Family Economics Review [1978, Number 3]

              HIGHLIGHTS I SUMMER 1978
MAGNUSON MOSS WARRANTY ACT
SERVICE LIFE OF APPLIANCES
ENERGY LABELS FOR APPLIANCES
IN-HOME ENERGY MONITOR
ENERGY EXTENSION SERV.CE
PROPERTY OF THE
LIBRARY
NOV 3 1978
University of North Carolina
2t Greer.~~cro
Depository
Consumer and Food Economics Institute
Science and Education Administration
U.S. DEPARTMENT OF AGRICULTURE
FAMILY ECONOMICS REVIEW is a quarterly
report on research of the Consumer and Food
Economics Institute and on information from
other sources relating to economic aspects of
family living. It is prepared primarily for home
economics agents and home economics
specialists of the · Cooperative Extension
Service.
On January 24, 1978, four USDA agencies-Agricultural Research Service
(ARS), Cooperative State Research Service (CSRS), Extension Service (ES),
and the National Agricultural Library (NAL)-merged to become a new
organization, the Science · and Education Administration (SEA), U.S.
Department of Agriculture.
This publication was prepared by the Science and Education
Administration's Federal Research staff, which was formerly the Agricultural
Research Service.
Authors are on the staff of the Consumer and Food
Economics Institute unless otherwise noted.
Editor: Katherine S. Tippett
Consumer and Food Economics Institute
Science and Education Administration
U.S. Department of Agriculture
Federal Building
Hyattsville, Md. 20782
This publication was formerly published as FAMILY ECONOMICS REVIEW_ ARS-NE-36
FAMILY ECONOMICS REVIEW
THE MAGNUSON MOSS WARRANTY ACT
by·Janet Marr
Consumer product warranties are promises
by manufacturers to stand behind their prod­ucts.
However, warranties differ from manufac­turer
to manufacturer and from product to
product, and the "legalese" frequently used to
write warranties has made it difficult for con­sumers
to compare the warranties of several
products. The Magnuson Moss Warranty-Feder­al
Trade Commission Improvement Act was
passed in 197 5 in an attempt to help consum­ers
understand written warranties before buy­ing
a product, to facilitate comparison shop­ping
of warranties, and to make it easier for
consumers to receive warranty service.
THE ACT
The act covers all consumer products that
were · manufactured or reconditioned after
July 4, 1975 (the effective date of the act) and
include a written warranty. Consumer products
are products normally used for personal, fami­ly,
or household use, including those installed
or attachable to real property. The consumer is
defined as the buyer (other than for purposes
of resale) of a new or used consumer product,
or any person to whom the product is trans­ferred
during the warranty period.
The act does not require sellers to give· war­ranties.
However, if a written warranty is given,
the terms and conditions must be expressed in
clear and simple language before the sale of the
product. Warranties given with a product that
costs $10 or more must be classified as "full"
or "limited." These labels will be the key to
consumers as to the protection they will
receive under the warranty. Under the pro­visions
of a full warranty, the seller agrees to
SUMMER 1978
remedy a consumer product within a reason­able
time and without charge in the event of a
defect in the product or a failure to conform
with the written warranty. 1 If a product
remains defective after a reasonable number of
attempts to repair the product, the warrantor
must refund the purchase price or replace the
product at the consumers option. Under a full
warranty, the warrantor cannot impose any
limitations on the duration of implied warran­ties
(see box). Finally, the warrantor may not
impose any duty other than notification on the
consumer as a precondition to warranty serv­ice,
unless the duty is reasonable. If the warran­tor
does not choose to meet these Federal
minimum standards for full warranties, the
warranty must be designated as "limited."
Although implied warranties are not govern­ed
by the Magnuson Moss Warranty Act, the
practice of using written warranties to limit or
disclaim implied warranties is. covered. Pre­viously,
a manufacturer could disclaim implied
warranties by including in a written warranty
such phrases as, "This warranty is in lieu of any
implied warranties." Thus, a major benefit of
the act is that anyone who is given a written
warranty also receives the implied warranties.
Magnuson Moss does allow sellers to limit the
1 "Without charge" means that both parts and labor
are covered, even the cost of removing and reinstalling
a product. For example, if flooring were found to be
defective, the warrantor would have to remove the
flooring and replace it free of charge. The warrantor
may also have to reimburse the consumer for incidental
expenses (i.e., cost of doing laundry at a laundromat)
incurred due to unreasonable delays in repairing a
product.
3
IMPLIED WARRANTIES UNDER STATE LAWS
Implied warranties are consumer rights
created by State laws under the Uniform
Commercial Code. Implied warranties
accompany the sale of all consumer prod­ucts.
First, the sale of a product implies
"merchantability" or that the goods are
reasonably fit for ordinary use. For exam­ple,
the seller of a food mixer warrants
that it will mix. Second, if the seller
knows that the product is to be used for a
special purpose, an implied warranty of
fitness for a particular purpose accompa­nies
the sale of the good. For example, if
a seller knows that a consumer wants a
dishwasher that will clean pots, it must be
suitable to clean pots as well as dishes.
The general intent of the Magnuson
Moss Warranty Act is to preserve consum­er
rights and remedies under State laws in
duration of implied warranties to that of the
written warranty only if the warranty is desig­nated
"limited" and the limitation is stated on
the face of the warranty.
An important provision of the a<!t which
applies to both full and limited warranties is
the regulation on tie-ins. Warrantors may not
require the use of a particular brand name
product or service as a precondition to obtain­ing
warranty repair. For example, a consumer
could not be required to use a brand name cof­fee
filter with their coffeemaker. Also, consum­ers
wishing to repair their own product must be
able to purchase parts for that product without
the requirement that they take the product to
the dealer for installation of that part. Warran­tors
cannot require the consumer to come to
them for inspections or maintenance of a prod­uct
if the consumer must pay for the inspec­tion
or maintenance.
IMPLEMENTATION
The Federal Trade Commission (FTC~ was
given the express authority to administer the
act and ·to issue rules, regulations, policy state­ments,
or advisory opinions to aid in the imple­mentation
of the act.
4
addition to the new rights and remedies
under the Federal law. For example,
Maine, Maryland, Vermont, Massachu­setts,
Kansas and West Virginia do not
allow a warrantor to disclaim or modify
an implied warranty. In contrast, the Fed­eral
law permits a warrantor to limit the
duration of an implied warranty if the
warranty is labeled "limited."
The Magnuson Moss Act only preempts
State disclosure and labeling laws which
differ from the act's disclosure and label­ing
requirements. For example, a Califor­nia
requirement to label an item "mobile
home warranty" was preempted since it
was in direct conflict with the Federal
labeling requirement that every warranty
be designated only as full or limited.
~;asic Rules
There are three basic rules that have been
issued by the FTC to aid in implementing the
act . These rulings cover the disclosure require­ments
of warranty information, the presale
availability of warranty information, and infor­mal
dispute settlement mechanisms. The three
rules apply to both full and limited warranties,
and the disclosure and presale availability rules
apply to consumer products that cost $15 or
more. 2
Disclosure. The warranty must "clearly and
conspicuously disclose in a single document, in
simple and readily understood language, the
following items of information: "
• The party to whom the warranty applies;
• a clear description of what parts or
characteristics are covered;
• a statement of what the warrantor will
pay for and what he will do in case of
defect or failure of the product;
2 The act requires that disclosure of warranty terms
be made before the sale of consumer products that cost
$5 or more. However, the FTC raised the threshold to
$15 in the final rules.
FAMILY ECONOMICS REVIEW
• when the warranty period begins, if differ­ent
from the purchase date, and the
length of the warranty;
• a step-by-step procedure to follow to
obtain warranty service;
• information about the existence of any
informal dispute settlement mechanism;.
• any limitations on the duration of implied
warranties (applies to "limited" warran­ties)
and a statement that such limitations
may not apply to you because of your
State law (see box);
• any exclusions or limitations of conse­quential
or incidental damages and a state­ment
that such limitations may not apply
to you because of your State law; and
• a statement that you may be entitled to
additional rights under your State law.
Presale availability. The rule requires the sell­er
to make available to the buyer, before the
sale, the text of the written warranty in one or
more of the following means:
• Clearly and conspicuously display the
warranty with the product;
• maintain a binder containing copies of
warranties in the department where the
product is sold and a poster saying that
the binder is available;
• display the package with the warranty
clearly visible; or
• display a sign which discloses the text of
the warranty near the product.
Warranty information must be made available
before the sale of a product by mail order,
catalog, or door-to-door. The warrantor is
charged with providing the seller with the
materials necessary to comply with the presale
availability rule.
Dispute settlement mechanisms. The rule
encourages, but does not require, warrantors t?
set up mechanisms to assure fair and expedi­tious
settlement of warranty disputes without
resorting to civil law. The rule specifies the
requirements for membership qualifications of
the staff for the mechanism to ensure imparti­ality,
maximum time allotted to resolve dis­putes,
and recordkeeping and audit procedures.
SUMMER 1978
Warrantors who employ informal dispute
settlement mechanisms must disclose the fol­lowing:
• On the face of the warranty-
1. The availability of the mechanism.
2. The name and address and/or toll free
number of the mechanism.
• Elsewhere in the text of the written war­ranty-
1. A description of the procedures that
will be followed.
2. The type of information required by
the mechanism.
3. The time limits adhered to by the
mechanism.
Although the regulation concerning informal
dispute settlement mechanisms has been in
effect since July 1976, only one mechanism
has been set up in compliance with the rule­the
Home Owners Warranty Corporation
(HOW). Under the provisions of the mecha­nism,
a neutral person of a local HOW Council
mvestigates disputes and seeks to clarify war­ranty
problems so that the parties can reach a
mutually acceptable agreement. If this concili­ation
process fails to resolve the dispute, non­binding
arbitration is provided. Again, a neutral
third party is appointed to listen to both sides
of the problem. The arbitrator then submits a
written decision which is not binding.
Although the FTC cannot force the warrantor
to comply with the decision of the arbitrator,
the FTC does require the warrantor to act in
"good faith." If the consumer is not satisfied
with the decision of the mechanism, he can
seek legal remedies provided for in the act. The
decision of the mechanism is admissible as evi­dence.
