Family Economics Review [1984, Number 1]

              Family
Economics
Review
Editor
Katherine S. Tippett
Managing Editor
Sherry Lowe
Editorial Assistant
Nancy J. Bailey
Family Economics Review is published each
quarter by the Family Economics Research
Group, Agricultural Research Service,
United States Department of Agriculture,
Washington, D.C.
The Secretary of Agriculture has
determined that the publication of this
periodical is necessary in the transaction
of the public business required by law of
this Department. Use of funds for this
periodical has been approved by the
Director of the Office of Management and
Budget through March 31, 1987.
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 .
Suggestions or comments concerning this
publication should be addressed to:
Katherine S. Tippett, Editor, Family
Economics Review, Family Economics
Research Group, USDA/ARS, Federal
Building, Room 442A, Hyattsville, Md.
20782.
For s ubscription information, see p. 32.
For sale by the Supenntendent ot Documents. U.S. Government Printing Otttce Washington. D. C. 20402
Family Economics Review 1984 No.1
Family
Economics
Review
CONTENTS
New Savings and Transaction Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Colien Hefferan
Creative Residential Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Carolyn Summers Edwards and Isabelle S. Payton
USDA 1983 Thrifty Food Plan ..................................•................... ·~... 18
Richard L. Kerr, Betty B. Peterkin, Andrea J. Blum, and Linda E. Cleveland
Abstracts
Electronic Funds Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Characteristics of New Housing, 1982.................................................. 16
Census '80 Product Primers............................................................ 17
Statistical Abstract of the United States, 1982-83 and
USA Statistics in Brief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Technical, Conceptual, and Administrative Lessons of the Income Survey
Development Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Energy Efficiency Ratings Revised..................................................... 26
Characteristics of Participants in Adult Education • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 26
Labor Force Statistics Derived From the Current Population Survey, a Databook • • • • • • • 28
Health Care Coverage and Insurance Premiums of Families, 1980 • • • • • • • • • • • • • • • • • • • • • • • 28
Characteristics of the Population Below the Poverty Level.............................. 30
Regular Features
Some New USDA Publications ........•......................... · · · · · • · · · · · · · · · • · • · • • · · · 16
Cost of Food at Home ....•.........••......................... • · • • · • • • • · • · · · · · · • · • • • · · 31
Consumer Prices ................................. • • • · · · · · · · · · · · · • • • • • • • • • • • • • · · · · • · · • • 32
Index of Articles in 1983 Issues ................. • · · · · · · • · · · • • · • • • • • · • • • • • • · • • · · · · • · • · • 33
Issued January 1984
1984 No.1 Family Economics Review
New Savings and 'IIansaction
Instruments
By Colien Hefferan
Economist
In recent months two new financial instru­ments,
the money market deposit account and
the super NOW (negotiable order of with­drawal)
account, have been introduced at
banks and thrift institutions •1 These two
accounts are the latest financial instru-ments
to become available as the result of
the 3-year process of deregulation of the
Nation's financial institutions. Since
passage of the Depository Institutions
Deregulation and Monetary Control Act of
1980 (P .L. 96-221) 2 and the Depository
Institutions Act of 1982 (P .L. 97-320), more
than a dozen new instruments, including
savings and transaction accounts 3 and
certificates of deposit, have been approved
for banks and thrift institutions. When the
provisions of these laws are fully imple­mented,
federally imposed limits on interest
rates, deposit amounts, and time require­ments
for certificates of deposit will be
lifted, and the number and types of accounts
offered will be greatly expanded. Only pass­book
savings and regular NOW accounts will
continue to have interest rate limits.
The deregulation of savings and transac­tion
accounts and authorization of new types
of accounts is administered through the
Depository Institutions Deregulation Com­mittee
(DIDC) established in 1980. The DIDC
is comprised of members representing the
Federal Reserve Board, Federal Deposit
Insurance Corporation, Federal Home Loan
Bank Board, National Credit Union Adminis­tration,
U.S. Department of the Treasury,
1 Includes savings and loan associations,
mutual savings banks, and credit unions.
2 For more information, see abstract in
Family Economics Review, spring 1981,
p. 25.
3 Transaction accounts include all finan­cial
instruments with checking, electronic
funds transfer, and other third-party
payment privileges.
2 family Economics Review 1984 No.1
and Comptroller of the Currency. DIDC deci­sions
are binding on all federally insured
banks and thrift institutions, which account
for about 96 percent of banks and 87 percent
of thrifts. 4 Other institutions--such as
brokerage firms, mutual funds, and
retailers--offering financial instruments
set the terms for those instruments indivi­dually.
