct expenditures, they may be substantial. The time involved in rearing children is considerable. The dollar value of household work done by nonBlack married women in 1988 was estimated to be between $8,750 and $10,830; that of non-Black males was estimated to be between $3,200 and $7,080 (1). In addition, earnings and 12 future career opportunities may be diminished because time in the labor force for one or both parents is reduced to care for children. For women who References gave birth, one study found that the earnings foregone in the year of birth and in the two subsequent years averaged $14,400 in 1986 dollars (7). 1. Bryant, W.K., Zick, C.D., and Kim, H. 1992. The Dollar Value of Household Work. College of Human Ecology, Cornell University. 2. The College Board. 1993. News from the College Board. September 22 issue. 3. Health Insurance Association of America. 1992. Source Book of Health Insurance Data. [1992 ed.] Washington, DC. 4. Lefkowitz, D., and Monheit, A. 1991. Health Insurance, Use of Health Services, and Health Care Expenditures (AHCPR Pub. No. 92-0017). National Medical Expenditure Survey Research Findings 12, Agency for Health Care Policy and Research, Public Health Service, Rockville, MD. 5. Lino, M. 1990. Expenditures on a child by husband-wife families. Family Economics Review 3(3):2-18. 6. Lino, M. 1991. Expenditures on a child by single-parent families. Family Economics Review 4(/):2-7. 7. Spalter-Roth, R.M., and Hartmann, H.l. 1990. Unnecessary Losses: Costs to Americans of the Lack of Family and Medical Leave. Institute for Women's Policy Research, Washington, DC. 8. U.S. Department of Agriculture, Human Nutrition Information Service. 1992. Cost of food at horne. Family Economics Review 5(3):37. 9. U.S. Department of Agriculture, Agricultural Research Service, Family Economics Research Group. 1993. Expenditures on a Child by Families, 1992. I 0. U.S. Department of Commerce, Bureau of the Census. 1993. Statistical Abstract of the United States, 1993. [113th ed.] 11. U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. 1990. Estimates of Expenditures on Children and Child Support Guidelines. 12. U.S. Department of Transportation, Federal Highway Administration. 1990 Nationwide Personal Transportation Study (forthcoming). Family Economics Review Table 3. Estimated annual expenditures on a child by husband-wife families, overall United States, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Othe,2 Income: Less than $32,000 (Average income=$20,000) 0- 2 . . .. . . .. 4,960 1,870 730 720 380 330 530 400 3- 5 ... .. . .. 5,260 1,910 830 740 380 330 600 470 6- 8 . . .. .. .. 5,520 1,830 1,040 960 450 370 290 580 9- 11 . ... .. . 5,070 1,490 1,240 810 450 410 180 490 12-14 ....... 5,500 1,530 1,220 1,010 720 380 110 530 15-17 ....... 6,260 1,550 1,490 1,270 730 460 220 540 Total (0- 17) . . 97,710 30,540 19,650 16,530 9,330 6,840 5,790 9,030 Income: $32,000 to $54,100 (Average income=$42,600) 0- 2 .. . . . . . . 6,870 2,560 870 1,080 450 410 840 660 3-5 . ..... . . 7,220 2,600 1,020 1 '100 440 400 930 730 6-8 ... .. . . . 7,460 2,520 1,270 1,320 530 470 510 840 9- 11. . .... . 6,980 2,190 1,500 1,170 520 510 340 750 12- 14 ... . ... 7,390 2,220 1,490 1,370 830 470 220 790 15-17 . . . .. . . 8,300 2,250 1,750 1,650 850 560 440 800 Total (0- 17) .. 132,660 43,020 23,700 23,070 10,860 8,460 9,840 13,710 Income: More than $54,100 (Average income=$79,400) 0-2 . .... . . . 10,210 4,050 1,200 1,330 600 480 1,320 1,230 3-5 .. . . . . . . 10,630 4,090 1,370 1,360 600 480 1,430 1,300 6-8 . . ...... 10,750 4,010 1,620 1,580 700 560 870 1,410 9- 11 . . . ... . 10,200 3,670 1,870 1,430 690 600 620 1,320 12- 14 . ..... . 10,680 3,710 1,890 1,630 1,090 570 430 1,360 15-17 ....... 11 ,790 3,730 2,140 1,920 1 '11 0 660 860 1,370 Total (0- 17) . . 192,780 69,780 30,270 27,750 14,370 10,050 16,590 23,970 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. 1994 Vol. 7 No. 3 13 Table 4. Estimated annual expenditures on a child by husband-wife families, urban West, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Other2 Income: Less than $32,100 (Average income=$20,200) 0- 2 . ....... 5,470 2,230 770 820 380 290 550 430 3-5 . .... ... 5,730 2,250 870 850 370 280 610 500 6-8 ....... . 6,030 2,200 1,090 1,060 450 320 300 610 9- 11 ....... 5,650 1,920 1,300 910 440 360 190 530 12-14 ....... 6,000 1,900 1,270 1,120 700 330 110 570 15-17 ..... .. 6,800 1,960 1,540 1,380 710 400 230 580 Total (0- 17) .. 107,040 37,380 20,520 18,420 9,150 5,940 5,970 9,660 Income: $32,100 to $54,400 (Average income=$42,900) 0- 2 .... . ... 7,410 2,920 910 1,200 440 360 880 700 3-5 . ....... 7,760 2,950 1,070 1,220 440 360 960 760 6-8 ........ 8,000 2,900 1,330 1,440 520 410 520 880 9- 11 .. ... .. 7,590 2,620 1,570 1,290 520 450 350 790 12-14 .. ..... 7,930 2,600 1,540 1,500 810 420 230 830 15-17 ....... 8,870 2,660 1,810 1,770 830 500 460 840 Total (0- 17) .. 142,680 49,950 24,690 25,260 10,680 7,500 10,200 14,400 Income: More than $54,400 (Average income=$79,900) 0-2 ........ 10,690 4,330 1,230 1,450 590 440 1,380 1,270 3-5 ........ 11,110 4,360 1,400 1,480 590 440 1,500 1,340 6-8 ........ 11,200 4,300 1,660 1,700 680 510 900 1,450 9- 11 ... . ... 10,740 4,020 1,930 1,540 680 550 650 1,370 12-14 ....... 11 '130 4,000 1,930 1,750 1,070 520 450 1,410 15-17 ....... 12,320 4,060 2,190 2,040 1,090 600 920 1,420 Total (0- 17) .. 201 ,570 75,210 31 ,020 29,880 14,100 9,180 17,400 24,780 1 Estimates are based on data from the 1990 Consumer Expenditure SuNey updated to 1993 dollars using the regional CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. The Western region consists of the following States: Alaska Nevada Arizona California Colorado Hawaii Idaho Montana 14 New Mexico Oregon Utah Washington Wyoming Family Economics Review Table 5. Estimated annual expenditures on a child by husband-wife families, urban Northeast, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Other2 Income: Less than $32,100 (Average income=$20,100) 0-2 ........ 5,130 2,070 830 700 380 320 420 410 3- 5 ........ 5,390 2,100 930 730 380 310 470 470 6- 8 ...... .. 5,770 2,040 1,160 950 450 360 220 590 9- 11 . ... ... 5,400 1,760 1,380 790 450 390 130 500 12-14 .. . . . . . 5,820 1,750 1,350 1,010 720 370 80 540 15-17 ... . ... 6,550 1,800 1,620 1,260 730 430 160 550 Total (0- 17) .. 102,180 34,560 21 ,810 16,320 9,330 6,540 4,440 9,180 Income: $32,100 to $54,300 (Average income=$42,800) 0-2 .. ...... 7,030 2,770 970 1,080 450 400 690 670 3-5 ....... . 7,370 2,800 1,120 1,110 440 390 770 740 6- 8 . . ... . .. 7,690 2,740 1,400 1,330 530 450 390 850 9 - 11 ....... 7,320 2,460 1,640 1,170 530 490 260 770 12- 14 ....... 7,710 2,440 1,630 1,380 840 460 160 800 15-17 .. .. ... 8,580 2,500 1,890 1,660 850 540 330 810 Total {0- 17) .. 137,100 47,130 25,950 23,190 10,920 8,190 7,800 13,920 Income: More than $54,300 (Average income=$79,800) 0- 2 ........ 10,250 4,170 1,280 1,340 600 480 1,130 1,250 3-5 . .. . .... 10,640 4,200 1,460 1,370 600 470 1,230 1,310 6-8 . ....... 10,840 4,150 1,720 1,590 690 550 710 1,430 9- 11 ....... 10,420 3,870 2,000 1,430 690 590 500 1,340 12-14 ... .... 10,860 3,850 2,000 1,640 1,090 560 340 1,380 15-17 . ...... 11,920 3,900 2,260 1,930 1,110 640 690 1,390 Total {0- 17) . . 194,790 72,420 32,160 27,900 14,340 9,870 13,800 24,300 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the regional CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. The Northeastern region consists of the following States: Connecticut New York Maine Pennsylvania Massachusetts Rhode Island New Hampshire Vermont New Jersey 1994 Vol. 7 No.3 15 Table 6. Estimated annual expenditures on a child by husband-wife families, urban South, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Othe~ Income: Less than $31,800 (Average income=$20,000) 0-2 ... 0 0 0 0 0 4,850 1,830 690 580 410 380 590 370 3-5 0 0 0 0 0 0 0 0 5,120 1,860 790 610 400 370 650 440 6- 8 0 0 0 0 0 0 0 0 5,390 1,800 990 820 480 430 330 540 9 - 11 0 0 0 0 0 0 0 5,010 1,530 1 '190 670 480 470 210 460 12-14 ....... 5,380 1,510 1 '160 880 760 440 130 500 15-17. ······ 6,160 1,560 1,420 1,130 770 510 260 510 Total (0 -17) .. 95,730 30,270 18,720 14,070 9,900 7,800 6,510 8,460 Income: $31,800 to $53,900 (Average income=$42,400) 0- 2 0 0 0 0 0 0 0 0 6,800 2,520 840 950 480 460 920 630 3-5 0 0 0 0 0 0 0 0 7,130 2,540 980 980 480 460 1,000 690 6- 8 0 0 0 0 0 0 0 0 7,370 2,490 1,230 1,200 560 530 560 800 9- 11 0 0 0 0 0 0 0 6,930 2,210 1,450 1,040 560 570 380 720 12- 14. 0 0 0 0 0 0 7,310 2,200 1,430 1,250 880 540 250 760 15-17 ..... 00 8,260 2,250 1,690 1,520 900 620 510 770 Total (0- 17) .. 131 ,400 42,630 22,860 20,820 11,580 9,540 10,860 13,110 Income: More than $53,900 (Average income=$79,100) 0-2 0 0 0 0 0 0 0 0 10,050 3,900 1,150 1,210 640 550 1,410 1,190 3- 5 0 0 0 0 0 0 0 0 10,440 3,930 1,310 1,240 640 550 1,520 1,250 6-8 0 0 0 0 0 0 0 0 10,560 3,880 1,550 1,450 740 640 940 1,360 9- 11 0 0 0 0 0 0 0 10,090 3,600 1,810 1,300 730 680 690 1,280 12- 14. 0 0 0 0 0 0 10,500 3,580 1,810 1,510 1,150 640 490 1,320 15-17 ... . ... 11 ,710 3,640 2,060 1,780 1,180 730 990 1,330 Total (0- 17) . . 190,050 67,590 29,070 25,470 15,240 11,370 18,120 23,190 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the regional CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. The Southern region consists of the following States: Alabama Kentucky South Carolina Arkansas Louisiana Tennessee Delaware Maryland Texas District of Columbia Mississippi Virginia Florida North Carolina West Virginia Georgia Oklahoma 16 Family Economics Review Table 7. Estimated annual expenditures on a child by husband-wife families, urban Midwest, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Othe,-2 Income: Less than $31,800 (Average income=$19,900) 0-2 ...... .. 4,570 1,750 650 620 360 290 520 380 3-5 .. . ... . . 4,850 1,780 750 650 350 290 580 450 6-8 . .. . .. .. 5,120 1,720 940 860 430 330 280 560 9- 11. ... . . . 4,740 1,440 1,140 710 430 360 180 480 12- 14 .. .... . 5,090 1,430 1,100 920 680 340 110 510 15-17 . . .... . 5,850 1,480 1,370 1,170 690 400 220 520 Total (0- 17) .. 90,660 28,800 17,850 14,790 8,820 6,030 5,670 8,700 Income: $31,800 to $53,800 (Average income=$42,400) 0-2 .. . . . . . . 6,500 2,440 800 990 430 370 830 640 3- 5 . ....... 6,840 2,470 940 1,020 420 370 910 710 6-8 ... ... .. 7,050 2,410 1,180 1,230 500 420 490 820 9- 11 . . .... . 6,650 2,140 1,400 1,080 500 460 330 740 12- 14 ....... 7,000 2,120 1,380 1,290 800 430 210 770 15-17 ... ... . 7,880 2,170 1,640 1,550 810 500 430 780 Total (0- 17) .. 125,760 41 ,250 22,020 21,480 10,380 7,650 9,600 13,380 Income: More than $53,800 (Average income=$79,000) 0- 2 .. . .. . .. 9,720 3,830 1 '11 0 1,250 570 450 1,300 1,210 3 - 5 . . . . .. . . 10,110 3,860 1,270 1,270 570 450 1,410 1,280 6-8 ........ 10,200 3,800 1,510 1,480 660 510 850 1,390 9- 11 . .. .... 9,760 3,530 1,770 1,330 660 560 610 1,300 12-14 .. . . . . . 10,150 3,510 1,760 1,540 1,050 520 430 1,340 15-17 . ...... 11 ,280 3,560 2,020 1,810 1,070 610 860 1,350 Total (0- 17) .. 183,660 66,270 28,320 26,040 13,740 9,300 16,380 23,610 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the regional CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.} 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. The Midwestern region consists of the following States: Illinois Missouri Indiana Nebraska Iowa North Dakota Kansas Ohio Michigan South Dakota Minnesota Wisconsin 1994 Vol. 7 No. 3 17 Table 8. Estimated annual expenditures on a child by husband-wife families, Rural, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Othe~ Income: Less than $31 ,700 (Average income=$19,900) 0-2 ........ 4,700 1,480 740 840 380 340 520 400 3-5 ........ 4,960 1,510 830 860 370 340 580 470 6-8 ........ 5,270 1,460 1,040 1,080 450 390 280 570 9- 11 ....... 4,910 1,180 1,250 930 450 430 180 490 12- 14 ....... 5,290 1,170 1,220 1,130 730 400 110 530 15-17 ....... 6,060 1,220 1,480 1,390 740 470 220 540 Total (0- 17) .. 93,570 24,060 19,680 18,690 9,360 7,110 5,670 9,000 Income: $31,700 to $53,700 (Average income=$42,400) 0-2 ........ 6,630 2,170 880 1,210 450 430 830 660 3-5 ........ 6,960 2,200 1,030 1,230 440 420 920 720 6-8 ........ 7,210 2,150 1,280 1,450 520 490 490 830 9 - 11 . . ..... 6,820 1,870 1,510 1,300 530 530 330 750 12- 14 ....... 7,190 1,850 1,490 1,500 850 500 210 790 15-17 ....... 8,110 1,910 1,750 1,780 860 580 430 800 Total (0- 17) .. 128,760 36,450 23,820 25,410 10,950 8,850 9,630 13,650 Income: More than $53,700 (Average income=$78,900) 0-2 ........ 9,840 3,550 1,190 1,460 600 510 1,310 1,220 3- 5 ........ 10,230 3,580 1,350 1,490 590 510 1,420 1,290 6-8 ....... . 10,360 3,530 1,600 1,700 690 590 860 1,390 9 - 11 ..... . . 9,910 3,250 1,860 1,550 690 630 620 1,310 12- 14 ....... 10,340 3,240 1,860 1,760 1,100 600 430 1,350 15-17 ....... 11,470 3,290 2,110 2,040 1,120 680 870 1,360 Total (0- 17) .. 186,450 61 ,320 29,910 30,000 14,370 10,560 16,530 23,760 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the regional CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. Rural areas throughout the United States are represented and are defined as places of less than 2,500 people outside a Metropolitan Statistical Area. 18 Family Economics Review Table 9. Estimated annual expenditures on a child by single-parent families, overall United States, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Othe,.-2 Income: Less than $32,000 (Average income=$13,700) 0-2 ........ 4,310 1,570 830 690 450 190 380 200 3-5 ........ 4,970 1,870 860 760 430 270 490 290 6-8 ........ 5,710 2,090 1,060 630 550 390 530 460 9 - 11 .. ..... 4,980 1,910 1,170 580 530 420 120 250 12-14 . ...... 5,350 1,830 1,200 670 750 420 160 320 15-17 . ...... 6,400 2,130 1,420 820 1,010 530 150 340 Total (0- 17) . . 95,160 34,200 19,620 12,450 11 '160 6,660 5,490 5,580 Income: $32,000 or more (Average income=$47,900) 0- 2 ........ 9,600 3,630 1,350 1,570 600 330 950 1,170 3- 5 ........ 10,370 3,920 1,420 1,630 570 440 1,140 1,250 6-8 ........ 11 ,320 4,140 1,730 1,500 720 600 1,200 1,430 9 - 11 .. .. ... 10,310 3,960 1,930 1,450 690 650 420 1,210 12- 14 ....... 10,860 3,890 1,940 1,550 960 640 600 1,280 15-17 ....... 11,850 4,180 2,150 1,590 1,260 790 580 1,300 Total (O- 17) 192,930 71 '160 31,560 27,870 14,400 10,350 14,670 22,920 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the CPI-U. The figures represent estimated expenses on the younger child in a two-child family. For estimated expenses on the older child, multiply the total expense for the appropriate age category by 0.92. To estimate expenses for two children, the expenses on the younger child and older child-after adjusting the expense on the older child downward-should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.37. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.72-after adjusting the expenses on the older children downward. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. 1994 Vol. 7 No.3 19 20 Income and Consumer Expenditures of Rural Elders By F.N. Schwenk Research Leader Family Economics Research Group Poverty statistics indicate that nonmetro elderly are more likely to be poor than metro elderly. This study provides additional information on differences in the economic status of rural and urban elderly households. The Consumer Expenditure Interview Survey data for 1990 and 1991 were used to provide income and expenditure information on rural and urban elderly households. Findings show that rural elders had 84 percent as much income and spent 85 percent as much as urban elders. Rural elderly women living alone had 69 percent as much income and spent 79 percent as much as urban elderly women living alone. Rural elderly women living alone are particularly at risk economically. Policy planners and service providers may need to be especially aware of their needs. [QJ ne of four Americans who are 65 years or older lives in a nonmetropolitan area 1 (4). Thus, nonmetro elders are an important segment of the elderly population. Various studies have reported that these elders tend to fare less well than metro elders. A recent publication (5) of the Interagency Forum on Aging-Related Statistics reports data on nonmetro elders from several national surveys. These data on poverty, housing, health, and other measures of well-being indicate that nonmetro elderly may be less well-off than urban elderly. The report states that "a higher percent of nonmetro elderly than metro elderly are impoverished; one-half of nonmetro 1 "Nonmetropolitan" refers to counties outside a metropolitan area. A metropolitan area is a county (or counties) containing a place or urbanized area of 50,000 people or more with a total population of at least I 00,000, including adjacent counties that have a high degree of economic and social integration with the central county. elderly are in poor, near-poor, or low income families." Although nonmetro elderly are more likely to own their home, the homes are of lower value and in poorer physical condition than homes owned by metropolitan elders. The report indicates that nonmetro elderly are not healthier nor more active than metro elderly persons. There is no difference in the percentage who smoke heavily, drink heavily, eat healthful diets, or are overweight. And, although the social support network may be a little larger, there is little evidence that nonmetropolitan elderly have a more closely knit community than metropolitan elderly. "Aging," a publication of the U.S. Department of Health and Human Services' Administration on Aging, had a special issue on rural elderly, which also challenged the image of rural America as a "happy, healthy, and tranquil place to live" {1). It reported that the rural elderly have a greater incidence of chronic health Family Economics Review conditions (arthritis, cardiovascular disease, hypertension, and diabetes) than urban elderly. Also, the 1990 U.S. poverty rate for elders was 8 percent in the suburbs, 15 percent in central cities, and 16 percent in nonmetropolitan areas (1). Another study (3) that used five separate indicators of poverty to compare the economic status of metro and nonmetro elders documented that nonmetro elderly are more likely than metro elderly to be poor. This was the case even when age, sex, race, marital status, and living arrangements were controlled by statistical procedures. Since previous studies and national poverty rates have shown that nonmetro elders experience a lower level of economic security than do metro elders, this study was designed to provide additional information on these differences. The measures of economic status are average income and expenditures, rather than poverty measures. The measure of population density is rural/ urban rather than nonmetro/metro. The rural households in this study are a subset of the nonmetro population that live in areas with less than 2,500 population.2 In addition, a particularly vulnerable subgroup of rural elders is analyzed. Because elderly women who live alone tend to have fewer financial resources than married couples or men who live alone, this study describes both the economic status of elderly rural households and the economic status of elderly women who live alone in rural areas. 2Urban households in this study include any rural hbuseholds that are within metro areas. 1994 Vol. 7 No. 3 Sample and Data Data for the study are from the Consumer Expenditure (CE) Interview Surveys for 1990 and 1991. The CE is an ongoing survey that collects data on household expenditures, income, and major socioeconomic and demographic characteristics. A national sample of consumer units3 is interviewed once each quarter for five consecutive quarters; the first interview is used only for bounding purposes. Using a rotating sample design, about one-fifth of the sample is replaced each quarter. Each year of CE data contains information from about 20,000 quarterly interviews. Income data are annual, and quarterly expenditure data are multiplied by four to provide estimates of annual expenditures. The data are weighted to represent the U.S. noninstitutionalized population. Consumer units with a reference person4 65 years or older were selected. There were 8,600 consumer units in the sample; for the analysis of women living alone, there were 3,022 reference persons. Using the weighted numbers, 16 percent of the elderly units lived in rural areas; 13 percent of the elderly women living alone were in rural areas. 3 A consumer unit consists of either: (I) all members of a particular housing unit who are related by blood, marriage, adoption, or other legal arrangements; (2) two or more people living together who pool their incomes to make joint expenditure decisions; or (3) a person li ving alone or sharing a household with others or living as a roomer in a private home or lodging house or in permanent living quarters in a hotel or motel, but who is financially independent. To be considered financially independent, at least two of the three major expense categories (housing, food, and other living expenses) have to be provided by the respondent. In this paper, the term household refers to consumer unit. 4Reference person is the first member mentioned when the respondent was asked to "start with the name of the person or one of the persons who owns or rents the home." Characteristics of Rural Elderly Household Type Rural elderly consumer units were more likely than urban units to consist of married couples (table I, p. 22). Over half of rural households were husband and wife, compared with 43 percent of urban households. A smaller percentage of rural households were women living alone-27 percent of rural, compared with 36 percent of urban households. Some rural women move to county-seat towns or other urban areas (2,500 or more population) when they are widowed to be nearer services and to find housing suitable to their needs. It is the women who live alone and remain in rural areas that are highlighted in table I. Income Rural units had lower income than urban units. Table I shows the distribution among income categories. Thirtyeight percent of rural units and 30 percent of urban units had income under $10,000. For women living alone, 68 percent of rural and 52 percent of urban households had income less than $10,000. Age For consumer units with a reference person age 65 or older, the age of the reference person in rural households was not much different than that in urban households, as shown in table I. The average age was 74.4 years, compared with 74.1 years for urban reference persons. However, for women living alone, rural women were older than urban women. On average, rural women were 77.3 years old, compared with urban women's average of 76.2 years old. Forty-two percent of rural women living alone were 80 years or older, compared with 33 percent of urban women. This has implications for programs that serve rural households. People who are 80 years or older and living alone are likely to have needs for transportation, health, and other services. 21 Race Table 1. Characteristics of rural and urban elderly 1 consumer units, There was less race diversity in rural 1990-91 areas than in urban areas. Among eld-erly units (and the subset of women All elderl~ Women living alone living alone), a lower percentage of Characteristic Rural Urban Rural Urban rural household heads were non-White. Sample size 1,069 7,531 284 2,738 Education Percent Rural reference persons were less likely Household type than their urban counterparts to have a high school education. Three of five Husband and wife 52 43 rural elders had not completed high Female living alone 27 36 100 100 school. For rural women living alone, Male living alone 12 10 the percentage who had not completed Other 9 II high school was slightly higher (62 Household income percent). <$5,000 10 5 22 10 $5,000- $9,999 28 25 46 42 Work Status $10,000-$14,999 17 17 14 19 As expected, most elders reported that $15,000-$19,999 11 11 1 7 they were retired or not working. Less $20,000- $29,999 15 14 5 7 than one of five reported an occupation. $30,000- $39,999 5 7 2 Rural women living alone were even $40,000 - $49,999 2 3 more likely to be retired or not working $50,000 or more 3 5 (91 percent). Incomplete income reporters 9 13 12 11 Housing Reference person Age (years) Eighty-eight percent of rural elders and 65-69 29 30 20 21 75 percent of urban elders owned their home. Women living alone were less 70-74 28 27 20 23 likely than other elders to own their 75 -79 20 21 18 23 homes, but still the majority were 80+ 23 22 42 33 owners (78 percent of rural women Race and 61 percent of urban women). White 93 86 90 88 Black 6 9 10 9 Usually, these homes were detached, Other 5 0 3 single-family dwellings. In rural areas, Education 79 percent of elders lived in a detached Not high school graduate 59 43 62 43 home. Rural elders were more likely High school graduate 23 30 23 32 than their urban counterparts to live in Some college 18 27 15 25 detached homes or mobile homes and Work status were much less likely to live in multiple Reports occupation 18 18 9 13 units. The pattern held true for rural Retired, not working 82 82 91 87 women who lived alone. Three-quarters of rural women living alone lived in Housing detached, single-family dwellings, Housing tenure whereas only half of urban women did. Own 88 75 78 61 Rent 12 25 22 39 Owning a detached, single-family home Type of home affects the financial decisions of elders. Single family, detached 79 66 76 51 The equity of home ownership provides Multiple unit 12 29 15 44 financial security. Yet, the expense and Mobile home 14 5 9 5 effort associated with a single-family 1 Reference person 65 years or older. 