The consumer can exercise his legal
rights under State laws without resorting to the
mechanism.
Other Rules and Opinions
The FTC has exercised its authority to issue
an advisory opinion concerning the application
of Magnuson Moss to "consumer products"
sold with new homes. The FTC stated that the
coverage of separate items of equipment which
are installed or attachable to real property
"includes, but is not limited to, appliances and
other thermal, mechanical, and electrical equip­ment;"
however, "it does not extend to the
5
wiring, plumbing, ducts, and other integral
component parts of the structure." The Com­mission
has issued a list of consumer products
which it considers are or are not covered under
Magnuson Moss when sold as part of a new
home ( 3). 3 The key is the separateness of the
function of the product from the home. For
example, kitchen appliances have separate
functions of their own; whereas wiring, doors,
or shingles have no function apart from the
house.
The FTC has proposed a rule concerning
reasonable duties other than notification that
can be imposed upon the consumer as a pre­condition
to obtaining warranty service under a
full warranty. However, the rule was framed in
negative terms. The proposed rule suggests
eight duties that are unreasonable, such as
requiring that the consumer:
• Pay for the costs of mailing or shipping a
product back to the warrantor;
• mail, ship, or carry a consumer product
that weighs more than 35 pounds, or can­not
be handled safely through doorways
and stairways, or has any hazardous
characteristics such as sharp edges;
• complete and return any card, such as a
warranty registration card to receive war­ranty
service (note: the warrantor may
require proof of the date of purchase);
• remove or reinstall a built-in product for
warranty service unless the average con­sumer
could do so without special tools or
skills;
• return a product in its original package;
• return the product to the selling dealer if
more than one authorized dealer is availa­ble;
• notify the warrantor in writing about the
defective product; and
• notify the warrantor within a specified
period of time.
The proposed ruling is not final.
The FTC has also proposed a rule concerning
used car warranties; however, it is not final.
Additionally, the FTC is authorized to issue
approximately 12 rules, at its discretion, to
3 Numbers in parentheses refer to References at the
end of this artic_le.
6
carry out the legislative intent of the act. These
nptional rules include: Extending the length of
warranties where a consumer is deprived of the
use of a product for a long period of time due
to repairs, requiring disclosure of specific terms
and conditions with service contracts, adver­tising
of warranties, defining what constitutes a
"reasonable number of attempts to repair a
product," and defining the terms "within a rea­sonable
time" or "without charge."
CONSUMER RECOURSE
Ideally, warranty claims should be handled
directly through the seller or manufacturer's
service representative. However, there are
numerous recourses available to handle war­ranty
problems including Federal and State
courts, U.S. State Attorney Generals, district
attorneys, private consumer agencies, local con­sumer
affairs offices, trade association dispute
settlement mechanisms such as MACAP (Major
Appliance Consumer Action Panel), Action
Lines, and Better Business Bureaus (1 0).
Magnuson Moss strengthens consumer
recourse by adding consumer rights under
Federal law. Under the act, the consumer can
enact a civil suit in a Federal district court or
State court against a warrantor who fails to
comply with the act or fails to meet the obliga­tions
of the written warranty, implied warran­ty,
or service contract (10). If the consumer
wins the case, the cost of bringing the lawsuit
to court, reasonable attorney's fees, and relief
for damages may be recovered.
The act further provides for a member of a
warranty dispute to file a Federal suit against a
manufacturer or seller. However, the total
amount of the claim must be at least $50,000
and each consumer must have $25 or more at
stake. A Federal class action suit can be filed if
the claim meets the same terms and there are at
least 100 consumers named in the suit.
The effectiveness of the act will largely
depend on educating consumers about their
warranty rights under Magnuson Moss. Educa­tors
need to encourage consumers to evaluate
each product for (1) the length of the warran­ty,
(2) the parts and characteristics of the prod­uct
~hat are . covered in the warranty, and ( 3)
the mformat10n on what the warrantor will do
in case of defect or failure of the product.
FAMILY ECONOMICS REVIEW
, References
(1) Denicola, R. C. 1975. The Magnuson­Moss
Warranty Act: Making consumer
product warranties a Federal case.
Fordham Law Review 44: 27 3-300.
(2) Federal Trade Commission. 197 5. Rules,
regulations, statements, and interpreta•
tions under Magnuson Moss Warranty
Act. Federal Register 40 FR 251,
60168-218.
(3) 1976. FTC gives advisory
opinion on application of Warranty
Act. FTC News, Dec.17, 1976, app. A.
(4) 1977. Reasonable duties
under a full warranty. Federal Register
42 FR 149, 39223.
(5) 1977. Warranties complying
with Magnuson-Moss Warranty Act.
Federal Register 42 FR 192, 54004-8.
( 6) There Ought to Be a Law
[fact sheet]. [n.d.]
(7) Feldman, L. 1976. New legislation and
(8)
(9)
(10)
(11)
the prospect for real warranty reform.
Journal of Marketing 40: 41-47.
Home Owners Warranty Corporation.
1977. An in depth review of the home
owners warranty plan. HOW-380. 9 pp.
Public Law 93-637, 88 Stat. 2183. Jan. 4,
197 5. Magnuson-Moss Warranty­Federal
Trade Commission Improve­ment
Act (15 U.S.C. 2301).
Rothschild, D. P. 1976. Magnuson-Moss
Warranty Act: Does it balance warran­tor
and consumer interest? George
Washington Law Review 44: 335-380.
Schmitt, M., and Kovac, S. 1976. Mag-nuson-
Moss vs. State protective con·
sumer legislation: The validity of a
stricter State standard of warranty pro­tection.
Arkansas Law Review 30:
21-34.
(12) Uniform Commercial Code, Section 2:
314-316.
SERVICE LIFE OF APPLIANCES BY SELECTED
HOUSEHOLD CHARACTERISTICS
by Katherine S. Tippett
With the current emphasis on helping fami­lies
choose appliances that are most energy
efficient and those that have the lowest life­cycle
cost, educators and leaders working with
families have a need to know which families are
most likely to replace their appliances.
The table on page 9 provides estimates for ·
the service life of five appliances owned by
households classified by income, age of head of
household, and whether or not the household
had moved in the 18 months prior to the time
the data were collected. Separate estimates are
given for appliances acquired new and for those
acquired used.
These estimates, by household characteris­tics,
are a followup to the all-households esti­mates
published in the Summer 197 5 issue of
FAMILY ECONOMICS REVIEW. Because
SUMMER 1978
households vary in the way they replace appli­ances,
estimates that are develot>ed from data
obtained from population subgroups can be
more useful for family decisionmaking and
budgeting.
The estimates by household characteristics
were developed from the same survey data as
the original all-households estimates. These
data were collected for the Consumer and
Food Economics Institute by the Bureau of the
Census in July 1972.- Although the data are
6 years old, collection of this type of data is
extremely expensive and newer estimates
probably cannot be expected for many years.
In addition, comparison of the all-hom:eholds .
estimates with estimates from data collected in
1957 through 1961 indicates that the service
life of appliances changes little over time.
7
The estimates show how long, on the aver­age,
households keep each appliance, not how
long the appliance could have been made to
last. The actuarial or current-life table method
used to develop the all-households estimates
was used to· develop the estimates by house­hold
characteristics. The method uses informa­tion
on appliances owned on the date of the
survey and on those discarded during the pre­ceding
12 months. 1
To obtain appliance service-life estimates for
subgroups of households, data for five appli­ances-
ranges, refrigerators, dishwashers, wash­ing
machines, and clothes dryers-were stand­ardized
and pooled within each household. The
actuarial method was then used with each sub­group
of the pooled appliance data. This pool­ing
procedure was necessary because of the
very small percentage of households within a
subgroup that owned or discarded any single
appliance of any given age. The difference
(expressed as a percentage) between each sub­group
estimate and the all-households estimate
was applied to the all-households estimate for
each appliance to derive the individual appli­ance
service-life estimates by household charac­teristics.
Thus, the estimates may not be as pre­cise
for any one appliance as for the all-house­holds
estimates; however, they are our best
estimates of the service life of appliances
owned by households of the given char­acteristics.
2
Results show considerable variation in the
practices of families. The large variation in ser­vice
life of appliances associated with whether
or not the family had moved just before the
1 For detailed information on methodology, see
Ruffin, M.D., and Tippett, K.S., 1975, Service-life
expectancy of household appliances: New estimates
from the USDA. Home Econ. Res. Jour. 3(3):
159-170.
2 For more information on methodology, see
Tippett, K.S., Magrabi, F.M., and Gray, B.C., 1978,
Service life of appliances: Variations by selected
characteristics of owner households, Home Econ. Res.
Jour. 6(3): 182-191.
8
survey indicates the greater likelihood of dis­~
arding appliances at the time of moving,
regardless of appliance age. The decision to
keep or discard appliances is likely to be made
as part of the overall moving decision and may
be influenced by circumstances of the move or
characteristics of the new residence as well as
by the age of the appliances. Many families sell­ing
a house may simply decide to include appli­ances
in the selling price of·the house. Appli­ances
may be included with the family's new
housing, which would be a reason for discard­ing
the appliances previously owned. Other
factors may be the expense of moving the
appliances, or changes in family composition or
life style related to the move.
A shorter service life for appliances owned
by younger families is consistent with research
showing that this group tends to make more
purchases of durable goods than do families in
which the head of the family is older. Younger
families also move more frequently, perhaps
discarding old appliances and acquiring new
ones when they do. Younger families, especial­ly
those with children, also, may give their
appliances harder use. As a result, younger
families may replace more often, either as an
alternative to frequent repair or as a means of
acquiring specialized features or greater
capacity.
The trend observed toward a slightly shorter
service life for appliances owned by households
with higher incomes is not as strong as might
be expected from studies of income and expen­ditures
for durable goods. The service-life esti­mates
were from data on family income and
age of appliances at the time of the survey. The
appliances were purchased sometime in the
past when income may have been much higher
or lower. Households whose incomes were rela­tively
high when an appliance was purchased
may have bought higher quality items that
satisfied their needs and preferences better
than did the lower quality items bought by low
income families, and that remained in good
condition for a longer period, resulting in long­er
use.
FAMILY ECONOMICS REVIEW
Estimated service life of 5 appliances owned by households classified by selected
Household
characteristic
All households 1 .......
Income: 2
Under $6,000 ........
$6,000-14,999 .......
$15,000 and over
Age of head: 2
35-49 ...............
50-64 ...............
65 and over .........
Under 50 ......... ...
50 and over ... ......
Changed residence: 2
Yes
No
.................
..................
Household
characteristic
All households 1
Income: 2
Under $6,000 ....... .
$6,000-14,999 .•.....
$15,000 and over
Age of head: 2
35-49 .........•..•..
50-64 .............. .
65 and over •.••..•..
Under 50 ........... \.
50 and over •.••.••••
Changed residence: 2
Yes •.••..•••••.•..••
No •••••..•.•.•.•.• · •
characteristics, 1972
Appliances acquired new
Range
Ref rig- Washing
Clothes dryer
Electric Gas era tor machine Electric Gas
Years
12.1 13.5 15.2 10.8 13.7 12.8
13.3 14.8 16.7 11.9 15.1 H.l
12.3 13.8 15.5 11.0 14.0 13.0
10.6 11.9 13.4 9.5 12.1 11.3
11.4 12.7 14.3 10.2 12.9 12.0
14.8 16.5 18.5 13.2 16.7 15.6
21.7 24.2 27.2 19.3 24.5 22.9
9.9 11.1 12.5 8.9 11.2 10.5
16.8 18.8 21.1 15.0 19.0 17.8
4.8 5.4 6.1 4.3 5.5 5.1
16.7 18.6 21.0 14.9 18.9 17.7
Appliances acquired used
Range Ref rig- Washing
Clothes
dryer,
Electric Gas era tor machine electric
Years
5.6 6.6 7.4 4.5 5.1
5.9 6.9 7.8 4.7 5.4
5.4 6.3 7.1 4.3 4.9
5.4 6.3 7.1 4.3 4.9
6.2 7.3 8.1 5.0 5.6
6.7 7.9 8.9 5.4 6.1
9.6 11.3 12.7 7.7 8.7
5.2 6.1 6.8 4.1 4.7
7.7 9.0 10.1 6.2 7.0
4.5 5.4 6.0 3.6 4.1
7.1 8.4 9.4 5.7 6.5
!Estimates derived from actuarial tables developed for each appliance.
2Estimates computed from standardized pooled data for 5 appliances.
SUMMER 1978
Dish-washer
11.1
12.2
11.3
9.8
10.4
13.5
19.9
9.1
15.4
4.4
15.3
Dish-washer
6.8
7.1
6.5
6.5
7.5
8.2
11.6
6.3
9.3
5.5
8.6
9
CONSUMER APPLIANCE DECISIONS: USING ENERGY LABELS
by Marilyn Doss Ruffm
Major appliances are characterized by a high
initial cost, a long period of service in the
household, and the consumption of appreciable
amounts of energy in their use. The purchase
decision, therefore, is a complex one: To weigh
desired product design and performance
features against product cost, including the
cost of operating the item.
Information on relative energy costs among
various brands and models of several major
appliances will soon be available to consumers.
Such information can help the consum­er
to make cost comparisons that consider
operating cost as well as purchase price. How­ever,
the label information and its use in calcu­lating
life-cycle cost is complicated. It will
involve concepts that are new to most consum­ers
and to many educators as well. Educators,
program leaders, and others who help families
make informed purchase decisions will need to
become familiar with appliance energy labels
and their use, in order to answer the many
questions that consumers are likely . to have
when the labels begin to appear in the market­place.
The energy labels will be based on tests of
appliance energy use under controlled labora­tory
conditions which were designed to simu­late
home use as much as possible, yet not be
burdensome to industry. In using the label
information, the consumer should remember
that it is intended as a guide to help estimate
costs and make comparisons-not a guarantee
of what the cost will actually be. The labels are
not intended to provide the sole criterion for
the consumer decision. Other factors to con­sider
include reliability, durability, safety, ease
of operation, ease of upkeep, and how well the
product performs its intended function. Also,
the manner in which the appliance is used and
cared for by the consumer, as well as environ­mental
conditions over which the consumer
may have limited control, will affect cost of
operation and performance as well as the
degree of wear--and thus may also affect the
service life over which the purchase price is dis­tributed.
10
Appliance Energy Labeling1
Energy cost labeling of major consumer
appliances is mandated by the Energy Policy
and Conservation Act of 1975, Title III, Part B.
The product categories covered in the legisla­tion
are: Room air conditioners, dishwashers,
refrigerators and refrigerator-freezers, freezers,
clothes dryers, television sets, clothes washers, 1
central air conditioners, water heaters, humidi­fiers
and dehumidifiers, kitchen ranges and
ovens, furnaces, and heating equipment other
than furnaces. Test procedures for measuring
energy efficiency have been developed and
finalized for the first nine of the product cate­gories.
2 The test procedures attempt to
measure energy efficiency and energy con­sumption
of a typical use-cycle, from which
annual energy consumption is then estimated
and priced.
The Federal Trade Commission is responsi­ble
for publishing labeling rules and designing
and issuing the labels. Manufacturers of appli­.
ances will be required to use the labels on their
products. FTC expects to publish a proposed
rule in the spring of 1978 and anticipates that
the final rule will be published by midyear,
with labels following in the marketplace by the
end of 1978.3 The legislation specifies that the
labels should use estimated operating costs
rather than some other measure of energy con­sumption
or efficiency. Sample labels were
1 Much of the information in this section is based on
a talk presented at the 1977 Food and Agricultural
Outlook Conference by R. Nelson DuRant, Office of
Consumer Products, U.S. Department of Energy.
Copies are available from Consumer and Food Eco·
nomics Institute (see inside cover of this issue of Fami·
ly Economics Review for address).
2 Federal Register, 1977, "Energy conservation pro­posals
for appliances," Title 10, Part 30: Federal
Energy Administration, 42 FR 105, 27896-9; 42 FR
152, 39964-9; 42 FR 178, 46140-54; 42 FR 188,
49802-10; 42 FR 192, 54110-9. Department of
Energy, 42 FR 201, 55599-611; 42 FR 227,60150-7.
3 Status when this issue of Family Economics Review
went to press.
FAMILY ECONOMICS REVIEW
field tested in 1977 to determine what infor­mation
would be most useful to the consumer.
Each appliance model will have a specially
designed label that will show the average
annual energy cost for that model and a range
of operating costs for comparable models (see
p. 13). Using the label information, consumers
will be able to compare the energy cost . of a
particular model with that of the highest and
lowest energy consumer of that particular
product type and size and to judge for them­selves
whether they are satisfied with that
model or want to consider one that is more
energy efficient. Other information that may
be on the label includes energy efficiency rat­ings,
costs by geographic area for heating and
air conditioning products, and additional cost
comparisons based on various energy price
levels and alternate usage levels.
The Department of Energy is developing a
consumer education program to help consum­ers
use the energy labels. The program will
cover comparison shopping, the significance of
annual operating costs, and the relationship of
these costs to the life-cycle (lifetime) cost.
Lifetime Cost of Appliances4
The cost of the energy to operate an appli­ance
over its lifetime in the household may
amount to 50 percent or more of the total cost
of ownership. Energy information from the
label can be used with other information to
compare the total cost of ownership among
two or more appliance models or brands. This
decisionmaking technique is called "life-cycle
costing."
Components of the total cost of ownership
over the appliance lifetime (or over the time its
function is required) include: The initial cost
(purchase price plus delivery and installation),
operating costs (energy, supplies, maintenance,
and repair), and disposal cost (or benefit if the
item has a trade-in or resale value).
4 Much of the information in this section is based on
a talk presented at the 1977 Food and Agricultural
Outlook Conference by Allan W. Beres, Federal Supply
Service General Services Administration. Copies are
availabie from Consumer and Food Economics lnsti·
tute (see inside cover of this issue of Family Economics
Review for address).
SUMMER 1978
A simplified life-cycle costing (LCC) formula
that the consumer can use to compare costs ·
among appliance alternatives considers initial
cost (including installation) plus annual energy
cost from the label. In its simplest form, the
present value of thE! lifetime cost equals the
initial cost, plus the present value of the sum of
annual energy costs over the lifetime.
Maintenance and repair costs are not includ­ed
in the simplified LCC formula as they are
likely to be a substantially lesser part of total
lifetime cost; in addition, little information is
available. In an example calculated by the
National Bureau of Standards, repair cost was
only about 4 percent of the total ownership
cost for an electric clothes dryer (assuming a
10-year ownership period and electricity at
4 cents per kilowatt-hour). 5 Similarly, disposal
costs are a small part of the total lifetime cost
of a major appliance to the consumer; in addi­tion,
disposal costs are not known to vary by
make or model.
The U.S. Government has used the simpli­fied
LCC formula in purchasing window air
conditioners, gas and electric ranges, refrigera­tors,
and gas and electric water heaters.
Using Label Information To Estimate
Lifetime Costs
Life-cycle costing is based on assumptions
about the future-the cost of power, the level
of use the item will receive, and the number of
years the item will remain in service. There is
considerable uncertainty regarding all three
factors. The consumer may therefore wish to
evaluate total product cost over a shorter
period of use or to estimate when an appliance
with a higher initial cost but lower energy con­sumption
will reach the break-even point after
which the consumer will begin to realize a
saving.
Illustration of the life-cycle cost calculation
follows.
s Steifel, S. W., and William, B. B., 1978, Application
of historical repair data in life cycle costing analysis,
Product Durability and Life: Proceedings of the 27th
Meeting of the Mechanical Failures Prevention Group,
held at the National Bureau of Standards, November ·
1-3, 1977.