22 Family Economics Review Figure 1. Income 1 of all elderly consumer units and elderly women who live alone, 1990-91 All elderly consumer units $16,743 $19,851 Elderly women who live alone $8,209 $11,869 D Rural DUrban 1For the 88 percent of consumer units that report their income. dwelling may strain the resources of some elders. The houses of rural elders are often of lower market value than those of urban elders. Also, they are more likely to need repairs, and they are larger-thus more expensive to heat and maintain. In some rural communities, the option of multiple units is not available. Personal preferences likely play a part in housing decisions also. Income of Rural Elderly Households Income The income of elderly households in rural areas was less than that of their urban counterparts (fig. I). Rural household income reporters had an average annual income of $16,743 or 84 percent as much as the $19,851 reported by urban households. This pattern was more pronounced among women who lived alone. Rural women had an average income of $8,209, only 69 percent as much as the $11 ,869 income of urban women. 1994 Vol. 7 No.3 If income needs are similar in rural and urban areas, rural elderly households were disadvantaged relative to urban households. It is not clear whether needs are similar. Urban needs for income may be greater than rural needs if the cost of living is higher in urban areas. It is widely believed that urban housing costs are higher-at least in some areas. However, differences in prices of such commodities and services as health care, automobiles, or food cannot be easily verified.5 Rural families may have greater transportation needs since they travel greater distances to markets and services. Also, rural families may have fewer options available for housing, health services, vehicles, or clothing and so need to pay whatever locally available products and services cost, whereas urban families may have a wider range of prices from which to choose. 5The Federal Government does not publish statistics that compare prices among cities, regions, or rural areas; the Consumer Price Index measures changes in prices since the base period for each selected city, not differences among cities. 0 ... among women who lived alone[,] Rural women had an average income of ... only 69 percent as much as ... urban women. 23 Table 2. Sources of income of rural and urban elderly units, 1990-91 Average income1 All Women living alone Income source Rural Urban Rural Urban Rural Before-tax income $16,743 $19,851 $8,209 $11,869 100 After-tax income 15,844 18,426 8,103 11,279 Social Security and 8,601 8,608 5,812 6,615 94 Railroad Retirement Pensions and annuities 2,182 3,566 855 1,910 34 Interest and dividends 1,776 2,444 867 1,861 38 Earnings 3,859 4,770 404 1,108 25 Other 325 462 270 376 16 1 For the 88 percent of consumer units that reported their income. Sources of Income Social Security There was little difference between rural and urban elderly households in the amount of Social Security they received (table 2). About 95 percent of each group had Social Security income that averaged about $8,600 per household. This represented over half (51 percent) of rural household income and about 43 percent of urban household income (fig. 2). For elderly rural women living alone, Social Security was an especially important source of income. About 95 percent of both rural and urban women received Social Security; rural women averaged $5,812 in Social Security income, and urban women averaged $6,615. For rural women, Social Security provided 71 percent of their total income. For urban women, it was a smaller, though still important, share of total income (56 percent). Thus, policy decisions regarding Social Security profoundly affect the economic well-being of elderly women, especially elderly rural women. 24 Pensions and Annuities Rural elders were less likely than urban elders to receive pension or annuity income. Thirty-four percent of rural families received such income, compared with 42 percent of urban families. The average income from pensions or annuities was $2,182 for rural elderly and $3,566 for urban elderly. This difference between rural and urban families was expected since the work histories differ. Rural elders were more likely to have been farmers, self-employed, or employed in small businesses where pensions and retirement plans are less prevalent than in larger businesses, which are usually located in urban areas. As expected, women living alone were less likely than other households to receive pension and annuity income. Only one-fifth of rural women received such income, which provided an annual average of $855. Pensions and annuities provided 13 percent of rural and 18 percent of urban household income. For elderly women living alone, these sources provided 10 percent of rural and 16 percent of urban women's income. Percent receiving income All Women living alone Urban Rural Urban 100 100 100 95 96 95 42 21 34 40 27 35 29 5 15 15 21 16 Interest and Dividends Interest and dividends from investments were received by similar percentages of rural and urban households, but the average dollar amount was less for rural households ($1,776 for rural and $2,444 for urban households). These sources provided 11 and 12 percent, respectively, of the annual income of rural and urban households. Again, rural women living alone were different from other rural elders or urban women living alone. Only 27 percent received interest or dividend income, and it averaged only $867, providing 11 percent of their income. Besides the income implications, the levels of interest and dividend income reflect the level of assets owned by households. The low interest and dividend income for rural households (and especially rural women living alone) indicate that rural households had fewer assets than urban households in saving accounts, bonds, stocks, and other investments. Family Economics Review Figure 2. Sources of income of elderly consumer units and elderly women who live alone, 1990-91 %of income All elderly consumer units Social Security Pensions and annuities Interest and dividends Earnings Other1 51 43 ~~I 112 18 ~~I ~a I I D Rural DUrban Elderly women who live alone Social Security 71r-------------------------~~----~ 55~------~------~~~------~ Pensions and annuities ~ ~ ~---1--------'----. Interest and 1 16 1 ~--_.___, dividends . 9 50_ Earnings c=:J other 1 ~B 10ther sources include public funds and regular contributions from others. Earnings Earnings from employment, farm income, business income, and rental units were received by 25 percent of rural and 29 percent of urban elders. Such earnings provided almost one-fourth of elders' income (23 percent for rural and 24 percent for urban households). For women living alone, earnings made a more modest contribution. Only 5 percent of rural and 15 percent of urban women had earnings. These earnings provided only 5 percent of rural women's income and 9 percent of urban women's mcome. 1994 Vol. 7 No.3 Expenditures Expenditures may be a better measure than income of economic well-being, especially for retired people (2). When elders draw on retirement savings to provide for their needs and desires, expenditures reflect this. Elderly households in rural areas spent 85 percent as much as their urban counterparts (table 3, p. 26). Rural elderly households spent an average of $15,005 per year, compared with $17,745 spent by urban households. Rural women living alone spent $9,215 or 79 percent as much as their urban counterparts. rnl Elderly households in rural areas spent 85 percent as much as their urban counterparts 25 - - ----------------------------------~ -- In rural and urban households, expenditures were less than after-tax income. However, women living alone spent more than their income, which suggests they are using savings to meet their needs. Rural women's expenditures totaled $9,215, somewhat more than their $8,103 after-tax income. Urban women spent $11,629, a little more than their after-tax income of $11,279. ln every expenditure category except health care, rural households spent less than urban households. Similarly, among women who live alone, rural women spent less than urban women in every expenditure group except health care. For women living alone, out-of-pocket expenditures for health care may be higher because the average age of rural women was older-so their health needs may have been greater. Figure 3 shows the allocation of expenditures among categories. Urban households spent a larger share of their budget on housing than did their rural counterparts. Thi probably reflects higher housing prices in urban areas. Urban homes had fewer rooms than rural homes (5.3 rooms in urban homes; 5.8 in rural). Household size was about the same in urban and rural households (1 .72 people in urban hou eholds; 1.77 in rural), so utilities and other expenses related to household size did not explain the higher expenditures of urban households. Rural households spent a larger share of their budget on transportation than did urban households. They owned more vehicles (1.9 vehicles in rural households; I .4 in urban) and probably drove more miles because of greater distances to town, friends, or services. Elderly women who lived alone had different budgetary patterns than elderly households as a whole. Both rural and urban women spent a much larger proportion on housing and a much smaller share for transportation. Elderly women owned 0.6 vehicles per household. 26 Table 3. Mean expenditures of rural and urban elderly consumer units, 1990-91 All e lder) ~ Women living alone Expenditure Rural Urban Rural Urban Total expenditures $ 15,005 $ 17,745 $9,215 $11 ,629 Housing 4,624 5,961 3,779 5,001 Food 2,883 3,307 1,626 2,037 Transportation 2,794 2,9 19 914 1,154 Health 2,151 2,118 1,549 1,484 Apparel 471 669 342 441 Entertainment 481 677 185 337 Personal care 156 249 98 194 Reading 122 143 74 103 Miscellaneous 1,323 1,702 648 878 Figure 3. Expenditure allocation of elderly consumer units and elderly women who live alone, 1990-91 % of expenditures All elderly consumer units Housing 31 I I 34 . I Food 19 19 ~ o Rural Transportation 19 16 I : [] Urban Health 14 12 I Other 17 ~ I 19 = l Elderly women who live alone Housing 41 43 f ! Food 18 18 [ Transportation 10 10 B Health 17 13 ~ Other 14 16 Family Economics Review There were no budget share differences between rural and urban households for food expenditures. Rural and urban elderly households spent 19 percent for food. Rural and urban women living alone spent 18 percent of their budget for food. Summary Rural elderly households had 84 percent as much income as urban households. A smaller percentage of rural households than urban households received each type of income: Social Security, pensions and annuities, interest and dividends, and earnings. Particularly of note was that rural women living alone had much lower income and fewer sources of income than other rural households or urban women living alone. Their income was less than half the average income of all rural households. Rural women's average income was 69 percent of that of urban women living alone. Compared with other elderly groups (rural households or urban females living alone), rural women living alone were far less likely to receive income from any of the major sources other than Social Security. Only 27 percent received interest and dividends, 21 percent had pensions or annuities, and 5 percent had earnings from employment or farms/businesses they owned. Social Security accounted for 71 percent of their income, averaging about $5,800 a year. Expenditures of rural elderly are 85 percent as much as those of urban elderly households. Compared with urban households, rural households spent a larger proportion of expenditures on transportation and health and a smaller share for housing. 1994 Vol. 7 No.3 To reiterate, rural women living alone were particularly vulnerable. Both rural and urban women living alone spent more than their after-tax income, indicating they relied on savings to meet their expenses. Over 40 percent of their expenditures were on housing, leaving little for other expenses. Rural women spent 17 percent of their budget on health expenditures, a larger share than other households. Implications Government policies regarding Social Security, health care plans, housing, and other programs affecting elders need to acknowledge the differences in income sources and expenditure patterns between rural and urban elderly households. Certainly, they must take into account the special needs of rural women who live alone. References Also, findings indicate a need for preretirement education for rural households. The pension and annuity income of rural elders was less than that of urban elders, perhaps reflecting less access to company-sponsored retirement plans. Also, income from interest and dividends was much lower, indicating less in savings and investments. Rural people retiring in the future may be different from the group reported here. People in this study were born in the first quarter of the century. The inclusion of farmers in Social Security, the growth of company-sponsored retirement programs, and similar events occurred fairly late in their work life. Future groups may receive more preretirement guidance and become more conscious of the need for retirement planning and saving. 1. Bull, C.N. and Bane, S.D. 1993. Growing old in rural America: New approach needed in rural health care. Aging 365: 19-25. 2. Houthakker, H.S. and Taylor, L. 1970. Consumer Demand in the United States: Analyses and Projections. Harvard University Press. 3. McLaughlin, O.K. and Jensen, L. 1993. Poverty among older Americans: The plight of nonmetropolitan elders. Journal of Gerontology 48(2):S44-S54. 4. Taeuber, C.M. 1992. Sixty-Five Plus in America. Current Population Reports, Special Studies. P23-178. U.S. Department of Commerce, Bureau of the Census. 5. U.S. Department of Health and Human Services, Administration on Aging. 1993. Van Nostrand, J.E. (Ed.). 1993. Common beliefs about the rural elderly: What do national data tell us? Vital and Health Statistics 3(28). U.S. Department of Health and Human Services, National Center for Health Statistics. 6. U.S. Department of Labor, Bureau of Labor Statistics. Consumer Expenditure Surveys: 1990 and 1991 Interview Survey Public Use Tapes and Documentation. 27 28 Trends in Tobacco Use By Joan C. Courtless Family Economist Family Economics Research Group Scientific knowledge regarding the medical consequences of smoking is constantly expanding and over time, a significant reduction in U.S. smoking prevalence and consumption has occurred. Findings from recent Federal surveys are used to describe trends in tobacco use. Among U.S. adults, per capita consumption of cigarettes has declined by 38 percent since 1960. As measured in the Consumer Expenditure Surveys, mean annual household expenditure for tobacco products and smoking supplies, in 1992 dollars, decreased by 49 percent between 1980 ($534) and 1992 ($275). Nevertheless, one in four Americans 12 years old and older and one in three young adults, ages 18 to 34, were current smokers in 1992. Smoking prevalence decreases as educational level increases. People with a college education were more likely than those with less education to quit smoking. Programs designed to reduce smoking should focus on adolescents and those less educated. Regulations restricting smoking in public places and added excise taxes have proven effective in curtailing smoking. igarette smoking is the leading cause of preventable illness and death in the United States (3,11, 12). Smoking has been recognized as a serious public health problem for over 30 years, particularly since the Surgeon General 's first report on smoking and health in 1964 (1 2,25). Since then, research has expanded our knowledge about the consequences of smoking. Prevention programs and regulatory policies that inhibit smoking have focused public attention so that smoking is no longer widely tolerated and smokers are increasingly isolated in public places. In this time of rising health care costs, it seems illogical to ignore the medical facts concerning tobacco use. The reality, however, is that millions of Americans do ignore them to smoke billions of cigarettes each year. Their own health is compromised, and the well-being of those around them is at risk. This article presents findings from various Federal sources and national surveys that describe trends in (1) tobacco consumption; (2) characteristics of people who smoke, formerly smoked, or use smokeless tobacco; and (3) prices and expenditures for tobacco. The consequences of passive or environmental smoke are examined, together with health costs related to smoking. Consumption of Tobacco and Tobacco Products The Economic Research Service (ERS) of the U.S. Department of Agriculture (USDA) estimates total and adu lt per capita consumption of cigarettes based on data from the U.S. Department of Treasury-Bureau of Alcohol, Tobacco, and Firearms, the U.S. Department of Commerce, the Tobacco Institute, and other private and industry sources. Adult per capita consumption in the United States is calculated by dividing Family Economics Review total estimated consumption by the total estimated population 18 years of age and older. According to ERS, adult per capita consumption of cigarettes in the United States has declined by 38 percent since 1960. Peak consumption during this period occurred in 1963 at 4,345 cigarettes per annum (fig. 1) (16,25). Per capita consumption in 1993 was estimated to be 2,576 cigarettes, the lowest since 1941 (4,16). U.S. consumption of cigarettes in 1993 was estimated at 489 billion cigarettes, a 19-percent decrease from the 600.4 billion smoked in 1984 (15). Other forms of tobacco are used in lesser quantities and, with the exception of snuff, are declining in use. ERS consumption data show that consumption of snuff (a type of smokeless tobacco) increased by 11 percent between 1984 and 1993 (16). For some consumers, snuff may be a substitute for smoking and reflect the restrictions placed on smoking in public places (4). Consumption of other tobacco products, however, has declined over the 10-year period: large cigars and cigarillos, by 43 percent; smoking tobacco, by 54 percent; and chewing tobacco, by 34 percent (16). Characteristics of Tobacco Users Current Smokers Prevalence of tobacco use is usually expressed in terms of current use. The National Household Survey on Drug Abuse (NHSDA) conducted by the Substance Abuse and Mental Health Services Administration, U.S. Department of Health and Human Services defines smoking as any use in the past month. The National Health Interview Survey (NHIS), Health Promotion and Disease Prevention (HPDP) supplement conducted by the National Center for Health Statistics, U.S. Department of Health and Human Services defines 1994 Vol. 7 No.3 Figure 1. Annual per capita consumption 1 of cigarettes, 1960-93 Thousands 1For those 18 years and over, including Armed Forces abroad. Note: For 1992, figures are subject to revision; for 1993, figures are estimated. Source: U.S. Department of Agriculture, Economic Research Service, Tobacco Situation and Outlook Report. current smokers as those who have smoked over 100 cigarettes in their lifetime and answer that they currently smoke. According to the 1992 NHSDA, 26 percent of the population age 12 and over or about 54 million people smoked tobacco in the past month (table 1, p. 30). This was a decline from 1988 when 29 percent of the population or 57 million people identified themselves as current smokers. Young adults, ages 18 to 34, had the highest rates of smoking: 34 percent of the 26- to 34-year-olds and 32 percent of the 18- to 24-year-olds smoked in the past month (19). The higher the educational level, the less likely that a person was currently smoking cigarettes (19). Educational status has replaced gender as the demographic variable most likely to predict differences in smoking prevalence (3). Those who were unemployed were more likely to be current smokers (43 percent) than any other demographic segment of the population (19). Hispanics were less likely to be current smokers (22 percent) than non-Hispanics (27 percent). People living in nonmetro areas were more likely than those in metro areas to have smoked cigarettes in the past month. Decreases in the proportion of current smokers since 1988 were evident except among people in the Western region and tho e with some college education. Most States have set the minimum age to purchase cigarettes at 18 years. Nevertheless, more than 3,000 American teenagers start smoking each day (25), and according to the 1989 Teenage Attitudes and Practices Survey, 57.5 percent of those 12 to 17 years old report buying their own cigarettes (22). Female adolescents are as likely as males to smoke cigarettes (1, 7, II). According to McDermott et al. (1 1), cigarette smoking may be the most practical and visible means females have to rebel. 29 --- --~ An annual survey of high school eniors, college students, and young adults--called Monitoring the Future: A Continuing Study of the Lifestyles and Values of Youth-is conducted by the University of Michigan Institute for Social Research and sponsored by the National Institute on Drug Abuse (NIDA), U.S. Department of Health and Human Services. Findings from the 1990 survey determined that 29 percent of high school seniors in 1990 smoked in the past month (7,8). There is little indication that the overall percentage of high school seniors who smoke is decreasing. During the period 1980-90, 29 to 30 percent of these students each year reported smoking in the past month (fig. 2). Of seniors surveyed, 19 percent were daily smokers in 1990, 64 percent had smoked cigarettes at one time, and 41 percent had tried smoking before the ninth grade (7). Another analysis of teenage cigarette consumption, using National Health and Nutrition Survey II data, determined that cigarette smoking was negatively related to both family income and parental education (30). However, because parental smoking behavior was also negatively related to these variables, children of poorly educated adults may be more likely to smoke because their parents were more likely to smoke-not because of parents' socioeconomic status. According to the 1990 Monitoring the Future survey, 25 percent of seniors planning to attend college for 4 years were current smokers, compared with 38 percent of those with no such plans (7). Students already attending college were less likely to be current smokers; 22 percent reported smoking in the past month. This was a decline from 1980 when 26 percent reported smoking (8). Of college students, 12 percent were daily smokers, compared with 27 percent of high school graduates of similar age who were not in college full time. College women were more likely to smoke than college men (8). 30 Table 1. Use of cigarettes in the past month by demographic characteristics, 1988 and 1992 Demographic characteristic Total, 12 years and older Age (years) 12- 17 18- 25 26-34 35 and older Sex Male Female Education Less than high school High school graduate Some college College graduate Race and ethnicity Non-Hispanic White Non-Hispanic Black Hispanic Population density Large metro Small metro Nonmetro Region Northeast North Central South West Current employment Full time Part time Unemployed Other1 1 Retired, disabled, homemaker, student, or other. 1988 Percent 28.8 11.8 35.2 37.1 27.3 32.2 25.6 38.4 33.9 27.3 17.4 28.7 30.3 26.3 28.2 28.1 30.8 29.3 29.6 31.1 22.9 33.0 29.1 50.5 24.8 1992 26.2 9.6 31.9 33.7 25.3 27.9 24.6 35.1 30.2 28.5 16.3 26.9 26.7 21.5 25.0 26.6 27.8 24.8 25.5 28.5 24.4 29.7 27.3 43.3 22.4 Source: U.S. Depanment of Health and Human Services, Substance Abuse and Mental Health Services Administration, National Household Survey on Drug Abuse. Family Economics Review Figure 2. P~evalence of smoking cigarettes in last 30 days, high school semors and college students, 1980-90 Percent 40 High school seniors / 30 -----··--~-.