11
Making Cost Comparisons
1. From the label, obtain the annual energy
cost of operating the item. Your choice will be
based on operating conditions (such as number
of loads laundered per week) and the cost of a
unit of energy (i.e., kWh or therm). Be sure
that you use the marginal cost rather than aver­age
cost of energy per unit. (See box, p. 13.) It
may be necessary to adjust the label value to
your local cost.
To do that, compute:
Annual energy X
cost from label
Your cost of energy per unit
Label cost of energy per unit
2. Estimate how long you intend to use the
item or how long an investment period you
wish to consider. You may wish to use the
USDA estimates of service-life expectancy,
which represent the average number of years
that households keep their appliances. These
are:
Freezer
Refrigerator
Range, gas
Range, electric
Dishwasher
Clothes washer, automatic
Clothes dryer, gas
Clothes dryer, electric
Television, black and white
Television, color
Years
20
15
13
12
11
11
13
14
11
12
USDA did not study the service-life expectancy
of air conditioners and water heaters. The con­sumer
could, however, use the estimates that
were developed by the Federal Supply Service
for use in U.S. Government purchase deci­sions-
room-air conditioner, 7 years; gas- or
electric-water heater, 10 years.
You may wish to focus on a shorter period
of use than the average service-life expectancy.
For example, you may not be certain that you
will want to keep the appliance as long as the
12
.average service-life expectancy-you may be
anticipating a move or other change within a
few years. Or, you may not be comfortable
with making a decision based on a long period
of future use. Or, you may be willing to invest
in an item that costs more initially but uses less
energy, only if that extra outlay is recovered
within a certain period of time-perhaps
. 3 years, or 5 years.
3. Based on the expected years of use that .
you choose to consider, select the appropriate
factor from table. The factor represents the
present value of the cost of energy to operate
the item throughout its expected period of use.
Future energy costs are inflated at their pro­jected
rate of increase above the general level
of increase in consumer prices (2.4 percent
annual rate) and are discounted at a 5-percent
annual rate to allow for the time value of
money.
4. Multiply the annual energy cost from
Step 1 by the factor obtained in Step 3.
5. To the figure obtained in Step 4, add the
purchase price of the appliance including tax
and installation.
6. Repeat Steps 1 through 5 for the other
brands or models that you are choosing from.
Be sure that you are consistent in specifying
your level of use, energy rate per unit, and
expected years of use.
7. Compare costs and make your selection.
To answer the question "Which item has the
lowest total cost?" simply select the item with
lowest cost as computed in Step 5. To answer
the question "Will a higher initial cost be paid
back within a specified tirpe period?" compare
the total costs of the items being considered. If
the total cost from Step 5 for an item that
costs more initially but uses less energy is less
than that of the alternative item (which costs
less initially but uses more energy), the answer
is yes.
FAMILY ECONOMICS REVIEW
Present value of lifetime energy cost
BE SURE THAT YOU USE THE
MARGINAL COST RATHER THAN
THE AVERAGE COST OF ENERGY
PER UNIT
1
2
3
.
.
Because of the "declining block rate"
pricing that is in general use today, a
decrease or increase in consumption
results in a less than proportionate change
in cost to the consumer. For example, if
you reduce your monthly use of electri­city
by one-third, you may find that your
monthly bill is only one-fourth lower than
previously. If rate information is not
printed on your regular utility bill, it can
be obtained from your local utility com­pany.
4 . .
Before
Buying
Check Energy Cost
How much will your yearly energy cost be
with this model? How does it compare with
other models? Check the figures and spend
less on energy.
Help the nation conserve energy.
Warning
Removal of this label before consumer
purchase is a violation of federal law.
(42 u.s.c. 6302)
SUMMER 1978
5 . .
6 .
7 . . .
8 . .
9 . .
10 .
11 . .
12 . .
13 . .
14 . . .
15 . ..
16 . . .
17 . . .
18 . . .
19 . . .
20 . .
Compare
Energy Costs
Estimated Yearly Energy Cost of
this Model
$84
Compare Energy Costs
This model has 23 cubic feet of inside space.
All brands and models with 21.5 to 24.5
cubic feet have abOut the same space inside.
These brands and models have different
yearly energy costs:
Model with
lowest
energy cost
$63
$84
This Model
Model with
highest
energy cost
$122
Source of Cost Information
Estimates are based on U.S. Government
standard tests. Your cost will depend on your
utility rate and how you use the product.
Expected years
of use
.
.
. .
. .
.
. .
. .
. .
.
. .
. . .
.. . . . . .
.
. . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .
. . . . . . . . . . . . . ..
. . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .
. . . .. . . . . . . . . . . . .
. . . . . . . . . . . . . .
. . . . . . . . . . . . . .
. . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .. . . .
. . . . .. . . . . . .
. . . . . . . . . .
Name of Corporation
Refrigerator /Freezer
Model: AH503
Capacity: 23 cubic feet
. . .
More Cost Information
. . . . .
. . . .
. . . .
. .
. . . . .
. . . .. . . . .
. . . .
The $84 estimate for this model is based on
the 19n natiOnal average electric rate of 3.8¢
per kilowatt hour.
Check this table to estimate your yearly cost.
Cost per kilowatt hour
8¢ 10¢
Factor
0.99
1. 95
2.89
3.80
4.70
5.56
6.41
7.24
8.04
8.83
9.60
10.34
11.07
11.79
12.48
13.16
13.82
14.46
15.09
15.70
$44 $88 $132 $176 $220
13
IN-HOME ENERGY MONITOR: A TEST OF CONSUMER
RESPONSE TO ENERGY INFORMATION1
by R. Bruce Hutton 2
The Division of Buildings and Community
Systems of the U.S. Departm-ent of Energy has
responsibility for encouraging more efficient
use of energy in homes and other buildings. To
date, the majority of efforts of the Division
have focused on product and system develop­ments,
but it is becoming more and more evi­dent
that motivating the consuming public to
conserve energy is as important and difficult a
challenge as developing the technologies. For
example, there are many sound energy-conserv­ing
products already available in the market­place,
such as insulation. Most have not achiev­ed
rapid and widespread use even though they
can be justified in terms of a sound economic
investment. In addition, there are many prac­tices,
such as lowering the furnace thermostat
setting in winter and raising the air-condition­ing
setting in summer, that homeowners could
adopt which would substantially reduce their
energy consumption. Clearly, these actions
would be in both the individual and national
ipterest, since they could conserve our supplies
of fossil fuels and reduce the cost of energy to
consumers. Yet, consumers have not widely
adoptee\ energy-efficient practices or made
more energy-efficient purchases.
A great deal of psychological research has
suggested that giving immediate feedback to
people about the · effects of their actions
enables them to better control these actions.
The application of this idea to the reduction of
energy consumption is clear. Consumers are
concerned about energy and are motivated by
continually increasing energy costs to reduce
their home energy consumption. Consequently,
if they are given rapid feedback on their actual
1 This article is condensed from a paper given at the
Food and Agricultural Outlook Conference in Novem­ber
1977, at Washington, D.C. The complete paper
may be ordered from Consumer and Food Economics
Institute (see im~ide cover page of this issue of Family
Economics Review for address).
2 Program Manager, Office of Assistant Secretary for
Conservation and Solar Applications, U.S. Department
of Energy. The views expressed in this paper are those
of the author and not necessarily of the USDA.
14
energy usage, especially in dollars and cents,
this should enable them to better control their
consumption. There are two main reasons -why
better control might occur. First, since the
monthly utility bill is not clear or detailed
enough to be very helpful, most consumers are
unaware of the amount of energy they use.
Immediate feedback would provide such infor­mation.
Second, instant feedback indicates the
success of various attempted conservation stra­tegies
which can lead the consumer to discover
and maintain conservation habits.
The Consumer Motivation Branch (CMB) of
the Division of Buildings and Community
Systems has been conducting research on ways
to work with the private sector to encourage
residential consumers to (1) purchase more
energy-efficient products and (2) adopt more
energy-efficient practices. One study funded by
CMB and conducted by Princeton University
dealt directly with the feedback concept. Four
experiments were conducted that involved giv­ing
some type of feedback to consumers on the
amount of energy being used compared, for
example, with the previous month's consump­tion,
or with the consumption of other people.
The feedback was adjusted for weather effects,
and sometimes took into account the physical
characteristics of the house. Overall results sup­ported
the theory that feedback helps reduce
energy consumption. 3
Following these experiments, CMB began to
test" the In-Home Energy Monitor-a relatively
simple device which would automatically pro­vide
residents with immediate information
about their home's energy consumption. The
test is being done in cooperation with the
Potomac Electric Power Company (PEPCO)
located in Washington, D.C. There are two
major objectives: (1) To test whether a simple,
one-function device which instantaneously dis­plays
projected hourly electricity cost will be
3 Full details of this preliminary research leading up
to the current Energy Monitor Study are available in
".Psych?logical Strategies to Reduce Energy Consump­tion:
Fust Annual Report," Center for Environmental
Studies, Princeton University, Princeton, N.J. 80540.
FAMILY ECONOMICS REVIEW
effective in helping conserve energy; and (2) to
find out what practical difficulties may arise in
doing this type of real-world test with a utility.
The device being used in this test is commer­cially
available, although this will be the first
controlled test of its effectiveness. It provides a
display in cents-per-hour of total household
electricity use (to tenths of a cent); for exaJ;n­ple,
"Your electricity cost for the next hour
will be $0.7 42 if you continue to use electrici­ty
at your present rate." If the consumer then
plugs in the dishwasher, the cost will immedi­ately
jump to a higher figure (such as $0.953).
The device also serves as a conventional digital
clock. It alternates time of day and cents-per­hour
at 4-second intervals.
This particular feedback device was chosen
for a number of reasons. A primary one is its
cost. While the monitor is not currently in mass
production and therefore sells for $125, mass
production could bring down· the cost to the
consumer to around $25. The payback period
is then likely to be less than 1 year. Other rea­sons
for choosing the monitor were the
immediacy of the data and the continual
reminder to the consumer that energy is being
used in the home at virt\lally all times.
PEPCO installed the energy monitor in the
homes of 140 families in its service area. These
families, selected on the basis of a stratified
random sample, were randomly assigned to
either a feedback group or the control group.
The subjects in each group represent a broad
demographic profile of PEPCO customers,
especially in terms of income. All participating
families have been visited by a Princeton
researcher and a PEPCO engineer who fully
explained the .details of the customer's involve­ment
and provided educational materials on
how to most effectively conserve energy. The
test began in the fall of 1977 and will run for
1 year, since the long term effectiveness of
such a feedback device is of major interest.
PEPCO is also installing a demand meter in
half the homes of all families participating in
the study; this meter will monitor amount and
time of electricity use on a continual basis.
This will enable us to assess the effectiveness of
the feedback in reducing overall electricity con­sumption,
and also determine the impact of
this type of feedback on the utility load pro­file.
In addition, the consumer's efforts to save
energy and reactions to such factors as the
device itself, the utility role, and the costs of
energy will be monitored and documented.
Running concurrently with the energy moni­tor
test, research and development of a more
sophisticated, multifunction feedback device is
being done by the Department of Energy's
Consumer Products and Technology Branch.
Also, based on what is learned in the current
test, a larger scale demonstration involving
several utilities and perhaps a more sophisti­cated
device is being developed. In addition,
the use, and effectiveness, of feedback in the
commercial sector will be explored in a co'ope~
rative project with a California utility to test
feedback in conjunction with time-of<lay
pricing.
FAIR DEBT COLLECTION
The Fair Debt Collection Practices Act
became effective March 20, 1978. The intent
of the new law, which amends the Consumer
Credit Protection Act, is to "eliminate abusive
debt collection practices" and protect the con­sumer
from harassment and unfair collection
procedures.
Provisions of the law make it a Federal
offense for debt collectors to threaten consum­ers
with violence, use obscene language, or con­tact
consumers by telephone at inconvenient
times or places. In addition, debt collectors are
SUMMER 1978
prohibited from publishing "shame" lists,
impersonating government officials or attor­neys,
obtaining information under false pre­tenses,
and collecting more than is legally
owed.
The Federal Trade Commission and the
Federal Bank regulators will enforce the act.
Source: Public Law 95-109, 91 Stat. 87 4-883,
HR 5294, Amendments to the Consumer Credit Pro­tection
Act, September 20, 1977.
15
ENERGY EXTENSION SERVICE1
by Judith M. Liersch 2
The Energy Extension Service (EES) is pres­ently
operating as a pilot program in 10 States.
As a pilot program, it provides a promising
experiment in energy outreach which can be
used to develop a rational and effective nation­wide
program.
The enabling legislation for the Energy
Extension Service is Title V of the Energy
Research and Development Administration's
(ERDA) FY 1978 authorization bill (P.L.
95-39) which was signed into law on June 3,
1977. The major purpose of the EES is to
increase energy savings and the substitution of
renewable for nonrenewable fuels. This is to be
done by providing small energy consumers with
an accessible, reliable, and creditable source of
assistance. Small consumers include individuals,
small institutions and business establishments,
and local governments. History has shown that
these are the least well-prepared energy users
for coping with current energy problems. EES
aims particularly to teach small users to be bet­ter
able to cope with rising energy prices and
potential fuel shortages.
Also, it is assumed that EES audiences, in
the course of receiving extension services, will
report on the institutional and other barriers
perceived to be preventing adoption of the
energy-saving measures being promoted. EES
cannot necessarily overcome these barriers but
can initiate a systematic process for collecting
such information and transmitting it for fol­lowup
action to public and private organiza­tions
at Federal and State levels. Thus, an
opportunity is created for regulators, legisla­tors,
administrators, and technology developers
to take action to overcome some of the barriers
impeding use of energy-saving methods and
equipment.
1 This article is condensed from a paper given at the
Food and Agricultural Outlook Conference in Novem­ber
1977, at Washington, D.C. The complete paper
may be orde:.;ed from Consumer and Food Economics
Institute (see inside cover of this issue of Family Eco­nomics
Reveiw for address).
2 Director, Energy Extension Service, U.S. Depart­ment
of Energy. The views expressed in this paper are
those of the author and not necessarily of the USDA.
16
The concept of direct assistance to consum­ers
inherent in EES stems from the Cooperative
Extension Service (CES) model where CES acts
as a major force arid catalyst for widespread
change at the local level. The record shows
many references to the congressional intent
that the EES follow the CES model to provide
grassroots delivery of relevant information and
assistance and the followthrough to be sure this
is timely, on target, and thoroughly
understood.
A major departure from the CES model is
that there is no single equivalent to the land­grant
college system in energy to administer
and provide technical support to EES. Rather,
in EES the State governments administer the
program. The technical base is understood to
exist in different institutions in each State,
including the land-grant institutions. ERDA
was selected to implement the EES since
ERDA is close to the technical base which is
critical to the program's success. With the
reorganization of the energy agencies, the
Department of Energy (DOE) is assuming the
role of managing the EES.
One of the major program highlights is face­to-
face assistance to small energy consumers. In
addition to this emphasis on personalized
assistance, another special aspect of EES is the·
State role in planning and operating the pro­gram.
DOE/EES is committed to the philoso­phy
that States must have the flexibility to
design programs which are sui ted to their par­ticular
energy circumstances.
In the area of technical assistance, DOE/EES
operates as a "wholesaler" and one which must
be very responsive in efficiently supplying the
States with the technical information and train­ing
assistance they specifically require. The
DOE/EES technical assistance team is working
with the pilot States to identify their specific
needs and to provide service characterized by
quick turnaround on technical questions. Fur­ther
action involves finding public and private
information resources for the States and then
facilitating contact. The overriding aim is to
build technical capability within the States and
an ability to benefit from the resources already
available.
FAMILY ECONOMICS REVIEW
A recurring theme throughout the develop­ment
of the program is not to "reinvent the
wheel." DOE/EES encourages the States to
design their programs to tie directly into and
supplement existing programs and service
mechanisms wherever possible, thus enabling
States to achieve a multiplier effect by tapping
into the best services available throughout the
State.
The 10 pilot States were selected competi­tively
in August 1977 from among ·50 propos­als
received by ERDA/DOE for the Energy
Extension Service. The proposals were selected
on technical merit and to represent a mix of
program and management approaches as well as
a broad geographic representation. Grants were
awarded in September to each State for $1.1
million for a 19-month pilot period ending
March 31, 1979.
The 10 pilot States are:
Alabama
Connecticut
Michigan
New Mexico
Pennsylvania
Tennessee
Texas
Washington
Wisconsin
Wyoming
The States are currently preparing detailed
implementation plans to assure that resources
are appropriately allocated to accomplish the
activities in the State proposals. When the plans
are completed at the end of November, they
will provide a detailed basis for tracking the
programs and for constructing effective evalu­ation
models for each State. Some services will
be offered in the pilot States by the end of the
year.
Several services are common to all the pilot
States: Energy audits, seminars, workshops and
training, information dissemination to residen- ·
tial dwellers, and energy hotlines. These ser­vices
are targeted for residential consumers,
small commercial establishments, and public
institutions. Such commonality of services and
target audiences should assist DOE/EES in
SUMMER 1978
drawing practical lessons which can assist ener­gy
extension services in different regions at
such time as the program is expanded.
Each pilot State, however, proposes to
expand on or initiate some service that is dif­ferent
from the others or approaches the ser­vice
in some unique way. For instance:
• Alabama will offer car care clinics.
• · Connecticut plans consumer education on
peak load pricing.
• Michigan will include vocational educa­tion
in energy conservation.
• Texas is preparing seminars for savings
and loan officers to assist them in assess­ing
energy conservation loan requests.
• Wyoming will offer home energy audits.
The implementation approaches by the pilot
States are quite varied. In terms of manage­ment,
five States focus EES management on
the State government, three use universities,
and two have hybrid organizations combining
both university and State government ele­ments.
Some States, like Wyoming, plan to
deliver services statewide. Others, like Washing­ton,
are targeting narrowly defined geographic
areas. All the States ,in one way or another use
delivery support from sources other than the
managing unit. For instance, seven States will
provide services with assistance from the
Cooperative Extension Service. In Pennsyl­vania,
the EES will be aided by the well-estab­lished
Pennsylvania Technical Assistance Pro­gram
(PENNTAP).
To maximize the benefit of lessons being
learned, DOE/EES has given the nonpilot
States a head start in developing an energy out­reach
program. Each nonpilot State has access
to a small grant to be used to track the pilot
program. In addition, the pilot States have each
budgeted a half-person year of effort for infor­mation
sharing with the nonpilot States. DOE/
EES also makes available to these States such
activities as a recently held technical informa­tion
short-course held at the DOE Technical
Information Center in Oak Ridge, Tenn.
17
SOCIAL INDICATORS 1976
"Social Indicators 1976," a recent publica­tion
of the U.S. Department of Commerce,
Bureau of the Census, presents selected data on
social conditions and trends in the United
States.
The book, which consists mostly of charts, is
divided into 11 major social areas-population;
the family; housing; social security and welfare;
health and nutrition; public safety; education
and training; work; income, wealth, and
expenditures; culture, leisure, and use of time;
and social mobility and participation. Within
each area, selected statistics describe the gener­al
status of the population. These statistics-social
indicators-focus primarily on the meas­ure
of individual or family well-being and
public perceptions of social concerns.
The statistical data were obtained from a
wide variety of sources, including the decennial
census, Current Population Survey, Annual
Housing Survey, General Social Survey, vital
statistics data from the National Center for
Health Statistics, and selected administrative
records and official registration systems.
The book is available from the Superintend­ent
of Documents, U.S. Government Printing
Office, Washington, D.C. 20402, for the price
of $7 .00. (Stock No. 041-001-00156-5)
AGE DIFFERENCES IN PERSONAL HEALTH CARE SPENDING, 1976
Expenditures. Spending for personal health
care totaled $120.4 billion in fiscal year
1976-an increase of 14 percent over fiscal year
197 5. Personal health care, which represents
about 87 percent of the national health care
bill, 1 is the cost of health services and supplies
received directly by individuals. The largest
share (56 percent) of the personal health care
bill was spent by the largest population group,
persons age 19-64 years; but persons age 65
and over who made up nearly 11 percent of the
population accounted for 29 percent of total
spending for personal health care (table 1).