---~·~----~-~--~·~---------·._-•- ~--~•~ ----· 20 / College students 10 0 1~9~80~~8~1~~82~- ~8~3~~84~~8~5--~8~6~~87=-~8=8---8=9~~9~0 Source: Johnston, L.D., O'Malley, P.M., and Bachman, J.G., 1991, Drug Use Among American High School Seniors, College Students and Young Adults, 1975-1990, Volume I High School Seniors and Volume II College Students and Young Adults, The University of Michigan Institute for Social Research and U.S. Department of Health and Human Services, National Institute on Drug Abuse. Former Smokers Although it is sometimes difficult for an individual to be certain he or she has permanently stopped smoking, survey data may be used to ascertain trends in "quitting" for various segments of the population. According to findings from the 1991 NHIS-HPDP, an estimated 89.8 million adults (49.8 percent of all adults) in the United States have smoked at one time (21). About 43.5 million people ( 48.5 percent of those who have ever smoked) had quit smoking. A higher proportion of men (51.6 percent) than women (44.7 percent) had stopped smoking. Quit ratios (the proportion of former smokers among those who have ever smoked) increased as education increased from 41.8 percent for those with less than 12 years to 66.1 percent for those with 16 or more years of education (21). A separate analysis of the 1990 NHIS-HPDP found highest rates of former smokers among those employed in executive or professional occupations (12). 1994 Vol. 7 No.3 Table 2, p. 32, shows the percentages of former smokers among those who have ever smoked have increased since 1970 (25). Highest quit ratios were reported by people 45 years and older, Whites, and college graduates. Young people exhibit a relatively low quit ratio. Among high school seniors surveyed in 1990, only 18 percent of those who ever smoked regularly had stopped smoking (7). Smokeless Tobacco Users The NHSDA estimated that 7.5 million Americans or 3.7 percent of the population were current (in past month) users of smokeless tobacco in 1992 (table 3, p. 32). People with the highest rates of smokeless tobacco use were White, living in the South, and men (19). In fact, 90 percent of smokeless tobacco users were men (19,20). Although the prevalence of cigarette smoking among the U.S. population 12 years and older declined somewhat between 1988 and 1992, use of smokeless tobacco has remained fairly constant (19). • Educational status has replaced gender as the demographic variable most likely to predict differences in smoking prevalence. 31 ··- The 1991 NHIS-HPDP also collected data concerning snuff and chewingtobacco use. Current users of smokeless tobacco are defined in the NHIS-HPDP as those who reported snuff or chewingtobacco use at least 20 times and who reported using snuff or chewing tobacco at the time of the interview. In 1991, men (5.6 percent) were much more likely to use smokeless tobacco than women (0.6 percent) (table 4) (20). For men, prevalence was highest among those who lived in rural areas (11.2 percent), who lived in the South (8.4 percent), who were 18 to 24 years old (8.2 percent), were American Indian/ Alaskan Native (8.1 percent), or who had less than 12 years of schooling (7 .7 percent). For women, prevalence was highest among those who were American Indian/Alaskan Native (2.5 percent), Black (2.3 percent), age 75 and older (2.3 percent), or had less than 12 years of schooling (2.0 percent). Prices and Expenditures Prices for tobacco and smoking products, as measured by the Consumer Price Index (CPI), have risen faster than prices for all items, increasing at an average annual rate of 9 percent since 1980 (fig. 3, p. 34) (27). In August 1993, cigarette manufacturers reduced prices of premium-branded cigarettes by about one-fourth. Prices for discount brands (about 36 percent of the domestic market) were already relatively low, selling for about half what premium brands formerly cost (16,17). Federal and State taxes on tobacco continue to rise. The Federal excise tax increased by 4 cents a pack in 1993 after having increased by 4 cents in 1991. In 1993, the Federal excise tax on cigarettes was 24 cents per pack and the weighted average State tax was 25.9 cents (16). Since 1968, every State and D.C. has taxed cigarettes (25). As a percentage of the total cost of cigarettes, however, taxes have declined (23). 32 Table 2. The quit ratio: Percentage of people who have smoked at one time but no longer do so, by demographic characteristics, selected years Demographic characteristics Age (years) 20-24 25-44 45 - 64 65 and older Sex Male Female Education Less than high school High school graduate Some college College graduate Race White Black 1970 20.8 29.8 36.1 56.9 37.9 29.2 38.1 33.6 34.9 48.2 36.7 23.2 1980 Percent 22.2 33.0 40.9 61.0 41.5 34.0 39.4 36.5 40.6 48.7 40.4 27.7 1988 27.5 36.8 52.8 69.8 47.3 43.4 46.3 41.6 46.4 60.6 48.0 32.8 Source: U.S. Department of Commerce, Bureau of the Census, 1992, Statistical Abstract of the United States, 1992, [/12th ed.] Table 3. Use of cigarettes and smokeless tobacco in the U.S. population 12 years and older: Past month, past year, and lifetime, 1988 and 1992 Substance Cigarettes Smokeless tobacco Period 1988 1992 1988 1992 Percent Past month 28.8 26. 2 3.6 3.7 Past year 34.2 31.2 5.0 5.0 Lifetime 75.1 71.0 14.9 14.7 Source: U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, National Household Survey on Drug Abuse. Family Economics Review Table 4. Current use1 of smokeless tobacco, 1991 National Health Interview Survey-Health Promotion and Disease Prevention Supplement, 1991 Characteristic Men Women Percent Total, 18 years and older 5.6 0.6 Age group (years) 18-24 8.2 0.2 25-44 5.8 .I 45-64 3.6 .6 65-74 5.4 1.3 ?:.75 5.8 2.3 Education (years) Less than high school 7.7 2.0 High school graduate 6.6 .3 Some college 5.2 .I College graduate 2.5 0 Race White 6.2 .3 Black 2.2 2.3 Asian/Pacific Islander 1.4 0 American Indian/Alaskan Native2 8.1 2.5 Ethnic origin Hispanic 1.5 .2 Non-Hispanic 5.9 .6 Type of area Urban 4.0 .3 Rural 11.2 1.5 Region Northeast 2.7 0 Midwest 5.7 .2 South 8.4 1.4 West 4.0 .2 Poverty status3 At/above poverty level 5.4 .3 Below poverty level 6.6 1.9 Unknown 6.4 1.5 I 2Snuff or chewing-tobacco use at least 20 times and use at time of interview. 3Estimates should be interpreted with caution because of the small number (n=339) of cases. Poverty statistics are based on definitions developed by the Social Security Administration that include a set of income thresholds that vary by family ize and composition. Source: U.S. Departmenr of Health and Human Services, Public Health Sen•ice, 1993, Use of smokeless tobacco among adults-United States, 1991, Morbidity Mortality Weekly Report42( 14):263-266. 1994 Vol. 7 No.3 It has been shown (10,13,25,30) that the demand for cigarettes is somewhat responsive to price changes. Additional taxes on cigarettes could benefit State and Federal treasuries while reducing demand. The larger the increase in price as the result of taxes, the larger the decrease in consumption (1 3); a relatively small increase in price through taxing would be ineffective in substantially reducing cigarette consumption (30). Price changes have a stronger effect on smoking prevalence than on consumption by smokers. Teenagers are particuIru ·Iy responsive to changes in cigarette prices; therefore, excise tax increases may help impede the onset of teenage smoking (25). Since 1980, when the average annual expenditure for tobacco products and smoking supplies was $534 (in 1992 dollars), spending on tobacco by households has declined by 49 percent (fig. 4, p. 34) (26). Data from the 1992 Consumer Expenditure Survey show that the mean annual expenditure for tobacco products and smoking supplies was $275 (table 5, p. 36). For 1992, tobacco products and smok.i ng supplies accounted for about I percent of total expenditures for all household (26). Households with incomes between $30,000 and $70,000 spent more on tobacco than did those with lower or higher incomes. However, the percentage of total expenditures spent on tobacco was higher in lower income households than in those earning higher incomes. Households reporting the highest expenditures for tobacco were headed by someone working as an operator, fabricator, or laborer; in construction or mechanics; in a service occupation; 35 to 54 years old; were husband-and-wife households with children; and located in a rural area. Some of these same hou eholds spent the highest percentage of total annual expenditures on tobacco: Those headed by someone employed as an operator, fabricator, or laborer; in construction or mechanics; in a service 33 occupation; and those located in a rural area. Also, households that rented their homes or had a reference person under 25 years old spent a higher proportion of total expenditures on tobacco than did other household . Passive Smoking Passive smoking has been defined as the exposure of nonsmokers to tobacco combustion products in the indoor environment and is also known as ETSenvironmental tobacco smoke. Passive smoking is the third leading preventable cause of death in the United States, after smoking and alcohol (9). Secondhand smoke kills 53,000 nonsmokers every year (9); the nonsmoker' risk for lung cancer resulting from chronic ETS exposure is 100 times greater than the risk associated with 20 years' exposure to asbestos in a building containing asbestos (14). ETS is a major cause of indoor air pollution. Secondhand smoke is designated as either mainstream (drawn through a cigarette, filtered by a smoker's lungs, and exhaled into the air) or sidestream (circulates directly in air from smoldering end of cigarettes between puffs; also, all ETS from cigars and pipes) (9). About 80 percent of ETS is sidestream (31). The Environmental Protection Agency has classified sidestream smoke a Class A (cancer causing, very hazardous) carcinogen (9). The Surgeon General has determined that ETS is a cause of lung cancer (3 1). Exposure to ETS contributes to decreased pulmonary function, decreased heart function, eye and throat irritation, respiratory illness, lung and other cancers, and aggravated allergies (9,31). Regulations restricting smoking in public places have had a significant negative effect on cigarette demand (30). These regulations limit opportunities to smoke, thereby ensuring nonsmokers protection again t passive smoking (see box). 34 Figure 3. Changes in consumer prices for tobacco and smoking products CPI-U 250 225 200 175 150 125 100 75 50 1980 84 Tobacco and smoking products ."" 88 All items 92 93 Source: US. Department of Labor, Bureau of Labor Statistics, CPI Detailed Report. Figure 4. Average annual household expenditure for tobacco products and smoking supplies, 1980-92 Constant 1992$ 600 500 400 300 200 100 0 1~9780~-----~8~4------~878------~9~2 Source: US. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey. Family Economics Review Legislation and Regulations Related to Smoking and Health (5,16,25,29) 1965 - Congress passes the Federal Cigarette Labeling and Advertising Act, requiring health warning on all cigarette packages: "Caution: Cigarette Smoking May be Hazardous to Your Health." 1970 - Congress enacts the Public Health Cigarette Smoking Act of 1969 (passed in 1970 and effective January 2, 1971 ), banning cigarette advertising on television and radio and requiring a stronger health warning on cigarette packages: "Warning: The Surgeon General Has Determined that Cigarette Smoking is Dangerous to Your Health." 1973 - Civil Aeronautics Board requires no-smoking sections on all commercial airline flights. - Arizona becomes the first State to restrict smoking in a number of public places and the first to do so explicitly because environmental tobacco smoke exposure is a public health hazard. 1974 - Connecticut passes the first State law to apply smoking restrictions to restaurants. 1975- Minnesota passes landmark comprehensive statewide clean indoor air law. 1976 - Interstate Commerce Commission prohibits smoking in railroad dining cars and requires separate smoking and nonsmoking passenger cars. 1978 - Utah enacts the first State law banning tobacco advertisements on any billboard, streetcar sign, streetcar, or bus. 1982- Congress temporarily doubles the Federal excise tax on cigarettes to 16 cents per pack, to be in effect January 1, 1983, to October 1, 1985. First increase since 1951. 1984 - Congress enacts the Comprehensive Smoking Education Act, requiring rotational health warnings on cigarette packages and advertisements. 1986 - Congress enacts the Comprehensive Smokeless Tobacco Health Education Act of 1986. Requires rotation of three health warnings on smokeless tobacco packages and advertisements and bans smokeless tobacco advertising on broadcast media. - Congress extends permanently the 16 cents per pack Federal excise tax on cigarettes. - Congress imposes a Federal excise tax on smokeless tobacco products. 1988 - Congressionally mandated smoking ban takes effect on domestic airline flights scheduled for 2 hours or less. 1990 - Interstate Commerce Commission bans smoking on all regularly scheduled interstate buses in the United States. - Congressionally mandated smoking ban extended to flights of 6 hours or less, effectively eliminating smoking on flights within the 48 contiguous States. 1991 - Congress increases Federal excise tax on a pack of cigarettes to 20 cents. 1993 - Congress increases Federal excise tax on a pack of cigarettes to 24 cents. 1994- U.S. Department of Defense bans smoking in all military workplaces, effective April 8, 1994. 1994 Vol. 7 No.3 Since 1980, ... spending on tobacco by households has declined by 49 percent. 35 Table 5. Average annual expenditures for tobacco products and smoking supplies, by demographic characteristics, 1992 Percentage of total annual Characteristic Mean dollars expenditures All households $275 0.9 Income <$10,000 209 1.7 $10,000- $19,999 263 1.4 $20,000- $29,999 297 1.1 $30,000 - $39,999 322 1.0 $40,000- $49,999 322 .8 $50,000- $69,999 342 .7 $70,000 and over 253 .4 Composition of household Husband and wife only 253 .8 Husband, wife with children 322 .8 Single parent (at least one child under age 18) 245 1.2 Housing tenure Homeowner 274 .8 Renter 277 1.3 Type of area Urban 268 .9 Rural 319 1.3 Head of household Age (years) <25 220 1.3 25-34 278 .9 35-44 326 .9 45-54 376 1.0 55-64 310 1.0 65-74 205 .9 75 and over 77 .4 Race White and other 282 .9 Black 219 l.l Occupation Self employed 270 .7 Managers and professionals 216 .5 Technical, sales, and clerical 287 .9 Service 320 1.4 Construction/mechanics 415 1.4 Operators, fabricators, laborers 419 1.5 Retired 154 .8 Source: U.S. Department of LAbor, Bureau of LAbor Statistics, /992 Consumer Expenditure Survey, unpublished data. 36 Also, restrictive regulations have reinforced the concept that smoking in public is a health hazard for nonsmokers and that involuntarily exposing others is socially unacceptable. Restrictions on smoking in the workplace are especially important because employed people spend more time at work than in other public places (28). Therefore, a smoke-free work environment can provide more protection to nonsmokers than any other smoking restrictions or regulations. There are potential health benefits for smokers as well. A ban on smoking at a person's usual workstation reduces workday cigarette consumption, compared with non-workday consumption. With no ban on smoking at the usual workstation, an Australian study found no difference between workday and non-workday cigarette consumption (28). Health Costs Related to Smoking One in five deaths in the United States- 435,000 annually-are caused by smoking (3). Over 80 percent of all U.S. lung cancer deaths and 30 percent of all deaths from cancer can be attributed to smoking (12,25). Also, over 20 percent of cardiovascular deaths result from smoking, accounting for an even greater number of deaths than those from lung and other cancers caused by smoking (25). Smokers have higher death rates than neversmokers at all ages over 35 years (6). Health costs for smokers are higher than those for neversmokers at every age. Over a 95-year lifetime, male smokers average $8,638 in additional lifetime medical expenditures or 32 percent more than neversmokers, and female smokers average an additional $1 0, 119 or 24 percent more ( 1990 dollars) (table 6). Heavy smokers (more than 25 cigarettes per day) average 47 percent higher expenditures than neversmokers if male and 41 percent higher if female (6). Family Economics Review Manning et al. estimated societal costs related to smoking (but not including the value of lives lost to passive smoking and to fires caused by smoking) and concluded that nonsmokers subsidize smokers' medical care and group life insurance, but smokers subsidize nonsmokers' pensions and nursing home payments-because nonsmokers can expect to live longer (10). For smokers, loss in life expectancy was estimated at 28 minutes per pack of cigarettes. Thus, people who smoke a pack a day shorten their lives by 7 days for every year they continue smoking at this rate. Implications Recent trends in smoking prevalence indicate men are more likely than women to quit smoking, as are Whites compared with Blacks, and college graduates compared with those with less education. Cigarette smoking is becoming a behavior observed most frequently among the poorly educated and socioeconomically disadvantaged segments of society (3). Data from the NHIS were used by the Office on Smoking and Health in the U.S. Department of Health and Human Services to project smoking rates among adults age 20 and over for the year 2000 (table 7) (3). Although smoking rates are projected to decline for most segments of our society, the percentage of female smokers will decrease more slowly than the percentage of male smokers, and the prevalence rate among people with a high school education or less is projected to decline only slightly. Each year, a million young people take up smoking and commit the health care system to $8.2 billion in extra medical costs over their lifetimes (6). Both regulatory actions and increased excise taxes have been shown to be effective in curtailing prevalence and consumption of cigarettes, especially among teenagers. Because teenagers experience little difficulty in buying cigarettes-even though in most States it is illegal until age 18, more active surveillance of retailers and substantial penalties for noncompliance Table 6. Lifetime medical expenditures 1 by sex and smoking status Sex Males Lifetime expenditures Excess2 expenditures Ratio to neversmokers Females I Lifetime expenditures Excess2 expenditures Ratio to neversmokers Neversmokers $27,276 $0 1.00 $42,783 $0 1.00 All smokers $35,914 $8,638 1.32 $52,902 $10,119 1.24 Heavy smokers $40,187 $12,911 1.47 $60,347 $17,564 1.41 2 Valu.es are in 1990 dollars. . . . . Med1cal expenditures incurred by smokers m add1uon to tho e mcurred by neversmokers. Source: Hodgson, T.A. , 1992, Cigarelle smoking and lifetime medical expenditures, The Milbank Quarterly 70( I ):81-125. 1994 Vol. 7 No.3 Table 7. Projected smoking rates among adults 20 years and older for the year 2000 Smoking Characteri tics prevalence rate Overall 21.7 Women 22.7 Men 19.9 Black 24.5 White 21.5 College graduate 5.0 Some college 16.0 High chool graduate 30.0 High school dropout 31.0 Source: Fiore, M.C. , / 992, Trends in cigarelle smoking in the United States, the epidemiology of tobacco use, The Medical Clinics of North America 76(2):289-303. would be needed to achieve more effective control (22). One of the national health objectives for the year 2000 sets a nationwide goal to enact and enforce State laws prohibiting the sale and distribution of tobacco products to youth less than 19 years old (22,24). Another objective targets special population group for the reduction of smoking prevalence including Blacks, Hispanics, American Indians/Alaskan Natives, and Southeast Asian men (21,24). The greate t impact from interventions could be achieved by focusing on adolescents and those less educated (2,3). School systems throughout the Nation would need to integrate programs into their health curricula that educate students about the hazards of smoking and the addictive properties of tobacco. 37 38 References 1. Bachman, J.G., et al. 1991. Racial/ethnic differences in smoking, drinking, and illicit drug use among American high school seniors, 1976-89. American Journal of Public Health 81(3):372-377. 2. Blaylock, J.R. and Blisard, W.N. 1992. U.S. cigarette consumption: The case of low-income women. American Journal of Agricultural Economics 74(3):698-705. 3. Fiore, M.C. 1992. Trends in cigarette smoking in the United States. The epidemiology of tobacco use. The Medical Clinics of North America 76(2):289-303. 4. Grise, V.N. 1993. Outlook for U.S. Tobacco. U.S. Department of Agriculture, Economic Research Service. 5. Grise, V. 1992. Cigarette market is changing. Agricultural Outlook. May issue, pp. 17-20. 6. Hodgson, T.A. 1992. Cigarette smoking and lifetime medical expenditures. The Milbank Quarterly 70(1):81-125. 7. Johnston, L.D., O'Malley, P.M., and Bachman, J.G. 1991. Drug Use Among American High School Seniors, College Students and Young Adults, 1975-1990. Volume I. High School Seniors. The University of Michigan Institute for Social Research and U.S. Department of Health and Human Services, National Institute on Drug Abuse. 8. Johnston, L.D., O'Malley, P.M. , and Bachman, J.G. 1991. Drug Use Among American High School Seniors, College Students and Young Adults, 1975-1990. Volume II. College Students and Young Adults. The University of Michigan Institute for Social Research and U.S. Department of Health and Human Services, National Institute on Drug Abuse. 9. Lesmes, G.R. and Donofrio, K.H. 1992. Passive smoking: The medical and economic issues. The American Journal of Medicine, Volume 93 (supplement lA), July 15 issue, pp. JA-38S-42S. 10. Manning, W.G., et al. 1989. The taxes of sin. Do smokers and drinkers pay their way? Journal of American Medical Association 261 (11): 1604-1609. 11. McDermott, R.J., et al. 1992. Multiple correlates of cigarette use among high school students. Journal of School Health 62(4): 146-150. 12. Metropolitan Life Insurance Company. 1992. Cigarette smoking among U.S. adults, 1985-1990, and smoking among selected occupational groups, 1990. Statistical Bulletin 73(4): 12-19. 13. Peter on, D.E., et al. 1992. The effect of State cigarette tax increases on cigarette sales, 1955 to 1988. American Journal of Public Health 82(1):94-96. 14. Peto, J. and Doll, R. 1986. Guest editorial: Passive smoking. British Journal of Cancer 54:381-383. 15. U.S. Department of Agriculture, Economic Research Service. 1993. Tobacco Situation and Outlook Report. TS-225. Family Economics Review 16. U.S. Department of Agriculture, Economic Research Service. 1993. Tobacco Situation and Outlook Report. TS-224. 17. U.S. Department of Agriculture, Economic Research Service. 1993. Tobacco Situation and Outlook Report. TS-222. 18. U.S. Department of Commerce, Bureau of the Census. 1992. Statistical Abstract of the United States, 1992. [!12th ed.] 19. U.S. Department of Health and Human Services, Public Health Service. 1993. Preliminary Estimates From the 1992 National Household Survey on Drug Abuse. Advance Report Number 3. 20. U.S. Department of Health and Human Services, Public Health Service. 1993. Use of smokeless tobacco among adults-United States, 1991. Morbidity and Mortality Weekly Report42(14):263-266. 21. U.S. Department of Health and Human Services, Public Health Service. 1993. Cigarette smoking among adults-United States, 1991. Morbidity and Mortality Weekly Report 42(12):230-233. 22. U.S. Department of Health and Human Services, Public Health Service. 1992. Accessibility of cigarettes to youths aged 12-17 years-United States, 1989. Morbidity and Mortality Weekly Report 41(27):485-488. 23. U.S. Department of Health and Human Services, Public Health Service. 1992. Strategies to Control Tobacco Use in the United States: A Blueprint for Public Health Action in the 1990's. Smoking and Tobacco Control Monograph #1 (NIH)92-3316. 24. U.S. Department of Health and Human Services, Public Health Service. 1991. Healthy People 2000: National Health Promotion and Disease Prevention Objectives. DHHS Publication No. (PHS)91-50212. 25. U.S. Department of Health and Human Services, Public Health Service. 1989. Reducing the Health Consequences of Smoking: 25 Years of Progress. A Report of the Surgeon General. DHHS Publication No. (CDC)89-8411. 26. U.S. Department of Labor, Bureau of Labor Statistics. 1992 Consumer Expenditure Survey. Unpublished data. 27. U.S. Department of Labor, Bureau of Labor Statistics. 1981-1993. CPI Detailed Report. January issues. 28. Wakefield, M.A., eta!. 1992. Workplace smoking restrictions, occupational status, and reduced cigarette consumption. Journal of Occupational Medicine 34 (7):693-697. 29. The Washington Post. 1994. Military gets smoking ban order. March 9 issue. 30. Wasserman, J., et al. 1991. The effects of excise taxes and regulations on cigarette smoking. Journal of Health Economics 10:43-64. 31. Wood, S.L. and White, G.L. 1991. Health hazards of passive smoking: A review. Journal of Health Education 22(5):303-306. 