Spending by this older group averaged $1,521
per person-nearly three times the amount
spent by those in the intermediate age group.
The group under age 19 spent the least amount
per person on personal health care.
Type of care. Hospital care represents the
largest share of the personal health care bill in
all ag.; groups (table 2); it is more significant as
an expenditure for persons age 19 or over. Per­sons
age 65 and over spend, on average, a small­er
share on physicians, dentists, anrl drugs, but
considerably more on nursing homes than the
younger age groups.
1 The remaining 13 percent is for the cost of
research, medical facilities construction, administrative
costs of government programs, government public
health activities, expenses incurred by philanthropic
organizations in raising fund& for health· care, and the
net cost of private health insurance.
18,
Source of funds. Private funding, consisting
of about half private health insurance pay­ments
and half direct consumer or "out-of­pocket"
expenditures, accounts for 70 percent
of the personal health care expenditures of per­sons
under age 65. For the aged, private fund­ing
was of less importance: Private health insur­ance
payments accounted for 5 percent and
direct payments accounted for 27 percent of
the personal health care bill for persons age 65
and older.
Public funding was the major source of fund­ing
for health services received by persons age
65 and over and accounted for more than two­thirds
of their total personal health care
expenses. The two most significant public pro­grams
are Medicare and Medicaid. Medicare
benefits go primarily to ·persons age 65 and
over, 2 and more than one-third of Medicaid
payments go for this group. In addition, Medi­caid
accounted for about half the public spend­ing
for persons under age 19 and about 32 per­cent
of the public money spent for persons
between age 19-64 years.
2 Disabled persons under 65 may also collect
Medicare.
Sources: l!.S. Department of He;,1lth, Education, and
Welfare, Social Security Administration Social Securi­ty
~uUetins: Gibson, R. M., and Muell~r, M.S., 1977,
Nat10n~ health expenditures, fiscal year 1976, 40( 4):
3-22; Gibson, R. M., Mueller, M.S., and Fisher, C. R.,
19?7, Age differences in health care spending fiscal
year 1976, 40(8): 3-14. '
FAMILY ECONOMICS REVIEW
Table 1. Personal health care spending by age, 1976
Population
Total
expenditures Per capita
Age
Percent Percent expenses
Number
-distri-
Amount
distri-
(millions) but ion (billions) bud on
All ages ............ 218.4 100.0 $120.4 100.0 $551
Under 19 years .... 71.8 32.9 17.9 14.9 249
19-64 years ....... 123.7 56.6 67.7 56.2 547
65 years and over . 22.9 10.5 34.8 28.9 1,521
Source: Gibson, R. M., Mueller, M. S., and Fisher, C. R., 1977, Age
differences in health care spending, fiscal year 1976, Social Security
Bulletin 40(8): 3-14, U.S. Department of Health, Education, and Welfare,
Social Security Administration.
Table 2. Personal health care spending by age and type of care, 1976
Type of
expenditure
Total ..................... .
Hospital care ........... .
Physicians' services .... .
Dentists' services ...... .
Drugs and drug sundries .•
Nursing-home care •...•...
Other 1 •••..•••.••••••••••
All ages
100
46
22
7
9
9
7
Under 19
years
19-64
years
Percent distribution
100
36
31
ll
12
1
9
100
49
22
9
9
4
8
65 years
and over
100
45
17
2
8
23
5
lrncludes other professional services, and eyeglasses and appliances.
Source: Gibson, R. M., Mueller, M. S., and Fisher, C. R., 1977, Age
differences in health care spending, fiscal year 1976, Social Security
Bulletin 40(8): 3-14, U.S. Department of Health, Education, and Welfare,
Social Security Administration.
Note: Numbers many not add to 100 due to rounding.
SUMMER 1978
19
CONSUMER PRICE INDEX REVISION
The monthly Consumer Price Index publish­ed
by the Bureau of Labor Statistics (BLS) has
been revised to take account of changes in the
spending patterns of families and individuals.
The revised index reflects data on expenditures
obtained in the 1972-73 Consumer Expendi­ture
Survey.
In addition to the traditional "Index for
Urban Wage Earners and Clerical Workers,"
which represents the items purchased and
prices paid by about 40 percent of the popula­tion,
BLS is publishing a second index reflect­ing
the buying habits of all urban households.
This second index, "Index for All Urban Con­sumers,"
reflects the buying habits of about 80
percent of the population including profession­al
workers, the self-employed, wage earners and
clerical workers, the poor, the unemployed,
and retired persons. Not included in either
index are persons living outside urban areas,
farm families, persons in military service, and
those in institutions. Publication of both the
revised and the new index began in January
1978.
The new and revised indexes have a refer­ence
base of 1967, as did the old index. In
addition to the national average, individual
indexes for 28 cities and for four regions by
population size will be published.
The Consumer Price Index table on page 21
of this issue of FAMILY ECONOMICS
REVIEW and all following issues will contain
the second index, "Consumer Price Index for
All Urban Consumers."
The Consumer Price Indexes serve two major
functions: (1) As a yardstick for revising wages,
salaries and other income payments to keep up
with ris'i ng prices; and (2) as an indicator of the
rate of inflation in the American economy.
The indexes are designed to measure changes
in the purchasing power of the urban consum­er's
dollar by comparing what a specific market
basket of goods and services costs this month
with what it cost in the past. Consumer
Expenditure Surveys provide the basis for the
selection of items to be priced (the market bas­ket).
The importance of each of these items
and their weights reflect the expenditures of a
cross section of consumers living in a repre­sentative
sample of urban places.
The indexes do not reflect on a month-to­month
or year-to-year basis the changes in buy­ing
patterns that consumers might make as an
adjustment to higher prices. Neither do the
indexes immediately adjust to the introduction
into the economy of new products and ser­vices,
such as convenience foods or "fast food"
eating places, or to changes in consumer
preference.
SOME NEW USDA PUBLICATIONS
(Please give your ZIP code in your return address when you order these.)
The following are for sale by:
The Superintendent of Documents, U.S. Government Printing Offic~, Washington, D.C. 20402:
• CONSERVATION PLANTS FOR THE NORTHEAST. PA 1154. November 1977. $1.70.
The National Technical Information Service, 5285 Port Royal Road, Springfield, Va. 22151:
• CHANGES IN THE REGIONAL BALANCE OF INCOME AND POPULATION IN THE
UNITED STATES, 1940-70. AGERS 42. September 1977. $4.00.
Single copies of the following are available free from the Office of Governmental and Public
Affairs, U.S. Department of Agriculture, Washington, D.C. 20250:
• Reprints from the 1977 Yearbook of Agriculture, GARDENING FOR FOOD AND FUN:
GROWING YOUR OWN VEGETABLES. AB 409. December 1977.
CANNING, FREEZING, STORING GARDEN PRODUCE. AB 410. December 1977.
• LAWN DISEASEs-HOW TO CONTROL THEM. G 61. Revised October 1977.
• APPLES IN APPEALING WAYS. G 161. Revised November 1977.
• GROWING GROUND COVERS. G 175. Revised September 1977.
20
FAMILY ECONOMICS REVIEW
CONSUMER PRICES
Consumer Price Index for all urban consumers
(1967 = 100)
Group
All items ....................
Food .......................
Food at home ....•....••.•
Food away from home .•.•..
HO US1. .ng 2 •••••••••••••••••••
Shelter ................. .
Rent .•.•..•.•••.••.•...
Homeownership ••••.•.•..
Fuel and other utilities2
Fuel oil, coal, and
bottled gas ••••.•••..•
Gas (piped) and
electricity .•••.•••...
Household furnishings
and operation 2 .•........
Apparel and upkeep •....•••.
Men's and boys' apparel ••
Women's and girls' apparel
Footwear ................ .
Transportation •.••••......•
Private ................. .
Public .................. .
Medical care •...•.•••••....
Entertainment 1 •••••••••• -•••
Other goods and services 2 ..
Personal care .•.•••••.••.
1New series.
Mar. Feb. Jan.
1978 1978 1978
189.8 188.4 187.2
204.2 202.0 199.2
202.5 200.1 197.0
212.3 210.5 208.2
196.7 195.0 193.8
202.9 201.3 200.0
160.5 159.7 158.8
218.3 216.4 215.0
212.6 210.6 208.5
297.2 296.9 295.2
226.6 223.3 219.7
173.6 172.1 171.3
156.5 154.5 155.7
155.8 153.9 154.7
145.4 142.7 146.0
160.7 159.3 158.8
179.9 179.4 179.0
179.1 178.6 178.2
187.2 186.8 186.6
214.5 213.3 211.2
174.1 172.9 171.9
179.3 179.0 178.5
178.2 177.7 177.2
Mar.
1977
178.2
188.6
186.9
195.2
185.5
186.3
150.8
199.3
198.5
281.4
208.5
174.6
151.7
152.6
143.3
155.4
174.8
174.1
180.4
197.6
157.3
167.3
2series has been changed to include additional items. For details, see
News, U.S. Department of Labor, Bureau of Labor Statistics, "The Consumer
Price Index--January 1978,"pp. 15-17, USDL-78-145.
Source: U.S. Department of Labor, Bureau of Labor Statistics.
U.S. WORKING WOMEN
"U.S. Working Women: A Databook "issued
by the U.S. Department of Labor, Bureau of
Labor Statistics, covers a wide collection of
data on characteristics of American working
women and their changing status over the past
quarter of a century. The databook provides
information on women's employment and
unemployment, marital and family status,
income and education, and race and Spanish
origin, illustrated with tables and some charts.