1994 Vol. 7 No.3 39 40 ------------------ Research Summaries Housing Vacancies and Home Ownership The monthly Current Population Survey/ Housing Vacancy Survey, conducted by the Bureau of the Census, U.S. Department of Commerce, provides estimates and characteristics of occupied and vacant housing units. A housing unit (house, apartment, group of rooms, or single room occupied or intended for occupancy as separate living quarters) is classified as occupied if a person or group of people is living in it at the time of the interview or if the occupants are only temporarily absent; otherwise the housing unit is classified as vacant. Housing Vacancies In 1992, national vacancy rates were 7.4 percent for rental housing and 1.5 percent for homeowner housing. The homeowner vacancy rate was lower than the 1991 rate of 1.7 percent, while the rental vacancy rate did not change. The vacancy rate was highest in central cities (8.3 percent for rental housing and 1.8 percent for homeowner housing) and lowest in suburbs (6.4 percent for rental housing and 1.4 percent for homeowner housing). By region of the country, the South had the highest rental vacancy rate (8.2 percent) and the Midwest had the lowest (6.7 percent). The homeowner vacancy rate was highest in the West ( 1.9 percent) and lowest in the Midwest (1.2 percent). Figure 1. Home ownership rates, by State: 1992 Less than 62.0 percent 62.0 to 66.9 percent • 67.0 to 69.9 percent • 70.0 percent and higher Source: Callis, A.A., 1993, Housing Vacancies and Homeownership Annual Statistics: 1992, Current Housing Reports, Series H111/92-A, U.S. Department of Commerce, Bureau of the Census. Family Economics Review Figure 2. U.S. home ownership rates, by age of householder: 1982 and 1992 Percent 100 80 60 40 20 Ol.-.-::J..__---.,Less than 35 55 to 64 01982 • 1992 Age of householder (years) Source: Callis, R.R., 1993, Housing Vacancies and Homeownership Annual Statistics: 1992, Current Housing Reports, Series H111/92-A, U.S. Department of Commerce, Bureau of the Census. The size of housing units influenced vacancy rates in 1992. Units with three rooms or less had a rental vacancy rate of 11.0 percent, compared with 3.1 percent for units with six rooms or more. Similarly, the homeowner housing vacancy rate for units with three rooms or less was 8.4 percent, compared with 1.1 percent for units with six rooms or more. The rental vacancy rate in 1992 for single-family homes was 3.9 percent, compared with 9.3 percent for apartments in buildings with two or more units. For homeowner housing, singlefamily homes had a vacancy rate of 1.3 percent, compared with 5.9 percent for units in multiunit structures. States with highest rental vacancy rates in 1992 were Utah (14.6 percent), Maine (10.7 percent), and South Carolina (10.0 percent). States with highest home- 1994 Vol. 7 No.3 owner vacancy rates in 1992 were Florida (3.0 percent), Hawaii (2.5 percent), and Maine and Nevada (2.3 percent each). The rate for the District of Columbia was 3.3 percent. In 1992, 89.0 percent of all U.S. housing units were occupied unit , 8.2 percent were year-round vacant units, and 2.8 percent were seasonal vacant units. These figures were higher outside metropolitan areas and lower inside metropolitan areas. The South had the highest year-round vacancy rate (10.0 percent) and the Midwest had the lowest (6.7 percent). In 1992, most vacant for-rent units were located in structures of five housing units or more and were vacant for less than 4 months. In contrast, most vacant for-sale units were located in structures of one unit and were vacant 4 months or more. Home Ownership The home ownership rate is computed by dividing the number of owneroccupied households by the total number of household . The U.S. home ownership rate in 1992 was 64.1 percent and has remained at about 64 percent since 1985. Among regions of the country, the highest rate was in the Midwest (67 .2 percent), and the lowest rate was in the West (59.3 percent). The home ownership rate was highest outside metropolitan areas (72.8 percent) and lowest in central cities (49.3 percent). Delaware had the highest home ownership rate in 1992 (73.8 percent), and New York had the lowest (53.3 percent). The rate for the District of Columbia was 35.0 percent. Six States in the South had home ownership rates of 70 percent or higher, wherea five States in the West had home ownership rates below 62 percent (fig. 1). Home ownership rates were highest among tho
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Title | Family Economics Review [1994, Volume 7, Number 3] |
Date | 1994 |
Contributors (group) | Institute of Home Economics (U.S.);United States. Agricultural Research Service;Consumer and Food Economics Research Division;Consumer and Food Economics Institute (U.S.);United States Science and Education Administration;United States. Agricultural Research Service;United States Agricultural Research Service Family Economics Research Group |
Subject headings | Home economics--Accounting--Periodicals |
Type | Text |
Format | Pamphlets |
Physical description | 154 v. ; $c 27 cm. |
Publisher | Washington, D.C. : U.S. Institute of Home Economics, Agricultural Research Service, U.S. Dept. of Agriculture |
Language | en |
Contributing institution | Martha Blakeney Hodges Special Collections and University Archives, UNCG University Libraries |
Source collection | Government Documents Collection (UNCG University Libraries) |
Rights statement | http://rightsstatements.org/vocab/NoC-US/1.0/ |
Additional rights information | NO COPYRIGHT - UNITED STATES. This item has been determined to be free of copyright restrictions in the United States. The user is responsible for determining actual copyright status for any reuse of the material. |
SUDOC number | A 77.245:7/3 |
Digital publisher | The University of North Carolina at Greensboro, University Libraries, PO Box 26170, Greensboro NC 27402-6170, 336.334.5482 |
Full-text | The United States Department of Agriculture (USDA) prohibits discrimination in its programs on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, and marital or familial status. (Not ap prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact the USDA Office of Communications at (202) 720-5881 (voice) or (202) 720-7808 (TDD). To file a complaint, write the Secretary of Agriculture, U.S. Department of Agriculture, Washington, DC 20250, or call (202) 720-7327 (voice) or (202) 720-1127 (TDD). USDA is an equal employment opportunity employer. I F I A IMI I I L I y I I Editor Joan C. Courtless Editorial Assistant Jane W. Fleming E c Family Economics Review is written and published each quarter by the Family Economics Research Group, Agricultural Research Service. U.S. Department of Agriculture, Washington, DC. The Secretary of Agriculture has determined that publication of this periodical is necessary in the transaction of the public business required by law of the Department. This publication is not copyrighted. Contents may be reprinted without permission, but credit to Family Economics Review would be appreciated. Use of commercial or trade names does not imply approval or constitute endorsement by USDA. Family Economics Review is indexed in the following databases: AGRICOLA, Ageline. Economic Literature Index, ERIC, Family Resources, PAIS, and Sociological Abstracts. Family Economics Review is for sale by the Superintendent of Documents. Subscription price is $7.50 per year ($9.40 for foreign addresses). Send subscription orders and change of address to Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. (See subscription form on p. 52.) Suggestions or comments concerning this publication should be addressed to: Joan C. Courtless, Editor. Family Economics Review. Family Economics Research Group, USDA/ARS, Federal Building. Room 439A, Hyattsville, MD 20782. Phone (301) 436-8461. N 0 M I C II II 1994 Vol.? No.3 Feature Articles s PROPER I Y Of THE LIBRARY AUG 15 1994 UniverSity of North Carolina at Greensboro 2 Expenditures on a Child by Families, 1993 Mark Lino 20 Income and Consumer Expenditures of Rural Elders F. N. Schwenk 28 Trends in Tobacco Use Joan C. Courtless Research Summaries 0 . r rr 40 Housing Vacancies and Home Ownership OF THE RY 42 Job-Related Education and Training '\ ;'; ~ 1994 Regular Items • Umver 1 1 ot I nrth f.arolin" ~t irE nstt r~l' 44 Recent Legislation Affecting Families 45 Data Sources 46 Charts From Federal Data Sources 48 Journal Abstracts and Book Summary 49 Poverty Thresholds 50 Cost of Food at Home 51 Consumer Prices 2 Feature Articles Expenditures on a Child by Families, 1993 By Mark Lino Economist Family Economics Research Group Child-rearing expenses consume a large proportion of a family's income. Using data from the 1990 Consumer Expenditure Survey, updated to 1993 dollars, this study examines expenditures on a child in husband-wife and single-parent families with two children. Estimates are provided for major components of the budget by age of child, family income, and region of residence. Overall expenses on a child increase with the age of the child and family income. Housing makes up the largest share of total expenditures on a child regardless of the child's age or household income. Families in the urban West generally have the highest child-rearing expenses. Also, families spend more or less on a child depending on the number of other children in the household and economies of scale. Results of this study should be of use in developing State child support guidelines and foster care payments as well as in family educational programs. [[] ince 1960, the Family Economics Research Group of the U.S. Department of Agriculture (USDA) has provided estimates of expenditures on a child from birth through age 17. These estimates are used in setting child support guidelines, foster care payments, and in educational programs on parenthood. Recent estimates have been based on 1987 expenditure data, updated using the Consumer Price Index (5,6). Because household expenditure patterns change, new estimates were derived using 1990 expenditure data updated to 1993 dollars. This study presents these new estimates for husbandwife and single-parent families. It briefly describes the data and methods used in calculating child-rearing expenses 1 and then discusses the estimated expenses. 1The report. "Expenditures on a Child by Familie , 1993: Technical Report" provides a more detailed description of the data and methodology. To obtain a copy, contact: USDA, ARS, Family Economics Research Group, Federal Building, Room 439A, 6505 Belcrest Rd. , HyattSv ille, MD 20782 (Telephone number: 30 1-436-8461 ). To partially adj ust for price differentials and varying patterns of expenditures, the child-rearing expense estimates for husband-wife families are provided for urban areas in four regions (Northeast, South, Midwest, and West) and rural areas throughout the United States-as well as for the United States overall.2 For single-parent families, estimates are provided only for the United States overall because of sample size limitations. Expenditures on a child are estimated for the major budgetary components: housing, food, transportation, clothing, health care, child care and education, and other miscellaneous goods and services. The box on p. 3 describes each expenditure component. 2Urban areas are defined as Metropolitan Statistical Areas (MSA' s) and other places of 2.500 or more people outside an MSA; rural areas are places of less than 2,500 people outside an MSA. Family Economics Review Source of Data Data used to estimate expenditures on a child are from the 1990 Consumer Expenditure Survey (CE), administered by the Bureau of Labor Statistics (BLS). The CE collects information on sociodemographic characteristics and income of households as well as expenditures. The CE, ongoing since 1980, interviews about 5,000 households each quarter over a 1-year period. Each quarter is deemed an independent sample by BLS, bringing the total number of households in the 1990 survey to about 20,000. From these households, the following husband-wife and single-parent families were selected for this study: those (l) with at least one own child age 17 or under in the household, (2) with six or fewer children, (3) with no other related or umelated people present in the household except own children, and (4) who were complete income reporters. Complete income reporters are households that provided values for major sources of income, such as wages and salaries, self-employment income, and Social Security income. Quarterly expenditures were annualized. The sample was weighted to reflect the U.S. population. Methodology The CE collects overall household expenditure data for some budgetary components (housing, food, transportation, health care, and other miscellaneous goods and services) and child-specific expenditure data for other components (clothing, child care, and education). Multivariate analysis was used to estimate household and child-specific expenditures, controlling for income level, family size, and age of the younger of two children so estimates could be made for families with these varying characteristics. Regional estimates were derived by controlling for region. The 1994 Vol. 7 No.3 Housing expenses include shelter (mortgage interest, property taxes, or rent; maintenance and repairs; and insurance), utilities (gas, elecuicity, fuel, telephone, and water), and house furnishings and equipment (furniture, floor coverings, major appliances, and small appliances). It should be noted that for homeowners, housing expenses do not include mortgage principal payments; such payments are considered in the CE to be a part of savings. Therefore, total dollars allocated to housing by homeowners are underestimated in this report. Food expenses include food and nonalcoholic beverages purchased at grocery stores, convenience stores, and specialty stores; dining out at restaurants; and school meals. Transportation expenses include the net outlay on purchase of new and used vehicles, vehicle finance charges, gasoline and motor oil, maintenance and repairs, insurance, and public transportation. Clothing expenses include children's apparel items such as diapers, shirts, pants, dresses, and suits; footwear; and clothing services such as dry cleaning, alteration and repair, and storage. Health care expenses include medical and dental services not covered by insurance, prescription drugs and medical supplies not covered by insurance, and health insurance premiums not paid by employer or other organization. Child care and education expenses include day care tuition and upplies; babysitting; and elementary and high school tuition, books, and supplies. Other miscellaneous expenses include personal care items, entertainment, and reading materials. three income groups of husband-wife households (1990 before-tax income under $28,900, between $28,900 and $48,900, and over $48,900) were determined by dividing the sample for the overall United States into equal thirds. For each income level, the estimates were for husband-wife families with two children, with the younger child in one of six age categories (0-2, 3-5, 6-8, 9-11, 12-14, and 15-17 years). Households with four members (two children) were selected as the standard since this was the average size of two-parent families in 1990. The focus was on the younger child in a household since the older child was sometimes over age 17. It should be noted that the estimates include two-parent households with and without pecific expenses; so for some families, the mean e timates may be higher or lower depending on whether they incur the expen e or not. This particularly applies to child care and education estimates-about 50 percent of families in the study had no expenditures for this budgetary component. Also, the estimates only cover out-ofpocket expenditures on a child made by the parents and not by others such as grandparents or friends. In addition, the three income categories were calculated for the overall United State by dividing the sample into equal thirds. Regional income categories are based on the e national income categories and may not represent equal thirds in each area. 3 After the various overall household and child- pecific expenditures were estimated, these total amounts were allocated among the four family member (husband, wife, older child, and younger child). Since the estimated expenditures for clothing and child care and education were only for children, allocations of these expenses were made by dividing the estimated expenditures by two (the number of children in the household). Because the CE did not collect expenditures on food and health care by family member, data from other Federal studies were used to apportion these budgetary components to a child by age. Food budget shares as a percentage of total food expenditures, for the younger child in a husband-wife household with two children, were determined using the 1992 USDA food plans (8). These shares were estimated by age of the child and household income level. The food budget shares were then applied to estimated household food expenditures to determine food expenses on a child. Health care shares as a percentage of total health care expenses for the younger child in a husband-wife household with two children were calculated from the 1987 National Medical Expenditure Survey (4). These shares were estimated by age of the child and applied to estimated household health care expenditures to determine expenses on a child. Unlike food and health care, no authoritative base exists for allocating estimated household expenditures on housing, transportation, and other miscellaneous goods and services among individual hou ehold members. Two of the most common approaches for allocating these expenses are the marginal cost method and the per capita method. The marginal cost method measures expenditures on a child as the difference in expenses between a couple with children and an 4 equivalent childless couple. The method depends on development of an equivalency measure; however, there is no universally accepted measure. Various measures have been proposed, each yielding different estimates of expenditures on children.3 Some of the marginal cost approaches assume that parents do not alter their expenditures on themselves after a child is added to a household. In addition, couples without children often buy homes larger than currently needed in anticipation of children. Comparing the expenditures of these couples to similar couples with a child could lead to underestimating the expenditures on a child. For these reasons, the per capita method was used for this study. The per capita method simply allocates expenses among household members in equal proportions. Although the per capita method has its limitations, these limitations were considered less severe than those of the marginal cost approach. A major limitation of the per capita method is that expenditures for an additional child may be less than average expenditures. Because of this, adjustment formulas for cases of one child or three or more children were devised for use when estimating expenditures on a child for households of different sizes. These formulas are discussed later on. Transportation expenses resulting from employment activities are not related to expenses on a child, so these costs were excluded from the estimated household transportation expenses using data from a 1990 study by the U.S. Department of Transportation (12 ). 3For a review of equivalency measures and estimates of expenditures on chi ldren resulting from them, see U.S. Department of Health and Human Services, Administration for Children and Families, 1990, Estimates of Expenditures on Children and Child Support Guidelines (II). Estimated Expenditures on a Child Estimates of family expenditures on the younger child in a husband-wife household with two children for the overall United States, urban regions of the country, and overall rural areas are presented in tables 3-9 on pp. 13-19. Income levels of households were updated to 1993 dollars using the all-items category of the CPI-U, and expenditures were updated using the CPI for the corresponding item (that is, the CPI's for housing, food, etc.). Regional estimates were updated to 1993 dollars using the regional CPI's. Given the large amount of information in the tables, the following subsections highlight the child-rearing expense estimates for the younger child in a two-child household for the overall United States by income level, budgetary component, and age of the child, as well as expense estimates by region. Income Level Estimated expenses on a child vary considerably by household income level (fig. 1). Depending on age of the child, the expenses range from $4,960 to $6,260 for families in the lowest income group ( 1993 before-tax income less than $32,000), from $6,870 to $8,300 for families in the middle income group ( 1993 before-tax income between $32,000 and $54,100), and from $10,210 to $1 I ,790 for families in the highest . income group ( 1993 before-tax income more than $54,100). On average, households in the lowest group spent 27 percent of their before-tax income on a child, those in the middle income group, 17 percent, and those in the highest income group, 13 percent. The range in these percentages would be narrower if after-tax income were considered, since a greater proportion of income in higher income households goes toward taxes. Family Economics Review Figure 1. Estimated 1993 annual family expenditures on a child, by before-tax income level and age of child1 Dollars 12,000 10,000 8,000 6,000 4,000 2,000 0 0-2 3-5 6-8 9-11 12-14 15-17 Age of child 0 Less than $32,000 $32,000-$54,100 • More than $54,1 00 1U.S. average for younger child in two-child family. Although families in the highest income group spent slightly less than twice the amount that families in the lowest income group spent on a child, on average, the amount varied by budgetary component. In general, expenses on a child for goods and services considered to be necessities (such as food) did not vary as much as those considered to be discretionary (such as other miscellaneous expenses) among households in the three income levels. For example, food expenses on a child age 15-17 averaged $1,490 in the lowest income group and $2, 140 in the highest income group, a 44-percent difference. Other miscellaneous expenses on the same age child averaged $540 in the lowest income group and $1,370 in the highest income group, a 154-percent difference. 1994 Vol. 7 No.3 Budgetary Component As a proportion of total child-rearing expenses, housing accounted for the largest share; figure 2 shows this for families in the middle income group. Based on an average for the six age groups, housing accounted for 31 percent of child-rearing expenses for a child in the lowest income group, 33 percent in the middle income group, and 36 percent in the highest income group. Food was the second largest average expense on a child for families regardless of income level, accounting for 20 percent of child-rearing expenses for a child in the lowest income group, 18 percent in the middle income group, and 16 percent in the highest income group. Transportation was the third largest child-rearing expense, making up 14 to 17 percent of child-rearing expenses across income levels. • In general, expenses on a child for goods and services considered to be necessities {such as food) did not vary as much as those considered to be discretionary {such as other miscellaneous expenses) ... 5 6 Expenditures on a child were lower in the younger age categories and higher in the older age categories. This held across income groups ... ---------------------------------- Figure 2. Estimated 1993 family expenditures on a child through age 17, by budgetary share1 Food Other Child Care & Education Clothing Health 1U.S. average for middle income families (1993 before-tax income between $32,000 and $54,100). Clothing was the fourth largest expense on a child for families in the lowest income group (10 percent of child-rearing expenses), whereas other miscellaneous goods and services (personal care items, entertainment, and reading materials) made up the fourth largest expense on a child for families in the middle (10 percent of child-rearing expenses) and highest (12 percent) income groups. Clothing accounted for 8 and 7 percent of expenses on a child for families in the middle and highest income groups. These estimates of children's clothing expenses do not include clothing received in the form of gifts or hand-me-downs. Child care and education were 6 to 9 percent, and health care 5 to 7 percent of child-rearing expenses across income groups. For health care, these estimated expenditures include only out-of-pocket expenses and not that portion covered by health insurance. Age of Child Expenditures on a child were lower in the younger age categories and higher in the older age categories. This held across income groups (figure 3 depicts this for families in the middle income group) even though housing expenses, the highest child-rearing expenditure, generally declined as the child grew older. The decline in housing expenses reflects diminishing interest paid by homeowners over the life of a mortgage. Payments on p1incipal are not considered part of housing costs in the CE. Child-rearing food, transportation, clothing, and health care expenses generally increased over age of a chi ld for all three income levels. Transportation expenses were highest for a child age 15-17, when he or she would start driving. Child care and education expenses were highest for a child under age 6. Most of this expense may be attributable to child care at this age. The estimated expenses for child care and education may seem low for those with the expense. However, as previously discussed, households with and without the expense are included in the estimates. Family Economics Review Figure 3. Estimated 1993 annual family expenditures on a child, by age and budgetary share 1 Percent $6,870 $7,220 $7,460 100 $6,980 $7,390 $8,300 Other t----; Child Care & Education 80 Health Clothing 60 Transportation 40 Food 20 Housing 0 0-2 3-5 6-8 9-11 12-14 15-17 Age of child 1U.S. average for middle income families (1993 before-tax income between $32,000 and $54,100). Region Child-rearing expenses in the various regions of the country reflect patterns observed in the United States overall. In each region, expenses on a child increased with income level of the household and, generally, with age of the child. Overall child-rearing expenses were highest in the urban West, followed by the urban Northeast, urban South, and rural areas; figure 4 shows total child-rearing expenses by region and age of a child for middle income families. Child-rearing expenses were lowest in the urban Midwest; households in the urban Midwest had child-rearing expenses that averaged 2 to 3 percent below those of households in rural areas. This is contrary to previous estimates by the Family Economics Research Group where rural areas had the lowest child-rearing expense estimates and the urban Midwest the second lowest. 1994 Vol. 7 No. 3 Much of the difference in expenses on a child among regions was related to housing costs. Total housing expenses on a child were highest in the urban West and lowest in rural areas. However, child-rearing transportation expenses were highest for families in rural areas. This likely reflects the longer distances that must be traveled and the lack of public transportation in these areas. Adjustments for Older Children and Household Size The expense estimates on a child represent expenditures on the younger child at various ages in a husband-wife household with two children. It cannot be assumed that expenses for the older child are the same at these various ages. Expenses may vary by birth order. To determine whether a difference exists, the extent of this difference, and how the expenditures may be adjusted to estimate expenses on an older child, the method described on pp. 3-4 was repeated, with the focus being on the older child in each of the same age categories as used with the younger child. A family with two children was again used as the standard. Household income and region of residence were not held constant, so findings are applicable to all families . It was found that, on average, husbandwife household with two children spent about the same amount on a younger and older child (except for differences caused by age). So, the figures in tables 3-9 reflect expenditures on either child in a two-child family. Thus, annual expenditures on children in a husbandwife, two-child family may be estimated by summing the expenses for the two appropriate age categories. For example, annual expenditures on children ages 9-11 and 15-17 in a husband-wife family in the middle income group for the overall United States would be $15,280 ($6,980 + $8,300). The estimates should also be adjusted if a household has only one child or more than two children. Families will spend more or less on a child depending on the number of other children in the household and economies of scale. To derive these adjustments, multivariate analysis was used to estimate expenditures for each budgetary component controlling for household size and age of the younger child, but not household income level and region of the country, so the results are applicable to all families. These expenditures were then assigned to a child using the method previou ly described. Compared with expenditures for each child in a husband-wife, twochild family, husband-wife households with one child spent an average of 26 percent more on the single child, and those with three or more children spent an average of 22 percent less on each child. 7 Therefore, to adju t the figures in table 3-9 to estimate annual overall expenditures on an only child, 26 percent should be added to the total expense for the child's age category. To estimate expenditures on three or more children, 22 percent should be subtracted from the total expense for each child's age category and the e totals should be summed. As an example of adjustments needed for different numbers of children, the total expenses for a middle income family in the overall United States on a child age 15-17 with no siblings would be $10,460 ($8,300 x 1.26) and the total expense on three children ages 3-5, 12-14, and 15-17 would be $17,870 (($7,220 + $7,390 + $8,300) X .78). Expenditures by Single-Parent Families The estimates of expenditures on a child by husband-wife families do not apply to single-parent families, which account for an increasing percentage of families with children. Therefore, separate estimates of child-rearing expenses in single-parent households were made using CE data. Most si ngleparent families in the survey (91 percent) were headed by a woman. The method used in determining childrearing expenses for two-parent households was followed. Multivariate analysis was used to estimate expenditures for each budgetary component, controlling for income level, household size (a single parent with two children was used as the standard), and age of the younger child (the same age categories as used with children in two-parent families). Income groups of single-parent households (1990 before-tax income under $28,900 and $28,900 and over) were selected to correspond with the income groups used in estimating child-rearing expenditure in husband-wife households. This income includes child support payments. The two higher 8 Figure 4. Estimated 1993 annual family expenditures on a child, by region and age 1 1993 dollars 9,000 8,500 8,000 7,500 ·-- ---- 7,000 6,500 j(' _, -" ---- A / / ,-11 / // 6,000 ';;--::;:---::;-;:------:;:-;::------;:::--:;-7----:;-;::--:;-::----:;-;::~ 0-2 3-5 6-8 9-11 12-14 15-17 Age of child Urban Midwest Rural Urban South Urban Northeast Urban West - - 1U.S. average for middle income families in 1993. income groups of two-parent fami lies ( 1990 before-tax income between $28,900 and $48,900 and over $48,900) were combined because only 16 percent of single-parent households had a 1990 before-tax income of $28,900 and over. The sample was weighted to reflect the U.S. population. Children's clothing and child care and education expenditures were divided between the two children in the oneparent household. For food and health care, household member shares were calculated for a three-member household (single parent and two children, with the younger child in one of the six age categories) using the USDA food plans and the 1987 National Medical Expenditure Survey findings. These shares for the younger child in a singleparent family were then applied to estimated food and health care expenditures to determine expenses on the younger child in each age category. • - Housing, transportation, and other miscellaneous expenditures were allocated among household members on a per capita basis. Transportation expenses were adjusted to account for nonemployment-related activities in single-parent families. Income and expenses were updated to 1993 dollars. Child-rearing expense estimates forsingle- parent families are in table 9. For the lower income group ( 1993 before-tax incomes less than $32,000), a comparison of estimated expenditures on the younger child in a single-parent family with two children with those in a husband-wife family is presented in table I; as previously discussed, 84 percent of single-parent familie and 33 percent of husband-wife fami lies were in this lower income group. More single-parent than husband-wife families fell in the bottom range of this lower income group. Average income for single-parent families in the lower Family Economics Review Table 1. A comparison of estimated 1993 expenditures on a child by single-parent and husband-wife families 1 Single-parent Husband-wife Age of child households households 0-2 $4,310 $4,960 3-5 4,970 5,260 6-8 5,710 5,520 9- II 4,980 5,070 12- 14 5,350 5,500 15 - 17 6,400 6,260 Total (0 - 17) $95,160 $97,710 1 Estimate> are for the younger child in a two-child family in the overall United States with 1993 beforetax income less than $32,000. income group was $13,700, compared with $20,000 for husband-wife families in this income group. However, total expenditures on a child through age 17 were, on average, only 3 percent lower in single-parent households than in twoparent households. Single-parent families in this lower income group, therefore, spend a larger proportion of their income on children. On average, housing and clothing expenses were higher, whereas transportation, health care, child care and education, and other miscellaneous expenditures on a child were lower in single-parent than in husband-wife households. Childrelated food expenditures were similar, on average, in single-parent and in twoparent families. For the higher income group of singleparent families (1993 before-tax income of $32,000 or over), child-rearing expense estimates were about the same as those for two-parent households in the before-tax income group of $54,100 or over: Total expenses for the younger child through age 17 were $192,930 for single-parent families versus $192,780 for husband-wife families. Therefore, child-rearing expenses for the higher income group of single-parent families 1994 Vol. 7 No. 3 also consume a larger proportion of income than in husband-wife families. It appears that expenditures on children do not differ very much between singleparent and husband-wife households. What differs is household income levels. As single-parent families have one less potential earner (the absent partner), on average, their total household income is lower and child-rearing expenses are a greater percentage of this income. Estimates only cover out-of-pocket child-rearing expenditures made by the parent with primary care of the child and do not include child-related expenditures made by the parent without primary care or others, such as grandparents. Such expenditures could not be estimated from the data. Overall expenses by both parents on a child in a single-parent household, therefore, are likely greater than this study's estimates. To determine the extent of the difference in expenditures on an older child in single-parent households, the previous procedure was essentially repeated with the focus being on the older child. A family with two children was used as the standard. On average, single-parent households with two children spent about 8 percent le s on the older than 0 It appears that expenditures on children do not differ very much between single-parent and husband-wife households. What differs is household income levels. 9 on the younger child (in addition to differences caused by age). This contrasts with husband-wife households that spent about the same amount on the older and younger child. A with husband-wife households, more or less is spent if a single-parent household has only one child or three or more children. To determine these differences, multivariate analysis was used to estimate expenditures for each budgetary component controlling for household size and age of the younger child. These expenditures were then assigned to a child using the previous method. Compared with expenditures for the younger child in a single-parent, twochild family, single-parent households with one child spent about 37 percent more on the single child, and those with three or more children spent about 28 percent less on each child. Comparisons With Past Estimates The child-rearing expense estimates presented in this study are based on data from the 1990 CE updated to 1993 dollars. Previous expense estimates of the Family Economics Research Group were based on the 1987 CE updated to 1992 prices (9). Table 2 compares the 1992 and 1993 overall U.S. estimates of expenditures on the younger child in a two-child household for husband-wife and single-parent families. The before-tax income of the bottom third income group was slightly lower in 1993 than in 1992. This represents a decline in real income for lower income families. For husband-wife households in the lower income group, although the real income of these families declined, estimated expenses on children increased by about 6 percent from 1992 to 1993. This increase was greater than the inflation rate of 3 percent over this period (1 0). 10 ---- ------------------------~~~ Table 2. Comparison of estimated 1992 and 1993 total (from birth to age 18) expenditures on a child by husband-wife and single-parent families, overall United States 1 1992 1993 Before-tax income Total expenditures Before-tax income Total expenditures Husband-wife families Less than $32,100 $92,070 Less than $32,000 $97,710 $32,100 to $51,900 $128,670 $32,000 to $54, I 00 $132,660 More than $51 ,900 $180,690 More than $54,100 $192,780 Single-parent families Less than $32,100 $96,630 Less than $32,000 $95,160 $32,100 or more $179,730 $32,000 or more $192,930 1 Estimates are forthe younger child in a two-child family. The middle income group of husbandwife families experienced a 3-percent increase in child-rearing expenses and the higher income group a 7-percent increase. In addition to increases in expenditures by husband-wife families on the younger child in a two-child household, there have been changes in expenses on the older child and expenses on an only child or three or more children. Findings based on the 1987 CE showed that husband-wife households spent about 3 percent more on an older child than a younger child (in addition to differences caused by age). In contrast, when the 1990 CE and more current data for allocating various budgetary components were used, no difference in expenses between the older and younger child was found. Also, using the 1990 CE, husband-wife families spent 26 percent more on an only child than on a child in a two-child family, compared with 21 p·ercent more using the 1987 CE. Husband-wife families with three or more children spent 22 percent less on each child using either the 1987 or the 1990 CE. Based on the more recent expenditure data and more recent sources for allocating food, transportation, and health care expenses, single-parent families in the lower income group spent 2 percent less on a younger child in a two-child family in 1993 than in 1992, whereas those in the higher income group spent 7 percent more. Single-parent families spent 8 percent less on an older child using the 1990 CE, compared with 11 percent less using the 1987 CE. Using either the 1987 or the 1990 CE, single-parent households spent 37 percent more on an only child than on a child in a twochild family. In cases of three or more children, single-parent families spent 28 percent less on each child than in a two-child family using the 1990 CE, whereas they spent 26 percent less on each child using the 1987 CE. These differences in child-rearing expense estimates show the need to update such estimates using the most recent expenditure data and the most recent studies to allocate various budgetary components among family members. Parental expenditures on children not only change with the general cost of living but with different economic and social conditions. Family Economics Review Estimating Future Costs The estimates presented in this study represent household expenditures on a child of a certain age in 1993. To estimate these expenses for the first 17 years, future price changes need to be incorporated in the figures. To do this, a future cost formula is used such that: CJ= Cp(l + i)" where: Cj= projected future annual dollar expenditure on a child of a particular age Cp =present (1993) annual dollar expenditure on a child of a particular age i =projected annual inflation (or deflation) n = number of years from present until child will reach a particular age An example of estimated future Estimated annual expenditures on a child born in 1993, by income group1 expenditures on the younger child in a husband-wife family with two Income group children for each of the three in- Year Age Lowest Middle Highest come groups for the overall United States is presented. The example assumes a child is born in 1993, 1993 <1 $4,960 $6,870 $10,210 reaching age 17 in the year 2010, 1994 1 5,260 7,280 10,820 and the average annual inflation 1995 2 5,570 7,720 11,470 rate over this time is 6 percent (the average annual inflation rate over 1996 3 6,260 8,600 12,660 the past 20 years) (10). As can be 1997 4 6,640 9,120 13,420 seen, total family expenses on a 1998 5 7,040 9,660 14,230 child through age 17 would be $170,920,$231,140, and $334,590 1999 6 7,830 10,580 15,250 for households in the lowest, mid- 2000 7 8,300 11 ,220 16,160 die, and highest income groups, 2001 8 8,800 11,890 17,130 respectively. In 1993 dollar values, these figures would be $97,710, 2002 9 8,570 11,790 17,230 $132,660, and $192,780. 2003 10 9,080 12,500 18,270 Inflation rates other than 6 percent 2004 11 9,620 13,250 19,360 could be substituted into the for- 2005 12 11 ,070 14,870 21,490 mula if projections of these rates 2006 13 11,730 15,760 22,780 vary in the future. Also, it is some-what unrealistic to assume that 2007 14 12,430 16,710 24,150 households remain in one income 2008 15 15,000 19,890 28,260 category as a child grows older. For 2009 16 15,900 21,080 29,950 most families, income rises over 2010 17 16,860 22,350 31,750 time. In addition, such projections assume child-rearing expenditures Total $170,920 $231,140 $334,590 change only with inflation. Com-parisons of the estimates using the 1 Estimates are for the younger child in a husband-wife family with two chi ldren for the overall United 1987 CE and 1990 CE show that States. parental expenditure patterns change over time. 1994 Vol. 7 No.3 11 Other Expenditures on Children Expenditures on a child estimated in this study were composed of direct parental expenses made on a child through age 17 for seven major budgetary components. These direct expenditures excluded costs related to childbirth and prenatal health care. In 1991, these particular health care costs averaged $4,720 for a normal delivery and $7,826 for a cesarean delivery (3). These costs may be reduced by health insurance. One of the largest expenses related to a child after age 17 is for a college education. The College Board (2) estimated that in 1993-94, average annual tuition and fees were $2,240 at 4-year public colleges and $9,516 at 4-year private colleges; annual room and board was $3,566 at 4-year public colleges and $4,226 at 4-year private colleges. For 2-year colleges in 1993-94, average annual tuition and fees were $1,271 at public colleges and $5,991 at private ones; annual room and board was $3,820 at 2-year private colleges (no estimates were given for 2-year public colleges). Other parental expenses on a child after age 17 could include those associated with a child living at home and gifts and contributions to a child after this age. Indirect costs involved in the rearing of children were also not included in the estimates. Although these costs are typically more difficult to measure than direct expenditures, they may be substantial. The time involved in rearing children is considerable. The dollar value of household work done by nonBlack married women in 1988 was estimated to be between $8,750 and $10,830; that of non-Black males was estimated to be between $3,200 and $7,080 (1). In addition, earnings and 12 future career opportunities may be diminished because time in the labor force for one or both parents is reduced to care for children. For women who References gave birth, one study found that the earnings foregone in the year of birth and in the two subsequent years averaged $14,400 in 1986 dollars (7). 1. Bryant, W.K., Zick, C.D., and Kim, H. 1992. The Dollar Value of Household Work. College of Human Ecology, Cornell University. 2. The College Board. 1993. News from the College Board. September 22 issue. 3. Health Insurance Association of America. 1992. Source Book of Health Insurance Data. [1992 ed.] Washington, DC. 4. Lefkowitz, D., and Monheit, A. 1991. Health Insurance, Use of Health Services, and Health Care Expenditures (AHCPR Pub. No. 92-0017). National Medical Expenditure Survey Research Findings 12, Agency for Health Care Policy and Research, Public Health Service, Rockville, MD. 5. Lino, M. 1990. Expenditures on a child by husband-wife families. Family Economics Review 3(3):2-18. 6. Lino, M. 1991. Expenditures on a child by single-parent families. Family Economics Review 4(/):2-7. 7. Spalter-Roth, R.M., and Hartmann, H.l. 1990. Unnecessary Losses: Costs to Americans of the Lack of Family and Medical Leave. Institute for Women's Policy Research, Washington, DC. 8. U.S. Department of Agriculture, Human Nutrition Information Service. 1992. Cost of food at horne. Family Economics Review 5(3):37. 9. U.S. Department of Agriculture, Agricultural Research Service, Family Economics Research Group. 1993. Expenditures on a Child by Families, 1992. I 0. U.S. Department of Commerce, Bureau of the Census. 1993. Statistical Abstract of the United States, 1993. [113th ed.] 11. U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. 1990. Estimates of Expenditures on Children and Child Support Guidelines. 12. U.S. Department of Transportation, Federal Highway Administration. 1990 Nationwide Personal Transportation Study (forthcoming). Family Economics Review Table 3. Estimated annual expenditures on a child by husband-wife families, overall United States, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Othe,2 Income: Less than $32,000 (Average income=$20,000) 0- 2 . . .. . . .. 4,960 1,870 730 720 380 330 530 400 3- 5 ... .. . .. 5,260 1,910 830 740 380 330 600 470 6- 8 . . .. .. .. 5,520 1,830 1,040 960 450 370 290 580 9- 11 . ... .. . 5,070 1,490 1,240 810 450 410 180 490 12-14 ....... 5,500 1,530 1,220 1,010 720 380 110 530 15-17 ....... 6,260 1,550 1,490 1,270 730 460 220 540 Total (0- 17) . . 97,710 30,540 19,650 16,530 9,330 6,840 5,790 9,030 Income: $32,000 to $54,100 (Average income=$42,600) 0- 2 .. . . . . . . 6,870 2,560 870 1,080 450 410 840 660 3-5 . ..... . . 7,220 2,600 1,020 1 '100 440 400 930 730 6-8 ... .. . . . 7,460 2,520 1,270 1,320 530 470 510 840 9- 11. . .... . 6,980 2,190 1,500 1,170 520 510 340 750 12- 14 ... . ... 7,390 2,220 1,490 1,370 830 470 220 790 15-17 . . . .. . . 8,300 2,250 1,750 1,650 850 560 440 800 Total (0- 17) .. 132,660 43,020 23,700 23,070 10,860 8,460 9,840 13,710 Income: More than $54,100 (Average income=$79,400) 0-2 . .... . . . 10,210 4,050 1,200 1,330 600 480 1,320 1,230 3-5 .. . . . . . . 10,630 4,090 1,370 1,360 600 480 1,430 1,300 6-8 . . ...... 10,750 4,010 1,620 1,580 700 560 870 1,410 9- 11 . . . ... . 10,200 3,670 1,870 1,430 690 600 620 1,320 12- 14 . ..... . 10,680 3,710 1,890 1,630 1,090 570 430 1,360 15-17 ....... 11 ,790 3,730 2,140 1,920 1 '11 0 660 860 1,370 Total (0- 17) . . 192,780 69,780 30,270 27,750 14,370 10,050 16,590 23,970 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. 1994 Vol. 7 No. 3 13 Table 4. Estimated annual expenditures on a child by husband-wife families, urban West, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Other2 Income: Less than $32,100 (Average income=$20,200) 0- 2 . ....... 5,470 2,230 770 820 380 290 550 430 3-5 . .... ... 5,730 2,250 870 850 370 280 610 500 6-8 ....... . 6,030 2,200 1,090 1,060 450 320 300 610 9- 11 ....... 5,650 1,920 1,300 910 440 360 190 530 12-14 ....... 6,000 1,900 1,270 1,120 700 330 110 570 15-17 ..... .. 6,800 1,960 1,540 1,380 710 400 230 580 Total (0- 17) .. 107,040 37,380 20,520 18,420 9,150 5,940 5,970 9,660 Income: $32,100 to $54,400 (Average income=$42,900) 0- 2 .... . ... 7,410 2,920 910 1,200 440 360 880 700 3-5 . ....... 7,760 2,950 1,070 1,220 440 360 960 760 6-8 ........ 8,000 2,900 1,330 1,440 520 410 520 880 9- 11 .. ... .. 7,590 2,620 1,570 1,290 520 450 350 790 12-14 .. ..... 7,930 2,600 1,540 1,500 810 420 230 830 15-17 ....... 8,870 2,660 1,810 1,770 830 500 460 840 Total (0- 17) .. 142,680 49,950 24,690 25,260 10,680 7,500 10,200 14,400 Income: More than $54,400 (Average income=$79,900) 0-2 ........ 10,690 4,330 1,230 1,450 590 440 1,380 1,270 3-5 ........ 11,110 4,360 1,400 1,480 590 440 1,500 1,340 6-8 ........ 