The databook, Bulletin 1977, is for sale for
$2.50 by the Superintendent of Documents,
U.S. Government Printing Office, Washington,
D.C. 20402. (Stock No. 029-001·021-12-7)
21
SUMMER 1978
COST OF FOOD AT HOME AND THE NEW CONSUMER PRICE INDEX
by Richard L. Kerr
Procedures for estimating the cost of three
of the USDA family food plans (low-cost,
moderate-cost, and liberal) have been revised to
use the new All-Urban Consumer Price Index
developed by the Bureau of Labor Statistics
(BLS) (see p. 20). The Revised Consumer Price
Index for Urban Wage Earners and Clerical
Workers is used for the thrifty food plan
because of special limitations due to this plan's
use in setting the food stamp allotment. All
cost-of-food-at-home estimates for 1977 or
earlier, including the regional costs for Decem­ber
1977 (pp. 24-27), were computed using
food prices collected by BLS as basis for the
old index for Urban Wage Earners and Clerical
Workers.
Average prices paid for almost 2,000 differ­ent
foods used by households surveyed by
USDA in the 1965-66 Household Food Con­sumption
Survey form the basis of the food
plan cost estimates now, as they did before the
conversion to use of the new Consumer Price
Index (CPI). These prices reflect the assort­ment
of container sizes and brands, the differ­ences
in quality of food selected, and the price
levels of the various stores in which the house­holds
purchased food at the time of the 'survey.
Base prices used with the four food plans are
prices paid by different groups of survey house­holds
selected by the per person cost of the
family's food.
Updating prices from 1965-66 to December
197 7. Prices paid by selected survey house­holds
were updated to December 1977 using
the percentage change in prices of about 100
carefully defined foods from time of the survey
to the month of the estimate. Prices for these
foods were collected routinely by BLS from a
representative sample of stores in cities across
the country as a part of the earlier CPl.
For example, if survey households selected
as the basis for the low-cost plan paid an aver­age
of 60 cents a pound for ground beef in
1965-66 and the price for ground beef collect­ed
by BLS in December 1977 was 75 percent
22
higher than the price collected by BLS in
1965-66, a price of $1.05 (60¢ + 7 5% of 60¢)
was used for ground beef in estimating the cost
of the low-cost plan in December 1977. Prices
of certain other low-cost cuts of beef that were
used by survey families, but were not priced by
BLS, were increased by 75 percent also. The
· percentage increase in the BLS price for other
beef cuts were used to update prices paid by
survey households for the numerous remaining
.cuts of beef they used.
Updating prices after 1977. BLS no longer
provides prices for specific food items, which
were used in computing the food plan costs.
Therefore, procedures were adjusted to use
detailed food category indexes which are avail­able
each month. The changeover was made in
December 1977, for which month BLS provid­ed
both price information based on the old CPI
and indexes based on the new All-Urban Con­sumer
Price Index.
For example, instead of using the percentage
change in the price of white flour to represent
the change in the price of flour, cake, cookie,
pancake, roll, and muffin mixes, and so forth,
the percentage change in the index for a flour
and prepared flour mixes category, which
incorporates prices of all these items, is used.
The rest of the steps in estimating the cost
of the food plans remain the same.
1. The updated prices for foods in each
food group (milk, cheese, ice cream; meat,
poultry, fish; eggs, and so forth) are weighted
by the average amounts of foods used by the
survey households to derive a price per unit­quart,
pound, or dozen.
2. The prices per unit are then multiplied by
the number of units of the food groups in the
plans for the different sex-age categories, total­ed,
and rounded to the nearest 10 cents to
arrive at the cost of food at home for a week.
3. To estimate the cost for the month • unrounded weekly costs are multiplied by
4.333 and then rounded to the nearest 10
cents.
FAMILY ECONOMICS REVIEW
00 c::
rs::
rs::
t:lj
::0 ....
CD
-.l
00
~
Co)
Cost of food at home estimated for food plans at 4 cost levels, March 1978, U.S. average 1
Sex-age groups
FAMILIES
Family of 2: 3
20-54 years .•.•••••.••..
55 years and over •••••.•
Family of 4:
Couple, 20-54 years and
children--
1-2 and 3-5 years
6-8 and 9-11 years
INDIVIDUALS 4
Child:
7 months to 1 year ••.•••
1-2 years ...••••••••••••
3-5 years ••••••.•.•••.••
6-8 years ••••••••••••••.
9-11 years ..•••..•••••••
Male:
12-14 years .•.••••••••••
15-19 years ••••••••.••••
20-54 years •••.•••••.•••
55 years and over •..•.••
Female:
12-19 years •••••••••...•
20-54 years •••••••••.•••
55 years and over .••.•..
Pregnant ...••.•..•.•••.•
Nursing •...•••...•••..•.
Thrifty
plan2
24.90
22.20
35.00
42.00
5.00
5.60
6.80
8.60
10.80
11.50
12.70
12.40
11.00
10.30
10.20
9.20
12.80
13.60
Cost for 1 week
Low-cost
plan
Moderate­cost
plan
Dollars
32.40
28.90
45.00
54.20 .n
6.00
7.10
8.40
11.00
13.70
14.60
16.20
16.20
14.30
13.10
13.30
12.00
16.40
17.30
40.50
35.60
56.00
67.90
7.40
8.70
10.50
13.80
17.30
18.30
20.20
20.40
17.-J
16.20
16.40
14.70
20.10
21.50
Liberal
plan
48.30
42.60
66.90
80.90
8.70
10.40
12.60
16.40
20.60
21.80
24.30
24.40
21.30
19.30
19.50
17.40
23.80
25.50
Thrifty
plan2
107.50
96.60
151.20
181.80
21.50
24.20
29.30
37.30
46.80
49.90
54.90
53.70
47.80
44.70
44.00
40.00
55.70
58.90
Cost for 1 month
Low-cost Moderate-plan
cost-plan
Dollars
140.10
125.30
194.70
234.60
26.10
30.70
36.60
47.70
59.50
63.20
70.10
70.00
62.00
56.90
57.40
51.90
70.90
75.10
175.50
154.70
242.70
293.80
31.90
37.90
45,30
59.60
74.70
79.10
87.70
88.30
76.90
70.40
71.20
63.70
87.10
93.40
Liberal
plan
209.60
184.10
289.80
350.90
37.60
44.90
5.4.40
71.20
89.20
94.40
105.10
105.90
92.10
83.70
84.60
75.30
103.00
110.40
lAssumes that food for all meals and snacks is purchas~d at the store and prepared at home. Estimates for each plan
were computed from quantities of foods published in the Wiut~r 1976 (thrifty plan) and Winter 1975 (low-cost, moderate­cost,
and liberal plans) issues of Family Economics Review. The costs of the food plans were first estimated using
prices paid in 1965-66 by households from USDA's Household Food Consumption Survey with food costs at 4 selected levels.
USDA updates these survey prices to estimate the current costs for the food plans using information from the Bureau of
Labor Statistics' "Estimated Retail Food Prices by Cities" from 1965-66 to 1977 and "CPI Detailed Report," tables 3
and 9, after 1977.
2coupon allotment in the Food Stamp Program based on this food plan.
310 percent added for family size adjustment. See footnote 4.
4The costs given are for individuals in 4-person families. For individuals in other size families, the following
adjustments are suggested: 1-person--add 20 percent; 2-person--add 10 percent; 3-person--add 5 percent; 5-or-6-person-­subtract
5 percent; 7-or-more-person--subtract 10 percent.
(')
0
U)
-4
..0.. ,,
0
0 c
):It
-4
::1:
0
3:
.'"
.c : U. )
):It z
c
:::u
-G'"') 0 z
U)
Cost of food at home estimated for food plans at 3 cost levels,
December 1977, Northeast Region 1
Sex-age groups
FAMILIES
Family of 2: 2
20-54 years ..•.•••....••
55 years and over •...••.
Family of 4:
Couple, 20-54 years
and children--
1-2 and 3-5 years
6-8 and 9-11 years
INDIVIDUALS .3
Child:
7 months to 1 year .•..••
1-2 years ..••••.•...•...
3-5 years ....•.••..•.•.•
6-8 years .•.••..........
9-11 years .•••••.••••...
Male:
12-14 years ••••.......••
15-19 years ......•.•..•.
20-54 years ••.....••.••.
55 years and over •..•...
Female:
12-19 years .•..••••.....
20-54 years ....•.•......
55 years and over •..•...
Pregnant .•••....••......
Nursing •..•....•.•..•. • •
Cost for 1 week
Low-cost
plan
33.40
29.80
46.40
55.80
6.10
7.30
8.70
11.30
14.10
15.10
16.70
16.70
14.80
13.50
13.70
12.30
16.90
17.90
Moderate­cost
plan
Dollars
42.90
37.60
59.10
71.60
7.60
9.10
11.00
14.50
18.10
19.30
21.40
21.60
18.70
17.10
17.40
15.50
21.20
22.80
Liberal
plan
51.70
45.30
71.20
86.30
9.00
10.90
13.30
17.50
21.80
23.20
25.80
26.10
22.70
20.50
20.90
18.50
25.40
27.20
Cost for 1 month
Low-cost
plan
145.00
128.90
200.90
242.20
26.30
31.40
37.70
49.10
61.30
65.50
72.50
72.40
63.90
58.50
59.40
53.30
73.30
77.60
Moderate­cost
plan
Dollars
186.10
163.00
256.40
310.60
32.90
39.50
47.70
62.80
78.60
83.70
92.70
93.60
81.10
74.10
75.60
67.10
92.10
98.90
Liberal
plan
224.00
196.10
308.70
373.90
39.00
47.40
57.70
75.60
94.70
100.60
111.90
113 .20
98.20
88.90
90.40
80.10
109.90
117.90
lAssumes that food for all meals and snacks is purchased at the store and prepared at home.
Estimates for each plan were computed from quantities of foods published in the Winter 1975
issue of Family Economics Review. The costs of the food plans were first estimated using
prices paid in 1965-66 by households in the Northeast from the USDA's Household Food Consump­tion
Survey with food costs at 3 selected levels. These prices are updated by use of
"Estimated Retail Food Prices by Cities" (Boston; New York, Northeastern New Jersey;
Philadelphia) released monthly by the Bureau of Labor Statistics.
210 percent added for family size adjustment. See footnote 3.
3The costs given are for individuals in 4-person families. For individuals in other size
families, the following adjustments are suggested: 1-person--add 20 percent; 2-person--add
10 percent; 3-person--add 5 percent; 5-or-6-person-- subtract 5 percent; 7-or-more-person-­subtract
10 percent.
FAMILY ECONOMICS REVIEW
)f
Cost of food at home estimated for food plans at 3 cost levels,
December 1977, North Central Region1
Cost for 1 week Cost for 1 month
Sex-age groups
FAMILIES
Family of 2: 2
2o-54 years .•....• • ....•
55 years and over ..... ••
Family of 4:
Couple, 20-54 years
and children--
1-2 and 3-5 years
6-8 and 9-11 years
INDIVIDUALS 3
Child:
7 months to 1 year •...• •
1-2 years •••••..•. • ••...
3-5 years ••••.••.••....•
6-8 years •• • •.••••••.•..
9-11 years ••••.•.••••.•.
Male:
12-14 years ..•...•••....
15-19 years •.•..••.••.••
20-54 years ..•••.•.••••.
55 years and over •...•.•
Female:
12-19 years ..•.....••...
20-54 years •..•••.....•.
55 years and over •...••.
Pregnant . ... • ....•.•• • ••
Nursing .•••.•.•..••.... •
Low-cost Moderate- Liberal
plan cost. plan plan
31.70
28.40
44.20
53.20
5.90
7. 00
8.40
10.90
13.60
14.50
16.00
15.80
14.00
12.90
13.00
11.80
16.10
17.00
Dollars
38.90
34.40
54.10
65.60
7. 10
8.50
10.20
13.40
16.80
17.80
19.70
19 . 60
17.10
15.80
15.80
14.20
19.40
20.80
47.10
41.40
65.20
79 . 20
8.40
10.10
12.30
16.20
20.20
21. 40
23.80
23.80
20'. 70
18.90
19 . 00
16.90
23.20
24.80
Low-cost Moderate-plan
cost plan
137 . 50
122.90
191.60
231.30
25 . 60
30.30
36.30
47 . 30
59.00
62.70
69.20
68.60
60.80
56.10
56.40
50.90
69.70
73 . 70
Dollars
169.10
149.10
234.60
284.80
30.80
36.70
44.20
58.20
72.90
77.20
85.30
85.10
74.10
68.40
68.60
61.40
84.00
90.10
Liberal
plan
203.80
179.20
282.40
343.00
36.40
43.70
53.40
70.00
87.70
92.90
103.10
103.00
89.60
82.00
82.30
73.30
100.40
107.60
1Assumes that food for all meals and snacks is purchased at the store and prepared at home.
Estimates for each plan were computed from quantities of foods published in the Winter 1975
issue of Family Economics Review. The costs of the food plans were first estimated using
prices paid in 1965-66 by households in the North Central Region from the USDA's Household
Food Consumption Survey with food costs at 3 selected levels. These prices are updated by
use of "Estimated Retail Food Prices by Cities" (Chicago, Cleveland, Detroit, St. Louis)
released monthly by the Bureau of Labor Statistics .
210 percent added for family size adjustment. See footnote 3.
3The costs given are for individuals in 4-person families. For individuals in other size
families, the following adjustments are suggested: 1-per son--add 20 percent; 2-person--add
10 percent; 3-person--add 5 percent; 5-or-6-person--subtract 5 percent; 7-or-more-person--
subtract 10 percent.
SUMMER 1978
25
Cost of food at home estimated for food plans at 3 cost levels,
December 1977, Southern Region 1
Sex-age groups
FAMILIES
Family of 2: 2
20-54 years ...•.........
55 years and over .•..•..
Family of 4:
Couple, 20-54 years
and children--
1-2 and 3-5 years
6-8 and 9-11 years
INDIVIDUALS 3
Child:
7 months to 1 year
1-2 years ...•...........
3-5 years .•.............
6-8 years .....•...•.....
9-11 years ............. .
Male:
12-14 years ....•.•......
15-19 years ..•.......•.•
20-54 years ......•.....•
55 years and over ...... .
Female:
12-19 years .•....•......
20-54 years .......••....
55 years and over ...... .
Pregnant ......•...•.....
Nursing .....••.....•....
Cost for 1 week
Low-cost Moderate- Liberal
plan cost plan plan
31.80
28.30
43.90
53.10
5.80
6.80
8.20
10.70
13.50
14.30
15.90
15.80
13.90
12.90
13.10
11.80
16.10
17.10
Dollars
39.40
34.50
54.20
66.00
7.00
8.30
10.10
13.40
16.80
17.80
19.70
19.70
17.10
15.90
16.10
14.30
19.70
21.10
45.60
39.90
63.00
76.30
8.20
9.70
11.80
15.50
19.30
20.60
22.80
22.90
19.90
18.30
18.60
16.40
22.70
24.30
Cost for 1 month
Low-cost Moderate-plan
cost plan
137.40
122.30
190.10
229.70
25.10
29.60
35.60
46.50
58.30
62.10
68.90
68.30
60.30
56.10
56.60
50.90
70.00
74.00
Dollars
170.70
149.70
235.20
285.80
30.50
36.10
43.90
57.90
72.70
77.10
85.50
85.50
74.10
68.80
69.70
62.00
85.40
91.50
Liberal
plan
197 . 90
173.00
273.30
330.70
35.60
42.10
51.30
67.00
83.80
89.10
98.90
99.30
86.10
79.40
80.60
71.20
98.40
105.40
lAssumes that food for all meals and snacks is purchased at the store and prepared at home.
Estimates for each plan were computed from quantities of foods published in the Winter 1975
issue of Family Economics Review. The costs of the food plans were first estimated using
prices paid in 1965-66 by households in the South from the USDA's Household Food Consumption
Survey witQ food costs at 3 selected levels. These prices are updated by use of "Estimated
Retail Food Prices by Cities" (Atlanta; Baltimore; Washington, D.C.; Maryland; Virginia)
released monthly by the Bureau of Labor Statistics.
210 percent added for family size adjustment. See footnote 3.
3rhe costs given are for individuals in 4-person families. For individuals in other size
families, the following adjustments are suggested: 1-person--add 20 percent; 2-person--add
10 percent; 3-person--add 5 percent; 5-or-6-person--subtract 5 percent; 7-or-more-person-­subtract
10 percent.
26 FAMILY ECONOMICS REVIEW
Cost of food at home estimated for food plans at 3 cost levels,
December 1977, Western Region 1
Cost for 1 week Cost for 1 month
Sex-age groups
Low-cost- Moderate- Liberal Low-cost Moderate- Liberal
FAMILIES
Family of 2: 2
20-54 years .•.•.........
55 years and over ......•
Family of 4:
Couple, 20-54 years
and children--
1-2 and 3-5 years
6-8 and 9-11 years ..•.
INDIVIDUALS 3
Child:
7 months to 1 year ..... .
1-2 years .............. .
3-5 years •....•......•..
6-8 years .........•.....
9-11 y,ears •..........•..
Male:
12-14 years ..........•..
15-19 years ...•.........
20-54 years ............ .
55 years and over ..•....
Female:
12-19 years .••...••...•.
20-54 years •....•.......
55 years and over •......
Pregnant ••.••..•.•..•...
Nursing ....•..•.........
plan cost plan plan
31.80
28.40
44.30
53.50
5.80
7.00
8.40
10.90
13.70
14.50
16.00
15.90
14.10
13.00
13.00
11.70
16.00
17.00
Dollars
40.30
35.40
55.60
67.60
7.00
8.60
10.40
13.70
17.30
18.30
20.20
20.30
17.60
16.20
16.30
14.60
19.90
21.40
48.50
42.60
67.20
81.80
8.60
10.40
12.70
16.70
21.00
22.20
24.60
24.50
21.30
19.60
19.60
17.40
23.80
25.60
plan cost plan plan.
137.80
123.00
191.80
231.90
25.20
30.20
36.30
47.30
59.30
63.00
69.50
6a.9o
60.90
56.30
56.40
50.90
69.50
73.60
Dollars
174.50
153.20
240.80
292.90
30.50
37.10
45.10
59.50
74.80
79.40
87.70
87.80
76.30
70.20
70.80
63.00
86.40
92.80
210.10
184.30
291.10
354.20
37.20
44.90
55 . 20
72.40
90.80
96.30
106.80
106.20
92.20
84.90
84.80
75.30
103.30
110.70
1Assumes that food for all meals and snacks is purchased at the store and prepared at home.
Estimates for each plan were computed from quantities of foods published in the Winter 1975
issue of Family Economics Review. The costs of the food plans were first estimated using
prices paid in 1965-66 by households in the West from the USDA's Household Food Consumption
Survey with food costs at 3 selected levels. These prices are updated by use of "Estimated
Retail Food Prices by Cities" (Los Angeles, San Francisco, Oakland) released monthly by the
Bureau of Labor Statistics.
210 percent added for family size adjustment. See footnote 3.
3The costs given are for individuals in 4-person families. For individuals in other size
families, the following adjustments are suggested: 1-person--add 20 percent; 2-person--add
10 percent; 3-person--add 5 percent; 5-or-6-person--subtract 5 percent; 7-or-more-person--
subtract 10 percent.
SUMMER 1978
·27
FAMILY ECONOMICS REVIEW
SUMMER 1978
CONTENTS
Page
The Magnuson Moss Warranty Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Janet Marr
Service Life of Appliances by Selected Household
Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Katherine S. Tippett
Consumer Appliance Decisions: Using Energy Labels.............................. 10
Marilyn Doss Ruffin
In-Home Energy Monitor: A Test of Consumer Response
to Energy Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
R. Bruce Hutton
Fair Debt Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Energy Extension Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Judith M. Liersch
Social Indicators 197 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Age Differences in Personal Health Care Spending, 1976 . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Consumer Price Index Revision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
U.S. Working Women . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Cost of Food at Home and the New Consumer Price Index
Richard L. Kerr
Regular Features
22
Some New USDA Publications .............................................. . 20
21
23
Consumer Prices ......................................................... .
Cost of Food at Home, U.S. and Regions ...................................... .
Issued June 1978
28
FAMILY ECONOMICS REVIEW
GPO 1133 7CC