11,200 4,300 1,660 1,700 680 510 900 1,450 9- 11 ... . ... 10,740 4,020 1,930 1,540 680 550 650 1,370 12-14 ....... 11 '130 4,000 1,930 1,750 1,070 520 450 1,410 15-17 ....... 12,320 4,060 2,190 2,040 1,090 600 920 1,420 Total (0- 17) .. 201 ,570 75,210 31 ,020 29,880 14,100 9,180 17,400 24,780 1 Estimates are based on data from the 1990 Consumer Expenditure SuNey updated to 1993 dollars using the regional CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. The Western region consists of the following States: Alaska Nevada Arizona California Colorado Hawaii Idaho Montana 14 New Mexico Oregon Utah Washington Wyoming Family Economics Review Table 5. Estimated annual expenditures on a child by husband-wife families, urban Northeast, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Other2 Income: Less than $32,100 (Average income=$20,100) 0-2 ........ 5,130 2,070 830 700 380 320 420 410 3- 5 ........ 5,390 2,100 930 730 380 310 470 470 6- 8 ...... .. 5,770 2,040 1,160 950 450 360 220 590 9- 11 . ... ... 5,400 1,760 1,380 790 450 390 130 500 12-14 .. . . . . . 5,820 1,750 1,350 1,010 720 370 80 540 15-17 ... . ... 6,550 1,800 1,620 1,260 730 430 160 550 Total (0- 17) .. 102,180 34,560 21 ,810 16,320 9,330 6,540 4,440 9,180 Income: $32,100 to $54,300 (Average income=$42,800) 0-2 .. ...... 7,030 2,770 970 1,080 450 400 690 670 3-5 ....... . 7,370 2,800 1,120 1,110 440 390 770 740 6- 8 . . ... . .. 7,690 2,740 1,400 1,330 530 450 390 850 9 - 11 ....... 7,320 2,460 1,640 1,170 530 490 260 770 12- 14 ....... 7,710 2,440 1,630 1,380 840 460 160 800 15-17 .. .. ... 8,580 2,500 1,890 1,660 850 540 330 810 Total {0- 17) .. 137,100 47,130 25,950 23,190 10,920 8,190 7,800 13,920 Income: More than $54,300 (Average income=$79,800) 0- 2 ........ 10,250 4,170 1,280 1,340 600 480 1,130 1,250 3-5 . .. . .... 10,640 4,200 1,460 1,370 600 470 1,230 1,310 6-8 . ....... 10,840 4,150 1,720 1,590 690 550 710 1,430 9- 11 ....... 10,420 3,870 2,000 1,430 690 590 500 1,340 12-14 ... .... 10,860 3,850 2,000 1,640 1,090 560 340 1,380 15-17 . ...... 11,920 3,900 2,260 1,930 1,110 640 690 1,390 Total {0- 17) . . 194,790 72,420 32,160 27,900 14,340 9,870 13,800 24,300 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the regional CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. The Northeastern region consists of the following States: Connecticut New York Maine Pennsylvania Massachusetts Rhode Island New Hampshire Vermont New Jersey 1994 Vol. 7 No.3 15 Table 6. Estimated annual expenditures on a child by husband-wife families, urban South, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Othe~ Income: Less than $31,800 (Average income=$20,000) 0-2 ... 0 0 0 0 0 4,850 1,830 690 580 410 380 590 370 3-5 0 0 0 0 0 0 0 0 5,120 1,860 790 610 400 370 650 440 6- 8 0 0 0 0 0 0 0 0 5,390 1,800 990 820 480 430 330 540 9 - 11 0 0 0 0 0 0 0 5,010 1,530 1 '190 670 480 470 210 460 12-14 ....... 5,380 1,510 1 '160 880 760 440 130 500 15-17. ······ 6,160 1,560 1,420 1,130 770 510 260 510 Total (0 -17) .. 95,730 30,270 18,720 14,070 9,900 7,800 6,510 8,460 Income: $31,800 to $53,900 (Average income=$42,400) 0- 2 0 0 0 0 0 0 0 0 6,800 2,520 840 950 480 460 920 630 3-5 0 0 0 0 0 0 0 0 7,130 2,540 980 980 480 460 1,000 690 6- 8 0 0 0 0 0 0 0 0 7,370 2,490 1,230 1,200 560 530 560 800 9- 11 0 0 0 0 0 0 0 6,930 2,210 1,450 1,040 560 570 380 720 12- 14. 0 0 0 0 0 0 7,310 2,200 1,430 1,250 880 540 250 760 15-17 ..... 00 8,260 2,250 1,690 1,520 900 620 510 770 Total (0- 17) .. 131 ,400 42,630 22,860 20,820 11,580 9,540 10,860 13,110 Income: More than $53,900 (Average income=$79,100) 0-2 0 0 0 0 0 0 0 0 10,050 3,900 1,150 1,210 640 550 1,410 1,190 3- 5 0 0 0 0 0 0 0 0 10,440 3,930 1,310 1,240 640 550 1,520 1,250 6-8 0 0 0 0 0 0 0 0 10,560 3,880 1,550 1,450 740 640 940 1,360 9- 11 0 0 0 0 0 0 0 10,090 3,600 1,810 1,300 730 680 690 1,280 12- 14. 0 0 0 0 0 0 10,500 3,580 1,810 1,510 1,150 640 490 1,320 15-17 ... . ... 11 ,710 3,640 2,060 1,780 1,180 730 990 1,330 Total (0- 17) . . 190,050 67,590 29,070 25,470 15,240 11,370 18,120 23,190 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the regional CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. The Southern region consists of the following States: Alabama Kentucky South Carolina Arkansas Louisiana Tennessee Delaware Maryland Texas District of Columbia Mississippi Virginia Florida North Carolina West Virginia Georgia Oklahoma 16 Family Economics Review Table 7. Estimated annual expenditures on a child by husband-wife families, urban Midwest, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Othe,-2 Income: Less than $31,800 (Average income=$19,900) 0-2 ...... .. 4,570 1,750 650 620 360 290 520 380 3-5 .. . ... . . 4,850 1,780 750 650 350 290 580 450 6-8 . .. . .. .. 5,120 1,720 940 860 430 330 280 560 9- 11. ... . . . 4,740 1,440 1,140 710 430 360 180 480 12- 14 .. .... . 5,090 1,430 1,100 920 680 340 110 510 15-17 . . .... . 5,850 1,480 1,370 1,170 690 400 220 520 Total (0- 17) .. 90,660 28,800 17,850 14,790 8,820 6,030 5,670 8,700 Income: $31,800 to $53,800 (Average income=$42,400) 0-2 .. . . . . . . 6,500 2,440 800 990 430 370 830 640 3- 5 . ....... 6,840 2,470 940 1,020 420 370 910 710 6-8 ... ... .. 7,050 2,410 1,180 1,230 500 420 490 820 9- 11 . . .... . 6,650 2,140 1,400 1,080 500 460 330 740 12- 14 ....... 7,000 2,120 1,380 1,290 800 430 210 770 15-17 ... ... . 7,880 2,170 1,640 1,550 810 500 430 780 Total (0- 17) .. 125,760 41 ,250 22,020 21,480 10,380 7,650 9,600 13,380 Income: More than $53,800 (Average income=$79,000) 0- 2 .. . .. . .. 9,720 3,830 1 '11 0 1,250 570 450 1,300 1,210 3 - 5 . . . . .. . . 10,110 3,860 1,270 1,270 570 450 1,410 1,280 6-8 ........ 10,200 3,800 1,510 1,480 660 510 850 1,390 9- 11 . .. .... 9,760 3,530 1,770 1,330 660 560 610 1,300 12-14 .. . . . . . 10,150 3,510 1,760 1,540 1,050 520 430 1,340 15-17 . ...... 11 ,280 3,560 2,020 1,810 1,070 610 860 1,350 Total (0- 17) .. 183,660 66,270 28,320 26,040 13,740 9,300 16,380 23,610 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the regional CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.} 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. The Midwestern region consists of the following States: Illinois Missouri Indiana Nebraska Iowa North Dakota Kansas Ohio Michigan South Dakota Minnesota Wisconsin 1994 Vol. 7 No. 3 17 Table 8. Estimated annual expenditures on a child by husband-wife families, Rural, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Othe~ Income: Less than $31 ,700 (Average income=$19,900) 0-2 ........ 4,700 1,480 740 840 380 340 520 400 3-5 ........ 4,960 1,510 830 860 370 340 580 470 6-8 ........ 5,270 1,460 1,040 1,080 450 390 280 570 9- 11 ....... 4,910 1,180 1,250 930 450 430 180 490 12- 14 ....... 5,290 1,170 1,220 1,130 730 400 110 530 15-17 ....... 6,060 1,220 1,480 1,390 740 470 220 540 Total (0- 17) .. 93,570 24,060 19,680 18,690 9,360 7,110 5,670 9,000 Income: $31,700 to $53,700 (Average income=$42,400) 0-2 ........ 6,630 2,170 880 1,210 450 430 830 660 3-5 ........ 6,960 2,200 1,030 1,230 440 420 920 720 6-8 ........ 7,210 2,150 1,280 1,450 520 490 490 830 9 - 11 . . ..... 6,820 1,870 1,510 1,300 530 530 330 750 12- 14 ....... 7,190 1,850 1,490 1,500 850 500 210 790 15-17 ....... 8,110 1,910 1,750 1,780 860 580 430 800 Total (0- 17) .. 128,760 36,450 23,820 25,410 10,950 8,850 9,630 13,650 Income: More than $53,700 (Average income=$78,900) 0-2 ........ 9,840 3,550 1,190 1,460 600 510 1,310 1,220 3- 5 ........ 10,230 3,580 1,350 1,490 590 510 1,420 1,290 6-8 ....... . 10,360 3,530 1,600 1,700 690 590 860 1,390 9 - 11 ..... . . 9,910 3,250 1,860 1,550 690 630 620 1,310 12- 14 ....... 10,340 3,240 1,860 1,760 1,100 600 430 1,350 15-17 ....... 11,470 3,290 2,110 2,040 1,120 680 870 1,360 Total (0- 17) .. 186,450 61 ,320 29,910 30,000 14,370 10,560 16,530 23,760 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the regional CPI-U. The figures represent estimated expenses on the younger child in a two-child family. Estimates are about the same for the older child, so to calculate expenses for two children, figures should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.26. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.78. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. Rural areas throughout the United States are represented and are defined as places of less than 2,500 people outside a Metropolitan Statistical Area. 18 Family Economics Review Table 9. Estimated annual expenditures on a child by single-parent families, overall United States, 19931 Child care Transpor- Health and Age of child Total Housing Food tation Clothing care education Othe,.-2 Income: Less than $32,000 (Average income=$13,700) 0-2 ........ 4,310 1,570 830 690 450 190 380 200 3-5 ........ 4,970 1,870 860 760 430 270 490 290 6-8 ........ 5,710 2,090 1,060 630 550 390 530 460 9 - 11 .. ..... 4,980 1,910 1,170 580 530 420 120 250 12-14 . ...... 5,350 1,830 1,200 670 750 420 160 320 15-17 . ...... 6,400 2,130 1,420 820 1,010 530 150 340 Total (0- 17) . . 95,160 34,200 19,620 12,450 11 '160 6,660 5,490 5,580 Income: $32,000 or more (Average income=$47,900) 0- 2 ........ 9,600 3,630 1,350 1,570 600 330 950 1,170 3- 5 ........ 10,370 3,920 1,420 1,630 570 440 1,140 1,250 6-8 ........ 11 ,320 4,140 1,730 1,500 720 600 1,200 1,430 9 - 11 .. .. ... 10,310 3,960 1,930 1,450 690 650 420 1,210 12- 14 ....... 10,860 3,890 1,940 1,550 960 640 600 1,280 15-17 ....... 11,850 4,180 2,150 1,590 1,260 790 580 1,300 Total (O- 17) 192,930 71 '160 31,560 27,870 14,400 10,350 14,670 22,920 1 Estimates are based on data from the 1990 Consumer Expenditure Survey updated to 1993 dollars using the CPI-U. The figures represent estimated expenses on the younger child in a two-child family. For estimated expenses on the older child, multiply the total expense for the appropriate age category by 0.92. To estimate expenses for two children, the expenses on the younger child and older child-after adjusting the expense on the older child downward-should be summed for the appropriate age categories. To estimate expenses for an only child, multiply the total expense for the appropriate age category by 1.37. To estimate expenses for each child in a family with three or more children, multiply the total expense for each appropriate age category by 0.72-after adjusting the expenses on the older children downward. (For expenses on all children in a family, these totals should be summed.) 20ther miscellaneous expenses include personal care items, entertainment, and reading materials. 1994 Vol. 7 No.3 19 20 Income and Consumer Expenditures of Rural Elders By F.N. Schwenk Research Leader Family Economics Research Group Poverty statistics indicate that nonmetro elderly are more likely to be poor than metro elderly. This study provides additional information on differences in the economic status of rural and urban elderly households. The Consumer Expenditure Interview Survey data for 1990 and 1991 were used to provide income and expenditure information on rural and urban elderly households. Findings show that rural elders had 84 percent as much income and spent 85 percent as much as urban elders. Rural elderly women living alone had 69 percent as much income and spent 79 percent as much as urban elderly women living alone. Rural elderly women living alone are particularly at risk economically. Policy planners and service providers may need to be especially aware of their needs. [QJ ne of four Americans who are 65 years or older lives in a nonmetropolitan area 1 (4). Thus, nonmetro elders are an important segment of the elderly population. Various studies have reported that these elders tend to fare less well than metro elders. A recent publication (5) of the Interagency Forum on Aging-Related Statistics reports data on nonmetro elders from several national surveys. These data on poverty, housing, health, and other measures of well-being indicate that nonmetro elderly may be less well-off than urban elderly. The report states that "a higher percent of nonmetro elderly than metro elderly are impoverished; one-half of nonmetro 1 "Nonmetropolitan" refers to counties outside a metropolitan area. A metropolitan area is a county (or counties) containing a place or urbanized area of 50,000 people or more with a total population of at least I 00,000, including adjacent counties that have a high degree of economic and social integration with the central county. elderly are in poor, near-poor, or low income families." Although nonmetro elderly are more likely to own their home, the homes are of lower value and in poorer physical condition than homes owned by metropolitan elders. The report indicates that nonmetro elderly are not healthier nor more active than metro elderly persons. There is no difference in the percentage who smoke heavily, drink heavily, eat healthful diets, or are overweight. And, although the social support network may be a little larger, there is little evidence that nonmetropolitan elderly have a more closely knit community than metropolitan elderly. "Aging" a publication of the U.S. Department of Health and Human Services' Administration on Aging, had a special issue on rural elderly, which also challenged the image of rural America as a "happy, healthy, and tranquil place to live" {1). It reported that the rural elderly have a greater incidence of chronic health Family Economics Review conditions (arthritis, cardiovascular disease, hypertension, and diabetes) than urban elderly. Also, the 1990 U.S. poverty rate for elders was 8 percent in the suburbs, 15 percent in central cities, and 16 percent in nonmetropolitan areas (1). Another study (3) that used five separate indicators of poverty to compare the economic status of metro and nonmetro elders documented that nonmetro elderly are more likely than metro elderly to be poor. This was the case even when age, sex, race, marital status, and living arrangements were controlled by statistical procedures. Since previous studies and national poverty rates have shown that nonmetro elders experience a lower level of economic security than do metro elders, this study was designed to provide additional information on these differences. The measures of economic status are average income and expenditures, rather than poverty measures. The measure of population density is rural/ urban rather than nonmetro/metro. The rural households in this study are a subset of the nonmetro population that live in areas with less than 2,500 population.2 In addition, a particularly vulnerable subgroup of rural elders is analyzed. Because elderly women who live alone tend to have fewer financial resources than married couples or men who live alone, this study describes both the economic status of elderly rural households and the economic status of elderly women who live alone in rural areas. 2Urban households in this study include any rural hbuseholds that are within metro areas. 1994 Vol. 7 No. 3 Sample and Data Data for the study are from the Consumer Expenditure (CE) Interview Surveys for 1990 and 1991. The CE is an ongoing survey that collects data on household expenditures, income, and major socioeconomic and demographic characteristics. A national sample of consumer units3 is interviewed once each quarter for five consecutive quarters; the first interview is used only for bounding purposes. Using a rotating sample design, about one-fifth of the sample is replaced each quarter. Each year of CE data contains information from about 20,000 quarterly interviews. Income data are annual, and quarterly expenditure data are multiplied by four to provide estimates of annual expenditures. The data are weighted to represent the U.S. noninstitutionalized population. Consumer units with a reference person4 65 years or older were selected. There were 8,600 consumer units in the sample; for the analysis of women living alone, there were 3,022 reference persons. Using the weighted numbers, 16 percent of the elderly units lived in rural areas; 13 percent of the elderly women living alone were in rural areas. 3 A consumer unit consists of either: (I) all members of a particular housing unit who are related by blood, marriage, adoption, or other legal arrangements; (2) two or more people living together who pool their incomes to make joint expenditure decisions; or (3) a person li ving alone or sharing a household with others or living as a roomer in a private home or lodging house or in permanent living quarters in a hotel or motel, but who is financially independent. To be considered financially independent, at least two of the three major expense categories (housing, food, and other living expenses) have to be provided by the respondent. In this paper, the term household refers to consumer unit. 4Reference person is the first member mentioned when the respondent was asked to "start with the name of the person or one of the persons who owns or rents the home." Characteristics of Rural Elderly Household Type Rural elderly consumer units were more likely than urban units to consist of married couples (table I, p. 22). Over half of rural households were husband and wife, compared with 43 percent of urban households. A smaller percentage of rural households were women living alone-27 percent of rural, compared with 36 percent of urban households. Some rural women move to county-seat towns or other urban areas (2,500 or more population) when they are widowed to be nearer services and to find housing suitable to their needs. It is the women who live alone and remain in rural areas that are highlighted in table I. Income Rural units had lower income than urban units. Table I shows the distribution among income categories. Thirtyeight percent of rural units and 30 percent of urban units had income under $10,000. For women living alone, 68 percent of rural and 52 percent of urban households had income less than $10,000. Age For consumer units with a reference person age 65 or older, the age of the reference person in rural households was not much different than that in urban households, as shown in table I. The average age was 74.4 years, compared with 74.1 years for urban reference persons. However, for women living alone, rural women were older than urban women. On average, rural women were 77.3 years old, compared with urban women's average of 76.2 years old. Forty-two percent of rural women living alone were 80 years or older, compared with 33 percent of urban women. This has implications for programs that serve rural households. People who are 80 years or older and living alone are likely to have needs for transportation, health, and other services. 21 Race Table 1. Characteristics of rural and urban elderly 1 consumer units, There was less race diversity in rural 1990-91 areas than in urban areas. Among eld-erly units (and the subset of women All elderl~ Women living alone living alone), a lower percentage of Characteristic Rural Urban Rural Urban rural household heads were non-White. Sample size 1,069 7,531 284 2,738 Education Percent Rural reference persons were less likely Household type than their urban counterparts to have a high school education. Three of five Husband and wife 52 43 rural elders had not completed high Female living alone 27 36 100 100 school. For rural women living alone, Male living alone 12 10 the percentage who had not completed Other 9 II high school was slightly higher (62 Household income percent). <$5,000 10 5 22 10 $5,000- $9,999 28 25 46 42 Work Status $10,000-$14,999 17 17 14 19 As expected, most elders reported that $15,000-$19,999 11 11 1 7 they were retired or not working. Less $20,000- $29,999 15 14 5 7 than one of five reported an occupation. $30,000- $39,999 5 7 2 Rural women living alone were even $40,000 - $49,999 2 3 more likely to be retired or not working $50,000 or more 3 5 (91 percent). Incomplete income reporters 9 13 12 11 Housing Reference person Age (years) Eighty-eight percent of rural elders and 65-69 29 30 20 21 75 percent of urban elders owned their home. Women living alone were less 70-74 28 27 20 23 likely than other elders to own their 75 -79 20 21 18 23 homes, but still the majority were 80+ 23 22 42 33 owners (78 percent of rural women Race and 61 percent of urban women). White 93 86 90 88 Black 6 9 10 9 Usually, these homes were detached, Other 5 0 3 single-family dwellings. In rural areas, Education 79 percent of elders lived in a detached Not high school graduate 59 43 62 43 home. Rural elders were more likely High school graduate 23 30 23 32 than their urban counterparts to live in Some college 18 27 15 25 detached homes or mobile homes and Work status were much less likely to live in multiple Reports occupation 18 18 9 13 units. The pattern held true for rural Retired, not working 82 82 91 87 women who lived alone. Three-quarters of rural women living alone lived in Housing detached, single-family dwellings, Housing tenure whereas only half of urban women did. Own 88 75 78 61 Rent 12 25 22 39 Owning a detached, single-family home Type of home affects the financial decisions of elders. Single family, detached 79 66 76 51 The equity of home ownership provides Multiple unit 12 29 15 44 financial security. Yet, the expense and Mobile home 14 5 9 5 effort associated with a single-family 1 Reference person 65 years or older. 22 Family Economics Review Figure 1. Income 1 of all elderly consumer units and elderly women who live alone, 1990-91 All elderly consumer units $16,743 $19,851 Elderly women who live alone $8,209 $11,869 D Rural DUrban 1For the 88 percent of consumer units that report their income. dwelling may strain the resources of some elders. The houses of rural elders are often of lower market value than those of urban elders. Also, they are more likely to need repairs, and they are larger-thus more expensive to heat and maintain. In some rural communities, the option of multiple units is not available. Personal preferences likely play a part in housing decisions also. Income of Rural Elderly Households Income The income of elderly households in rural areas was less than that of their urban counterparts (fig. I). Rural household income reporters had an average annual income of $16,743 or 84 percent as much as the $19,851 reported by urban households. This pattern was more pronounced among women who lived alone. Rural women had an average income of $8,209, only 69 percent as much as the $11 ,869 income of urban women. 1994 Vol. 7 No.3 If income needs are similar in rural and urban areas, rural elderly households were disadvantaged relative to urban households. It is not clear whether needs are similar. Urban needs for income may be greater than rural needs if the cost of living is higher in urban areas. It is widely believed that urban housing costs are higher-at least in some areas. However, differences in prices of such commodities and services as health care, automobiles, or food cannot be easily verified.5 Rural families may have greater transportation needs since they travel greater distances to markets and services. Also, rural families may have fewer options available for housing, health services, vehicles, or clothing and so need to pay whatever locally available products and services cost, whereas urban families may have a wider range of prices from which to choose. 5The Federal Government does not publish statistics that compare prices among cities, regions, or rural areas; the Consumer Price Index measures changes in prices since the base period for each selected city, not differences among cities. 0 ... among women who lived alone[,] Rural women had an average income of ... only 69 percent as much as ... urban women. 23 Table 2. Sources of income of rural and urban elderly units, 1990-91 Average income1 All Women living alone Income source Rural Urban Rural Urban Rural Before-tax income $16,743 $19,851 $8,209 $11,869 100 After-tax income 15,844 18,426 8,103 11,279 Social Security and 8,601 8,608 5,812 6,615 94 Railroad Retirement Pensions and annuities 2,182 3,566 855 1,910 34 Interest and dividends 1,776 2,444 867 1,861 38 Earnings 3,859 4,770 404 1,108 25 Other 325 462 270 376 16 1 For the 88 percent of consumer units that reported their income. Sources of Income Social Security There was little difference between rural and urban elderly households in the amount of Social Security they received (table 2). About 95 percent of each group had Social Security income that averaged about $8,600 per household. This represented over half (51 percent) of rural household income and about 43 percent of urban household income (fig. 2). For elderly rural women living alone, Social Security was an especially important source of income. About 95 percent of both rural and urban women received Social Security; rural women averaged $5,812 in Social Security income, and urban women averaged $6,615. For rural women, Social Security provided 71 percent of their total income. For urban women, it was a smaller, though still important, share of total income (56 percent). Thus, policy decisions regarding Social Security profoundly affect the economic well-being of elderly women, especially elderly rural women. 24 Pensions and Annuities Rural elders were less likely than urban elders to receive pension or annuity income. Thirty-four percent of rural families received such income, compared with 42 percent of urban families. The average income from pensions or annuities was $2,182 for rural elderly and $3,566 for urban elderly. This difference between rural and urban families was expected since the work histories differ. Rural elders were more likely to have been farmers, self-employed, or employed in small businesses where pensions and retirement plans are less prevalent than in larger businesses, which are usually located in urban areas. As expected, women living alone were less likely than other households to receive pension and annuity income. Only one-fifth of rural women received such income, which provided an annual average of $855. Pensions and annuities provided 13 percent of rural and 18 percent of urban household income. For elderly women living alone, these sources provided 10 percent of rural and 16 percent of urban women's income. Percent receiving income All Women living alone Urban Rural Urban 100 100 100 95 96 95 42 21 34 40 27 35 29 5 15 15 21 16 Interest and Dividends Interest and dividends from investments were received by similar percentages of rural and urban households, but the average dollar amount was less for rural households ($1,776 for rural and $2,444 for urban households). These sources provided 11 and 12 percent, respectively, of the annual income of rural and urban households. Again, rural women living alone were different from other rural elders or urban women living alone. Only 27 percent received interest or dividend income, and it averaged only $867, providing 11 percent of their income. Besides the income implications, the levels of interest and dividend income reflect the level of assets owned by households. The low interest and dividend income for rural households (and especially rural women living alone) indicate that rural households had fewer assets than urban households in saving accounts, bonds, stocks, and other investments. Family Economics Review Figure 2. Sources of income of elderly consumer units and elderly women who live alone, 1990-91 %of income All elderly consumer units Social Security Pensions and annuities Interest and dividends Earnings Other1 51 43 ~~I 112 18 ~~I ~a I I D Rural DUrban Elderly women who live alone Social Security 71r-------------------------~~----~ 55~------~------~~~------~ Pensions and annuities ~ ~ ~---1--------'----. Interest and 1 16 1 ~--_.___, dividends . 9 50_ Earnings c=:J other 1 ~B 10ther sources include public funds and regular contributions from others. Earnings Earnings from employment, farm income, business income, and rental units were received by 25 percent of rural and 29 percent of urban elders. Such earnings provided almost one-fourth of elders' income (23 percent for rural and 24 percent for urban households). For women living alone, earnings made a more modest contribution. Only 5 percent of rural and 15 percent of urban women had earnings. These earnings provided only 5 percent of rural women's income and 9 percent of urban women's mcome. 1994 Vol. 7 No.3 Expenditures Expenditures may be a better measure than income of economic well-being, especially for retired people (2). When elders draw on retirement savings to provide for their needs and desires, expenditures reflect this. Elderly households in rural areas spent 85 percent as much as their urban counterparts (table 3, p. 26). Rural elderly households spent an average of $15,005 per year, compared with $17,745 spent by urban households. Rural women living alone spent $9,215 or 79 percent as much as their urban counterparts. rnl Elderly households in rural areas spent 85 percent as much as their urban counterparts 25 - - ----------------------------------~ -- In rural and urban households, expenditures were less than after-tax income. However, women living alone spent more than their income, which suggests they are using savings to meet their needs. Rural women's expenditures totaled $9,215, somewhat more than their $8,103 after-tax income. Urban women spent $11,629, a little more than their after-tax income of $11,279. ln every expenditure category except health care, rural households spent less than urban households. Similarly, among women who live alone, rural women spent less than urban women in every expenditure group except health care. For women living alone, out-of-pocket expenditures for health care may be higher because the average age of rural women was older-so their health needs may have been greater. Figure 3 shows the allocation of expenditures among categories. Urban households spent a larger share of their budget on housing than did their rural counterparts. Thi probably reflects higher housing prices in urban areas. Urban homes had fewer rooms than rural homes (5.3 rooms in urban homes; 5.8 in rural). Household size was about the same in urban and rural households (1 .72 people in urban hou eholds; 1.77 in rural), so utilities and other expenses related to household size did not explain the higher expenditures of urban households. Rural households spent a larger share of their budget on transportation than did urban households. They owned more vehicles (1.9 vehicles in rural households; I .4 in urban) and probably drove more miles because of greater distances to town, friends, or services. Elderly women who lived alone had different budgetary patterns than elderly households as a whole. Both rural and urban women spent a much larger proportion on housing and a much smaller share for transportation. Elderly women owned 0.6 vehicles per household. 26 Table 3. Mean expenditures of rural and urban elderly consumer units, 1990-91 All e lder) ~ Women living alone Expenditure Rural Urban Rural Urban Total expenditures $ 15,005 $ 17,745 $9,215 $11 ,629 Housing 4,624 5,961 3,779 5,001 Food 2,883 3,307 1,626 2,037 Transportation 2,794 2,9 19 914 1,154 Health 2,151 2,118 1,549 1,484 Apparel 471 669 342 441 Entertainment 481 677 185 337 Personal care 156 249 98 194 Reading 122 143 74 103 Miscellaneous 1,323 1,702 648 878 Figure 3. Expenditure allocation of elderly consumer units and elderly women who live alone, 1990-91 % of expenditures All elderly consumer units Housing 31 I I 34 . I Food 19 19 ~ o Rural Transportation 19 16 I : [] Urban Health 14 12 I Other 17 ~ I 19 = l Elderly women who live alone Housing 41 43 f ! Food 18 18 [ Transportation 10 10 B Health 17 13 ~ Other 14 16 Family Economics Review There were no budget share differences between rural and urban households for food expenditures. Rural and urban elderly households spent 19 percent for food. Rural and urban women living alone spent 18 percent of their budget for food. Summary Rural elderly households had 84 percent as much income as urban households. A smaller percentage of rural households than urban households received each type of income: Social Security, pensions and annuities, interest and dividends, and earnings. Particularly of note was that rural women living alone had much lower income and fewer sources of income than other rural households or urban women living alone. Their income was less than half the average income of all rural households. Rural women's average income was 69 percent of that of urban women living alone. Compared with other elderly groups (rural households or urban females living alone), rural women living alone were far less likely to receive income from any of the major sources other than Social Security. Only 27 percent received interest and dividends, 21 percent had pensions or annuities, and 5 percent had earnings from employment or farms/businesses they owned. Social Security accounted for 71 percent of their income, averaging about $5,800 a year. Expenditures of rural elderly are 85 percent as much as those of urban elderly households. Compared with urban households, rural households spent a larger proportion of expenditures on transportation and health and a smaller share for housing. 1994 Vol. 7 No.3 To reiterate, rural women living alone were particularly vulnerable. Both rural and urban women living alone spent more than their after-tax income, indicating they relied on savings to meet their expenses. Over 40 percent of their expenditures were on housing, leaving little for other expenses. Rural women spent 17 percent of their budget on health expenditures, a larger share than other households. Implications Government policies regarding Social Security, health care plans, housing, and other programs affecting elders need to acknowledge the differences in income sources and expenditure patterns between rural and urban elderly households. Certainly, they must take into account the special needs of rural women who live alone. References Also, findings indicate a need for preretirement education for rural households. The pension and annuity income of rural elders was less than that of urban elders, perhaps reflecting less access to company-sponsored retirement plans. Also, income from interest and dividends was much lower, indicating less in savings and investments. Rural people retiring in the future may be different from the group reported here. People in this study were born in the first quarter of the century. The inclusion of farmers in Social Security, the growth of company-sponsored retirement programs, and similar events occurred fairly late in their work life. Future groups may receive more preretirement guidance and become more conscious of the need for retirement planning and saving. 1. Bull, C.N. and Bane, S.D. 1993. Growing old in rural America: New approach needed in rural health care. Aging 365: 19-25. 2. Houthakker, H.S. and Taylor, L. 1970. Consumer Demand in the United States: Analyses and Projections. Harvard University Press. 3. McLaughlin, O.K. and Jensen, L. 1993. Poverty among older Americans: The plight of nonmetropolitan elders. Journal of Gerontology 48(2):S44-S54. 4. Taeuber, C.M. 1992. Sixty-Five Plus in America. Current Population Reports, Special Studies. P23-178. U.S. Department of Commerce, Bureau of the Census. 5. U.S. Department of Health and Human Services, Administration on Aging. 1993. Van Nostrand, J.E. (Ed.). 1993. Common beliefs about the rural elderly: What do national data tell us? Vital and Health Statistics 3(28). U.S. Department of Health and Human Services, National Center for Health Statistics. 6. U.S. Department of Labor, Bureau of Labor Statistics. Consumer Expenditure Surveys: 1990 and 1991 Interview Survey Public Use Tapes and Documentation. 27 28 Trends in Tobacco Use By Joan C. Courtless Family Economist Family Economics Research Group Scientific knowledge regarding the medical consequences of smoking is constantly expanding and over time, a significant reduction in U.S. smoking prevalence and consumption has occurred. Findings from recent Federal surveys are used to describe trends in tobacco use. Among U.S. adults, per capita consumption of cigarettes has declined by 38 percent since 1960. As measured in the Consumer Expenditure Surveys, mean annual household expenditure for tobacco products and smoking supplies, in 1992 dollars, decreased by 49 percent between 1980 ($534) and 1992 ($275). Nevertheless, one in four Americans 12 years old and older and one in three young adults, ages 18 to 34, were current smokers in 1992. Smoking prevalence decreases as educational level increases. People with a college education were more likely than those with less education to quit smoking. Programs designed to reduce smoking should focus on adolescents and those less educated. Regulations restricting smoking in public places and added excise taxes have proven effective in curtailing smoking. igarette smoking is the leading cause of preventable illness and death in the United States (3,11, 12). Smoking has been recognized as a serious public health problem for over 30 years, particularly since the Surgeon General 's first report on smoking and health in 1964 (1 2,25). Since then, research has expanded our knowledge about the consequences of smoking. Prevention programs and regulatory policies that inhibit smoking have focused public attention so that smoking is no longer widely tolerated and smokers are increasingly isolated in public places. In this time of rising health care costs, it seems illogical to ignore the medical facts concerning tobacco use. The reality, however, is that millions of Americans do ignore them to smoke billions of cigarettes each year. Their own health is compromised, and the well-being of those around them is at risk. This article presents findings from various Federal sources and national surveys that describe trends in (1) tobacco consumption; (2) characteristics of people who smoke, formerly smoked, or use smokeless tobacco; and (3) prices and expenditures for tobacco. The consequences of passive or environmental smoke are examined, together with health costs related to smoking. Consumption of Tobacco and Tobacco Products The Economic Research Service (ERS) of the U.S. Department of Agriculture (USDA) estimates total and adu lt per capita consumption of cigarettes based on data from the U.S. Department of Treasury-Bureau of Alcohol, Tobacco, and Firearms, the U.S. Department of Commerce, the Tobacco Institute, and other private and industry sources. Adult per capita consumption in the United States is calculated by dividing Family Economics Review total estimated consumption by the total estimated population 18 years of age and older. According to ERS, adult per capita consumption of cigarettes in the United States has declined by 38 percent since 1960. Peak consumption during this period occurred in 1963 at 4,345 cigarettes per annum (fig. 1) (16,25). Per capita consumption in 1993 was estimated to be 2,576 cigarettes, the lowest since 1941 (4,16). U.S. consumption of cigarettes in 1993 was estimated at 489 billion cigarettes, a 19-percent decrease from the 600.4 billion smoked in 1984 (15). Other forms of tobacco are used in lesser quantities and, with the exception of snuff, are declining in use. ERS consumption data show that consumption of snuff (a type of smokeless tobacco) increased by 11 percent between 1984 and 1993 (16). For some consumers, snuff may be a substitute for smoking and reflect the restrictions placed on smoking in public places (4). Consumption of other tobacco products, however, has declined over the 10-year period: large cigars and cigarillos, by 43 percent; smoking tobacco, by 54 percent; and chewing tobacco, by 34 percent (16). Characteristics of Tobacco Users Current Smokers Prevalence of tobacco use is usually expressed in terms of current use. The National Household Survey on Drug Abuse (NHSDA) conducted by the Substance Abuse and Mental Health Services Administration, U.S. Department of Health and Human Services defines smoking as any use in the past month. The National Health Interview Survey (NHIS), Health Promotion and Disease Prevention (HPDP) supplement conducted by the National Center for Health Statistics, U.S. Department of Health and Human Services defines 1994 Vol. 7 No.3 Figure 1. Annual per capita consumption 1 of cigarettes, 1960-93 Thousands 1For those 18 years and over, including Armed Forces abroad. Note: For 1992, figures are subject to revision; for 1993, figures are estimated. Source: U.S. Department of Agriculture, Economic Research Service, Tobacco Situation and Outlook Report. current smokers as those who have smoked over 100 cigarettes in their lifetime and answer that they currently smoke. According to the 1992 NHSDA, 26 percent of the population age 12 and over or about 54 million people smoked tobacco in the past month (table 1, p. 30). This was a decline from 1988 when 29 percent of the population or 57 million people identified themselves as current smokers. Young adults, ages 18 to 34, had the highest rates of smoking: 34 percent of the 26- to 34-year-olds and 32 percent of the 18- to 24-year-olds smoked in the past month (19). The higher the educational level, the less likely that a person was currently smoking cigarettes (19). Educational status has replaced gender as the demographic variable most likely to predict differences in smoking prevalence (3). Those who were unemployed were more likely to be current smokers (43 percent) than any other demographic segment of the population (19). Hispanics were less likely to be current smokers (22 percent) than non-Hispanics (27 percent). People living in nonmetro areas were more likely than those in metro areas to have smoked cigarettes in the past month. Decreases in the proportion of current smokers since 1988 were evident except among people in the Western region and tho e with some college education. Most States have set the minimum age to purchase cigarettes at 18 years. Nevertheless, more than 3,000 American teenagers start smoking each day (25), and according to the 1989 Teenage Attitudes and Practices Survey, 57.5 percent of those 12 to 17 years old report buying their own cigarettes (22). Female adolescents are as likely as males to smoke cigarettes (1, 7, II). According to McDermott et al. (1 1), cigarette smoking may be the most practical and visible means females have to rebel. 29 --- --~ An annual survey of high school eniors, college students, and young adults--called Monitoring the Future: A Continuing Study of the Lifestyles and Values of Youth-is conducted by the University of Michigan Institute for Social Research and sponsored by the National Institute on Drug Abuse (NIDA), U.S. Department of Health and Human Services. Findings from the 1990 survey determined that 29 percent of high school seniors in 1990 smoked in the past month (7,8). There is little indication that the overall percentage of high school seniors who smoke is decreasing. During the period 1980-90, 29 to 30 percent of these students each year reported smoking in the past month (fig. 2). Of seniors surveyed, 19 percent were daily smokers in 1990, 64 percent had smoked cigarettes at one time, and 41 percent had tried smoking before the ninth grade (7). Another analysis of teenage cigarette consumption, using National Health and Nutrition Survey II data, determined that cigarette smoking was negatively related to both family income and parental education (30). However, because parental smoking behavior was also negatively related to these variables, children of poorly educated adults may be more likely to smoke because their parents were more likely to smoke-not because of parents' socioeconomic status. According to the 1990 Monitoring the Future survey, 25 percent of seniors planning to attend college for 4 years were current smokers, compared with 38 percent of those with no such plans (7). Students already attending college were less likely to be current smokers; 22 percent reported smoking in the past month. This was a decline from 1980 when 26 percent reported smoking (8). Of college students, 12 percent were daily smokers, compared with 27 percent of high school graduates of similar age who were not in college full time. College women were more likely to smoke than college men (8). 30 Table 1. Use of cigarettes in the past month by demographic characteristics, 1988 and 1992 Demographic characteristic Total, 12 years and older Age (years) 12- 17 18- 25 26-34 35 and older Sex Male Female Education Less than high school High school graduate Some college College graduate Race and ethnicity Non-Hispanic White Non-Hispanic Black Hispanic Population density Large metro Small metro Nonmetro Region Northeast North Central South West Current employment Full time Part time Unemployed Other1 1 Retired, disabled, homemaker, student, or other. 1988 Percent 28.8 11.8 35.2 37.1 27.3 32.2 25.6 38.4 33.9 27.3 17.4 28.7 30.3 26.3 28.2 28.1 30.8 29.3 29.6 31.1 22.9 33.0 29.1 50.5 24.8 1992 26.2 9.6 31.9 33.7 25.3 27.9 24.6 35.1 30.2 28.5 16.3 26.9 26.7 21.5 25.0 26.6 27.8 24.8 25.5 28.5 24.4 29.7 27.3 43.3 22.4 Source: U.S. Depanment of Health and Human Services, Substance Abuse and Mental Health Services Administration, National Household Survey on Drug Abuse. Family Economics Review Figure 2. P~evalence of smoking cigarettes in last 30 days, high school semors and college students, 1980-90 Percent 40 High school seniors / 30 -----··--~-.---~·~----~-~--~·~---------·._-•- ~--~•~ ----· 20 / College students 10 0 1~9~80~~8~1~~82~- ~8~3~~84~~8~5--~8~6~~87=-~8=8---8=9~~9~0 Source: Johnston, L.D., O'Malley, P.M., and Bachman, J.G., 1991, Drug Use Among American High School Seniors, College Students and Young Adults, 1975-1990, Volume I High School Seniors and Volume II College Students and Young Adults, The University of Michigan Institute for Social Research and U.S. Department of Health and Human Services, National Institute on Drug Abuse. Former Smokers Although it is sometimes difficult for an individual to be certain he or she has permanently stopped smoking, survey data may be used to ascertain trends in "quitting" for various segments of the population. According to findings from the 1991 NHIS-HPDP, an estimated 89.8 million adults (49.8 percent of all adults) in the United States have smoked at one time (21). About 43.5 million people ( 48.5 percent of those who have ever smoked) had quit smoking. A higher proportion of men (51.6 percent) than women (44.7 percent) had stopped smoking. Quit ratios (the proportion of former smokers among those who have ever smoked) increased as education increased from 41.8 percent for those with less than 12 years to 66.1 percent for those with 16 or more years of education (21). A separate analysis of the 1990 NHIS-HPDP found highest rates of former smokers among those employed in executive or professional occupations (12). 1994 Vol. 7 No.3 Table 2, p. 32, shows the percentages of former smokers among those who have ever smoked have increased since 1970 (25). Highest quit ratios were reported by people 45 years and older, Whites, and college graduates. Young people exhibit a relatively low quit ratio. Among high school seniors surveyed in 1990, only 18 percent of those who ever smoked regularly had stopped smoking (7). Smokeless Tobacco Users The NHSDA estimated that 7.5 million Americans or 3.7 percent of the population were current (in past month) users of smokeless tobacco in 1992 (table 3, p. 32). People with the highest rates of smokeless tobacco use were White, living in the South, and men (19). In fact, 90 percent of smokeless tobacco users were men (19,20). Although the prevalence of cigarette smoking among the U.S. population 12 years and older declined somewhat between 1988 and 1992, use of smokeless tobacco has remained fairly constant (19). • Educational status has replaced gender as the demographic variable most likely to predict differences in smoking prevalence. 31 ··- The 1991 NHIS-HPDP also collected data concerning snuff and chewingtobacco use. Current users of smokeless tobacco are defined in the NHIS-HPDP as those who reported snuff or chewingtobacco use at least 20 times and who reported using snuff or chewing tobacco at the time of the interview. In 1991, men (5.6 percent) were much more likely to use smokeless tobacco than women (0.6 percent) (table 4) (20). For men, prevalence was highest among those who lived in rural areas (11.2 percent), who lived in the South (8.4 percent), who were 18 to 24 years old (8.2 percent), were American Indian/ Alaskan Native (8.1 percent), or who had less than 12 years of schooling (7 .7 percent). For women, prevalence was highest among those who were American Indian/Alaskan Native (2.5 percent), Black (2.3 percent), age 75 and older (2.3 percent), or had less than 12 years of schooling (2.0 percent). Prices and Expenditures Prices for tobacco and smoking products, as measured by the Consumer Price Index (CPI), have risen faster than prices for all items, increasing at an average annual rate of 9 percent since 1980 (fig. 3, p. 34) (27). In August 1993, cigarette manufacturers reduced prices of premium-branded cigarettes by about one-fourth. Prices for discount brands (about 36 percent of the domestic market) were already relatively low, selling for about half what premium brands formerly cost (16,17). Federal and State taxes on tobacco continue to rise. The Federal excise tax increased by 4 cents a pack in 1993 after having increased by 4 cents in 1991. In 1993, the Federal excise tax on cigarettes was 24 cents per pack and the weighted average State tax was 25.9 cents (16). Since 1968, every State and D.C. has taxed cigarettes (25). As a percentage of the total cost of cigarettes, however, taxes have declined (23). 32 Table 2. The quit ratio: Percentage of people who have smoked at one time but no longer do so, by demographic characteristics, selected years Demographic characteristics Age (years) 20-24 25-44 45 - 64 65 and older Sex Male Female Education Less than high school High school graduate Some college College graduate Race White Black 1970 20.8 29.8 36.1 56.9 37.9 29.2 38.1 33.6 34.9 48.2 36.7 23.2 1980 Percent 22.2 33.0 40.9 61.0 41.5 34.0 39.4 36.5 40.6 48.7 40.4 27.7 1988 27.5 36.8 52.8 69.8 47.3 43.4 46.3 41.6 46.4 60.6 48.0 32.8 Source: U.S. Department of Commerce, Bureau of the Census, 1992, Statistical Abstract of the United States, 1992, [/12th ed.] Table 3. Use of cigarettes and smokeless tobacco in the U.S. population 12 years and older: Past month, past year, and lifetime, 1988 and 1992 Substance Cigarettes Smokeless tobacco Period 1988 1992 1988 1992 Percent Past month 28.8 26. 2 3.6 3.7 Past year 34.2 31.2 5.0 5.0 Lifetime 75.1 71.0 14.9 14.7 Source: U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, National Household Survey on Drug Abuse. Family Economics Review Table 4. Current use1 of smokeless tobacco, 1991 National Health Interview Survey-Health Promotion and Disease Prevention Supplement, 1991 Characteristic Men Women Percent Total, 18 years and older 5.6 0.6 Age group (years) 18-24 8.2 0.2 25-44 5.8 .I 45-64 3.6 .6 65-74 5.4 1.3 ?:.75 5.8 2.3 Education (years) Less than high school 7.7 2.0 High school graduate 6.6 .3 Some college 5.2 .I College graduate 2.5 0 Race White 6.2 .3 Black 2.2 2.3 Asian/Pacific Islander 1.4 0 American Indian/Alaskan Native2 8.1 2.5 Ethnic origin Hispanic 1.5 .2 Non-Hispanic 5.9 .6 Type of area Urban 4.0 .3 Rural 11.2 1.5 Region Northeast 2.7 0 Midwest 5.7 .2 South 8.4 1.4 West 4.0 .2 Poverty status3 At/above poverty level 5.4 .3 Below poverty level 6.6 1.9 Unknown 6.4 1.5 I 2Snuff or chewing-tobacco use at least 20 times and use at time of interview. 3Estimates should be interpreted with caution because of the small number (n=339) of cases. Poverty statistics are based on definitions developed by the Social Security Administration that include a set of income thresholds that vary by family ize and composition. Source: U.S. Departmenr of Health and Human Services, Public Health Sen•ice, 1993, Use of smokeless tobacco among adults-United States, 1991, Morbidity Mortality Weekly Report42( 14):263-266. 1994 Vol. 7 No.3 It has been shown (10,13,25,30) that the demand for cigarettes is somewhat responsive to price changes. Additional taxes on cigarettes could benefit State and Federal treasuries while reducing demand. The larger the increase in price as the result of taxes, the larger the decrease in consumption (1 3); a relatively small increase in price through taxing would be ineffective in substantially reducing cigarette consumption (30). Price changes have a stronger effect on smoking prevalence than on consumption by smokers. Teenagers are particuIru ·Iy responsive to changes in cigarette prices; therefore, excise tax increases may help impede the onset of teenage smoking (25). Since 1980, when the average annual expenditure for tobacco products and smoking supplies was $534 (in 1992 dollars), spending on tobacco by households has declined by 49 percent (fig. 4, p. 34) (26). Data from the 1992 Consumer Expenditure Survey show that the mean annual expenditure for tobacco products and smoking supplies was $275 (table 5, p. 36). For 1992, tobacco products and smok.i ng supplies accounted for about I percent of total expenditures for all household (26). Households with incomes between $30,000 and $70,000 spent more on tobacco than did those with lower or higher incomes. However, the percentage of total expenditures spent on tobacco was higher in lower income households than in those earning higher incomes. Households reporting the highest expenditures for tobacco were headed by someone working as an operator, fabricator, or laborer; in construction or mechanics; in a service occupation; 35 to 54 years old; were husband-and-wife households with children; and located in a rural area. Some of these same hou eholds spent the highest percentage of total annual expenditures on tobacco: Those headed by someone employed as an operator, fabricator, or laborer; in construction or mechanics; in a service 33 occupation; and those located in a rural area. Also, households that rented their homes or had a reference person under 25 years old spent a higher proportion of total expenditures on tobacco than did other household . Passive Smoking Passive smoking has been defined as the exposure of nonsmokers to tobacco combustion products in the indoor environment and is also known as ETSenvironmental tobacco smoke. Passive smoking is the third leading preventable cause of death in the United States, after smoking and alcohol (9). Secondhand smoke kills 53,000 nonsmokers every year (9); the nonsmoker' risk for lung cancer resulting from chronic ETS exposure is 100 times greater than the risk associated with 20 years' exposure to asbestos in a building containing asbestos (14). ETS is a major cause of indoor air pollution. Secondhand smoke is designated as either mainstream (drawn through a cigarette, filtered by a smoker's lungs, and exhaled into the air) or sidestream (circulates directly in air from smoldering end of cigarettes between puffs; also, all ETS from cigars and pipes) (9). About 80 percent of ETS is sidestream (31). The Environmental Protection Agency has classified sidestream smoke a Class A (cancer causing, very hazardous) carcinogen (9). The Surgeon General has determined that ETS is a cause of lung cancer (3 1). Exposure to ETS contributes to decreased pulmonary function, decreased heart function, eye and throat irritation, respiratory illness, lung and other cancers, and aggravated allergies (9,31). Regulations restricting smoking in public places have had a significant negative effect on cigarette demand (30). These regulations limit opportunities to smoke, thereby ensuring nonsmokers protection again t passive smoking (see box). 34 Figure 3. Changes in consumer prices for tobacco and smoking products CPI-U 250 225 200 175 150 125 100 75 50 1980 84 Tobacco and smoking products ."" 88 All items 92 93 Source: US. Department of Labor, Bureau of Labor Statistics, CPI Detailed Report. Figure 4. Average annual household expenditure for tobacco products and smoking supplies, 1980-92 Constant 1992$ 600 500 400 300 200 100 0 1~9780~-----~8~4------~878------~9~2 Source: US. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey. Family Economics Review Legislation and Regulations Related to Smoking and Health (5,16,25,29) 1965 - Congress passes the Federal Cigarette Labeling and Advertising Act, requiring health warning on all cigarette packages: "Caution: Cigarette Smoking May be Hazardous to Your Health." 1970 - Congress enacts the Public Health Cigarette Smoking Act of 1969 (passed in 1970 and effective January 2, 1971 ), banning cigarette advertising on television and radio and requiring a stronger health warning on cigarette packages: "Warning: The Surgeon General Has Determined that Cigarette Smoking is Dangerous to Your Health." 1973 - Civil Aeronautics Board requires no-smoking sections on all commercial airline flights. - Arizona becomes the first State to restrict smoking in a number of public places and the first to do so explicitly because environmental tobacco smoke exposure is a public health hazard. 1974 - Connecticut passes the first State law to apply smoking restrictions to restaurants. 1975- Minnesota passes landmark comprehensive statewide clean indoor air law. 1976 - Interstate Commerce Commission prohibits smoking in railroad dining cars and requires separate smoking and nonsmoking passenger cars. 1978 - Utah enacts the first State law banning tobacco advertisements on any billboard, streetcar sign, streetcar, or bus. 1982- Congress temporarily doubles the Federal excise tax on cigarettes to 16 cents per pack, to be in effect January 1, 1983, to October 1, 1985. First increase since 1951. 1984 - Congress enacts the Comprehensive Smoking Education Act, requiring rotational health warnings on cigarette packages and advertisements. 1986 - Congress enacts the Comprehensive Smokeless Tobacco Health Education Act of 1986. Requires rotation of three health warnings on smokeless tobacco packages and advertisements and bans smokeless tobacco advertising on broadcast media. - Congress extends permanently the 16 cents per pack Federal excise tax on cigarettes. - Congress imposes a Federal excise tax on smokeless tobacco products. 1988 - Congressionally mandated smoking ban takes effect on domestic airline flights scheduled for 2 hours or less. 1990 - Interstate Commerce Commission bans smoking on all regularly scheduled interstate buses in the United States. - Congressionally mandated smoking ban extended to flights of 6 hours or less, effectively eliminating smoking on flights within the 48 contiguous States. 1991 - Congress increases Federal excise tax on a pack of cigarettes to 20 cents. 1993 - Congress increases Federal excise tax on a pack of cigarettes to 24 cents. 1994- U.S. Department of Defense bans smoking in all military workplaces, effective April 8, 1994. 1994 Vol. 7 No.3 Since 1980, ... spending on tobacco by households has declined by 49 percent. 35 Table 5. Average annual expenditures for tobacco products and smoking supplies, by demographic characteristics, 1992 Percentage of total annual Characteristic Mean dollars expenditures All households $275 0.9 Income <$10,000 209 1.7 $10,000- $19,999 263 1.4 $20,000- $29,999 297 1.1 $30,000 - $39,999 322 1.0 $40,000- $49,999 322 .8 $50,000- $69,999 342 .7 $70,000 and over 253 .4 Composition of household Husband and wife only 253 .8 Husband, wife with children 322 .8 Single parent (at least one child under age 18) 245 1.2 Housing tenure Homeowner 274 .8 Renter 277 1.3 Type of area Urban 268 .9 Rural 319 1.3 Head of household Age (years) <25 220 1.3 25-34 278 .9 35-44 326 .9 45-54 376 1.0 55-64 310 1.0 65-74 205 .9 75 and over 77 .4 Race White and other 282 .9 Black 219 l.l Occupation Self employed 270 .7 Managers and professionals 216 .5 Technical, sales, and clerical 287 .9 Service 320 1.4 Construction/mechanics 415 1.4 Operators, fabricators, laborers 419 1.5 Retired 154 .8 Source: U.S. Department of LAbor, Bureau of LAbor Statistics, /992 Consumer Expenditure Survey, unpublished data. 36 Also, restrictive regulations have reinforced the concept that smoking in public is a health hazard for nonsmokers and that involuntarily exposing others is socially unacceptable. Restrictions on smoking in the workplace are especially important because employed people spend more time at work than in other public places (28). Therefore, a smoke-free work environment can provide more protection to nonsmokers than any other smoking restrictions or regulations. There are potential health benefits for smokers as well. A ban on smoking at a person's usual workstation reduces workday cigarette consumption, compared with non-workday consumption. With no ban on smoking at the usual workstation, an Australian study found no difference between workday and non-workday cigarette consumption (28). Health Costs Related to Smoking One in five deaths in the United States- 435,000 annually-are caused by smoking (3). Over 80 percent of all U.S. lung cancer deaths and 30 percent of all deaths from cancer can be attributed to smoking (12,25). Also, over 20 percent of cardiovascular deaths result from smoking, accounting for an even greater number of deaths than those from lung and other cancers caused by smoking (25). Smokers have higher death rates than neversmokers at all ages over 35 years (6). Health costs for smokers are higher than those for neversmokers at every age. Over a 95-year lifetime, male smokers average $8,638 in additional lifetime medical expenditures or 32 percent more than neversmokers, and female smokers average an additional $1 0, 119 or 24 percent more ( 1990 dollars) (table 6). Heavy smokers (more than 25 cigarettes per day) average 47 percent higher expenditures than neversmokers if male and 41 percent higher if female (6). Family Economics Review Manning et al. estimated societal costs related to smoking (but not including the value of lives lost to passive smoking and to fires caused by smoking) and concluded that nonsmokers subsidize smokers' medical care and group life insurance, but smokers subsidize nonsmokers' pensions and nursing home payments-because nonsmokers can expect to live longer (10). For smokers, loss in life expectancy was estimated at 28 minutes per pack of cigarettes. Thus, people who smoke a pack a day shorten their lives by 7 days for every year they continue smoking at this rate. Implications Recent trends in smoking prevalence indicate men are more likely than women to quit smoking, as are Whites compared with Blacks, and college graduates compared with those with less education. Cigarette smoking is becoming a behavior observed most frequently among the poorly educated and socioeconomically disadvantaged segments of society (3). Data from the NHIS were used by the Office on Smoking and Health in the U.S. Department of Health and Human Services to project smoking rates among adults age 20 and over for the year 2000 (table 7) (3). Although smoking rates are projected to decline for most segments of our society, the percentage of female smokers will decrease more slowly than the percentage of male smokers, and the prevalence rate among people with a high school education or less is projected to decline only slightly. Each year, a million young people take up smoking and commit the health care system to $8.2 billion in extra medical costs over their lifetimes (6). Both regulatory actions and increased excise taxes have been shown to be effective in curtailing prevalence and consumption of cigarettes, especially among teenagers. Because teenagers experience little difficulty in buying cigarettes-even though in most States it is illegal until age 18, more active surveillance of retailers and substantial penalties for noncompliance Table 6. Lifetime medical expenditures 1 by sex and smoking status Sex Males Lifetime expenditures Excess2 expenditures Ratio to neversmokers Females I Lifetime expenditures Excess2 expenditures Ratio to neversmokers Neversmokers $27,276 $0 1.00 $42,783 $0 1.00 All smokers $35,914 $8,638 1.32 $52,902 $10,119 1.24 Heavy smokers $40,187 $12,911 1.47 $60,347 $17,564 1.41 2 Valu.es are in 1990 dollars. . . . . Med1cal expenditures incurred by smokers m add1uon to tho e mcurred by neversmokers. Source: Hodgson, T.A. , 1992, Cigarelle smoking and lifetime medical expenditures, The Milbank Quarterly 70( I ):81-125. 1994 Vol. 7 No.3 Table 7. Projected smoking rates among adults 20 years and older for the year 2000 Smoking Characteri tics prevalence rate Overall 21.7 Women 22.7 Men 19.9 Black 24.5 White 21.5 College graduate 5.0 Some college 16.0 High chool graduate 30.0 High school dropout 31.0 Source: Fiore, M.C. , / 992, Trends in cigarelle smoking in the United States, the epidemiology of tobacco use, The Medical Clinics of North America 76(2):289-303. would be needed to achieve more effective control (22). One of the national health objectives for the year 2000 sets a nationwide goal to enact and enforce State laws prohibiting the sale and distribution of tobacco products to youth less than 19 years old (22,24). Another objective targets special population group for the reduction of smoking prevalence including Blacks, Hispanics, American Indians/Alaskan Natives, and Southeast Asian men (21,24). The greate t impact from interventions could be achieved by focusing on adolescents and those less educated (2,3). School systems throughout the Nation would need to integrate programs into their health curricula that educate students about the hazards of smoking and the addictive properties of tobacco. 37 38 References 1. Bachman, J.G., et al. 1991. Racial/ethnic differences in smoking, drinking, and illicit drug use among American high school seniors, 1976-89. American Journal of Public Health 81(3):372-377. 2. Blaylock, J.R. and Blisard, W.N. 1992. U.S. cigarette consumption: The case of low-income women. American Journal of Agricultural Economics 74(3):698-705. 3. Fiore, M.C. 1992. Trends in cigarette smoking in the United States. The epidemiology of tobacco use. The Medical Clinics of North America 76(2):289-303. 4. Grise, V.N. 1993. Outlook for U.S. Tobacco. U.S. Department of Agriculture, Economic Research Service. 5. Grise, V. 1992. Cigarette market is changing. Agricultural Outlook. May issue, pp. 17-20. 6. Hodgson, T.A. 1992. Cigarette smoking and lifetime medical expenditures. The Milbank Quarterly 70(1):81-125. 7. Johnston, L.D., O'Malley, P.M., and Bachman, J.G. 1991. Drug Use Among American High School Seniors, College Students and Young Adults, 1975-1990. Volume I. High School Seniors. The University of Michigan Institute for Social Research and U.S. Department of Health and Human Services, National Institute on Drug Abuse. 8. Johnston, L.D., O'Malley, P.M. , and Bachman, J.G. 1991. Drug Use Among American High School Seniors, College Students and Young Adults, 1975-1990. Volume II. College Students and Young Adults. The University of Michigan Institute for Social Research and U.S. Department of Health and Human Services, National Institute on Drug Abuse. 9. Lesmes, G.R. and Donofrio, K.H. 1992. Passive smoking: The medical and economic issues. The American Journal of Medicine, Volume 93 (supplement lA), July 15 issue, pp. JA-38S-42S. 10. Manning, W.G., et al. 1989. The taxes of sin. Do smokers and drinkers pay their way? Journal of American Medical Association 261 (11): 1604-1609. 11. McDermott, R.J., et al. 1992. Multiple correlates of cigarette use among high school students. Journal of School Health 62(4): 146-150. 12. Metropolitan Life Insurance Company. 1992. Cigarette smoking among U.S. adults, 1985-1990, and smoking among selected occupational groups, 1990. Statistical Bulletin 73(4): 12-19. 13. Peter on, D.E., et al. 1992. The effect of State cigarette tax increases on cigarette sales, 1955 to 1988. American Journal of Public Health 82(1):94-96. 14. Peto, J. and Doll, R. 1986. Guest editorial: Passive smoking. British Journal of Cancer 54:381-383. 15. U.S. Department of Agriculture, Economic Research Service. 1993. Tobacco Situation and Outlook Report. TS-225. Family Economics Review 16. U.S. Department of Agriculture, Economic Research Service. 1993. Tobacco Situation and Outlook Report. TS-224. 17. U.S. Department of Agriculture, Economic Research Service. 1993. Tobacco Situation and Outlook Report. TS-222. 18. U.S. Department of Commerce, Bureau of the Census. 1992. Statistical Abstract of the United States, 1992. [!12th ed.] 19. U.S. Department of Health and Human Services, Public Health Service. 1993. Preliminary Estimates From the 1992 National Household Survey on Drug Abuse. Advance Report Number 3. 20. U.S. Department of Health and Human Services, Public Health Service. 1993. Use of smokeless tobacco among adults-United States, 1991. Morbidity and Mortality Weekly Report42(14):263-266. 21. U.S. Department of Health and Human Services, Public Health Service. 1993. Cigarette smoking among adults-United States, 1991. Morbidity and Mortality Weekly Report 42(12):230-233. 22. U.S. Department of Health and Human Services, Public Health Service. 1992. Accessibility of cigarettes to youths aged 12-17 years-United States, 1989. Morbidity and Mortality Weekly Report 41(27):485-488. 23. U.S. Department of Health and Human Services, Public Health Service. 1992. Strategies to Control Tobacco Use in the United States: A Blueprint for Public Health Action in the 1990's. Smoking and Tobacco Control Monograph #1 (NIH)92-3316. 24. U.S. Department of Health and Human Services, Public Health Service. 1991. Healthy People 2000: National Health Promotion and Disease Prevention Objectives. DHHS Publication No. (PHS)91-50212. 25. U.S. Department of Health and Human Services, Public Health Service. 1989. Reducing the Health Consequences of Smoking: 25 Years of Progress. A Report of the Surgeon General. DHHS Publication No. (CDC)89-8411. 26. U.S. Department of Labor, Bureau of Labor Statistics. 1992 Consumer Expenditure Survey. Unpublished data. 27. U.S. Department of Labor, Bureau of Labor Statistics. 1981-1993. CPI Detailed Report. January issues. 28. Wakefield, M.A., eta!. 1992. Workplace smoking restrictions, occupational status, and reduced cigarette consumption. Journal of Occupational Medicine 34 (7):693-697. 29. The Washington Post. 1994. Military gets smoking ban order. March 9 issue. 30. Wasserman, J., et al. 1991. The effects of excise taxes and regulations on cigarette smoking. Journal of Health Economics 10:43-64. 31. Wood, S.L. and White, G.L. 1991. Health hazards of passive smoking: A review. Journal of Health Education 22(5):303-306. 1994 Vol. 7 No.3 39 40 ------------------ Research Summaries Housing Vacancies and Home Ownership The monthly Current Population Survey/ Housing Vacancy Survey, conducted by the Bureau of the Census, U.S. Department of Commerce, provides estimates and characteristics of occupied and vacant housing units. A housing unit (house, apartment, group of rooms, or single room occupied or intended for occupancy as separate living quarters) is classified as occupied if a person or group of people is living in it at the time of the interview or if the occupants are only temporarily absent; otherwise the housing unit is classified as vacant. Housing Vacancies In 1992, national vacancy rates were 7.4 percent for rental housing and 1.5 percent for homeowner housing. The homeowner vacancy rate was lower than the 1991 rate of 1.7 percent, while the rental vacancy rate did not change. The vacancy rate was highest in central cities (8.3 percent for rental housing and 1.8 percent for homeowner housing) and lowest in suburbs (6.4 percent for rental housing and 1.4 percent for homeowner housing). By region of the country, the South had the highest rental vacancy rate (8.2 percent) and the Midwest had the lowest (6.7 percent). The homeowner vacancy rate was highest in the West ( 1.9 percent) and lowest in the Midwest (1.2 percent). Figure 1. Home ownership rates, by State: 1992 Less than 62.0 percent 62.0 to 66.9 percent • 67.0 to 69.9 percent • 70.0 percent and higher Source: Callis, A.A., 1993, Housing Vacancies and Homeownership Annual Statistics: 1992, Current Housing Reports, Series H111/92-A, U.S. Department of Commerce, Bureau of the Census. Family Economics Review Figure 2. U.S. home ownership rates, by age of householder: 1982 and 1992 Percent 100 80 60 40 20 Ol.-.-::J..__---.,Less than 35 55 to 64 01982 • 1992 Age of householder (years) Source: Callis, R.R., 1993, Housing Vacancies and Homeownership Annual Statistics: 1992, Current Housing Reports, Series H111/92-A, U.S. Department of Commerce, Bureau of the Census. The size of housing units influenced vacancy rates in 1992. Units with three rooms or less had a rental vacancy rate of 11.0 percent, compared with 3.1 percent for units with six rooms or more. Similarly, the homeowner housing vacancy rate for units with three rooms or less was 8.4 percent, compared with 1.1 percent for units with six rooms or more. The rental vacancy rate in 1992 for single-family homes was 3.9 percent, compared with 9.3 percent for apartments in buildings with two or more units. For homeowner housing, singlefamily homes had a vacancy rate of 1.3 percent, compared with 5.9 percent for units in multiunit structures. States with highest rental vacancy rates in 1992 were Utah (14.6 percent), Maine (10.7 percent), and South Carolina (10.0 percent). States with highest home- 1994 Vol. 7 No.3 owner vacancy rates in 1992 were Florida (3.0 percent), Hawaii (2.5 percent), and Maine and Nevada (2.3 percent each). The rate for the District of Columbia was 3.3 percent. In 1992, 89.0 percent of all U.S. housing units were occupied unit , 8.2 percent were year-round vacant units, and 2.8 percent were seasonal vacant units. These figures were higher outside metropolitan areas and lower inside metropolitan areas. The South had the highest year-round vacancy rate (10.0 percent) and the Midwest had the lowest (6.7 percent). In 1992, most vacant for-rent units were located in structures of five housing units or more and were vacant for less than 4 months. In contrast, most vacant for-sale units were located in structures of one unit and were vacant 4 months or more. Home Ownership The home ownership rate is computed by dividing the number of owneroccupied households by the total number of household . The U.S. home ownership rate in 1992 was 64.1 percent and has remained at about 64 percent since 1985. Among regions of the country, the highest rate was in the Midwest (67 .2 percent), and the lowest rate was in the West (59.3 percent). The home ownership rate was highest outside metropolitan areas (72.8 percent) and lowest in central cities (49.3 percent). Delaware had the highest home ownership rate in 1992 (73.8 percent), and New York had the lowest (53.3 percent). The rate for the District of Columbia was 35.0 percent. Six States in the South had home ownership rates of 70 percent or higher, wherea five States in the West had home ownership rates below 62 percent (fig. 1). Home ownership rates were highest among tho |
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