Savings and transaction instruments
offered by these firms are usually developed
to reflect market conditions.
The introduction of numerous new financial
instruments, coupled with the deregulation
of terms on many existing accounts, poses a
challenge to savers and investors trying to
decide how best to arrange their finances.
This article reviews several new financial
instruments and examines ways of evaluating
the appropriateness of each for meeting
financial needs.
Money Market Deposit Accounts
The money market deposit account (MMDA)
is a federally insured savings instrument
with limited transaction privileges. The
DIDC authorized issuance of this account
beginning in December 1982. The MMDA was
developed in accordance with provisions of
the 1982 Depository Institutions Act to pro­vide
banks and thrift institutions with an
instrument directly competitive with money
market mutual fund shares. Money market
mutual fund shares (uninsured, market-based
savings and transaction instruments offered
by brokerage firms and investment companies)
grew from less than 0.1 percent of all
additions to individual assets in 1977 to
23.1 percent in 1981 (~_).
MMDA's require a minimum deposit of
$2,500, although institutions may set a
higher minimum and deposit rate if they
wish. There is no Federal interest rate
4 As of December 1982, the Federal Deposit
Insurance Corporation insured deposits at
14,802 of the 15,449 banks operating in the
United States. As of July 1983, the Federal
Savings and Loan Insurance Corporation
insured deposits at 3,130 of 3, 612 operating
thrift institutions.
.,
ceiling for accounts in which the average
daily balance, computed on a monthly basis,
remains above $2,500. The maximum allowable
interest rate for accounts where the balance
drops below $2,500 is 5.50 percent, however.
Interest rates may be guaranteed for up to
1 month and MMDA's may be issued with a
specific maturity of up to 30 days. Some
institutions pay interest rates that vary
according to the balance maintained in the
account. For example, they may pay one rate
for balances up to $5,000 and a higher rate
for balances above that amount.
The transaction privileges on MMDA's are
limited to no more than six third-party
transfers per month, including three checks;
however, account owners can make unlimited
deposits and withdrawals in person. Fees
charged for transactions vary widely among
institutions. There are no Federal regula­tions
setting or limiting service charges.
Many institutions charge no fees for MMD A's;
others impose fees only when the minimum
balance drops below $2,500. Among institu­tions
that charge fees, the arrangements may
be complicated and costly, usually involving
a monthly fee and a fee for each transac­tion.
Consumer acceptance of MMDA's has been
immediate and unprecedented. In the 4 months
following their introduction, $340 billion
flowed into these accounts, an amount equiv­alent
to the level of deposits in 6-month
money market certificates 2 years after
their introduction (1). One reason for the
initial success of these accounts may have
been the high introductory interest rates
they offered. When first introduced, the
average yield on MMDA's exceeded that of
money market mutual fund shares by about
2-1/2 percentage points (1). Since then the
differential between rates has persisted,
though narrowed (see table 1).
The rapid growth in balances held in
MMDA's has been the result of shif{s from ·
several types of savings instruments. The
high interest rates initially offered on
MMDA's made .these accounts more attractive
Table 1. Interest rates on selected financial instruments, December 1982 to September 1983.
Date
December 1982 ••••••••••••••••••••
1983:
January ....................... .
February ...................... .
March ••••••••••••••••••••••••••
April ..•.............••....•...
May ••••••.•••••••••••••••••••••
June .......................... .
July ................•..•.••....
August ........................ .
September ••••••••••••••••••••••
1 Not available.
M:mey market
rrutual fund
8.2
8.0
7.8
7.8
8.0
7.8
7.9
8.2
8.5
8.6
M:mey market Super NJ\1
deposit account account
10.6 NA1
9.0 7.6
8.3 7.3
8.2 7. 3
8.3 7.4
8.2 7.2
8.2 7. 2
8.4 7.5
8.5 7.4
8.7 NA1
Sources: Furlong, Frederick T., 1983, New deposit instruments, Federal Reserve Bulletin
69(5) :319-326. Unpublished tabulations from the Federal Reserve Board.
1984 No.1 Family Economics Review J
i
than most short-term instruments. Some MMDA
balances have come from withdrawals from
money market funds, assets in which have
declined about 20 percent during the past
year (1). Survey data indicate that some
savers shifted funds from Treasury securi­ties
and other interest bearing investments
to MMDA's (_!). Most MMDA deposits, however,
are estimated to be the result of shifts
from savings and small denomination time
accounts held at banks and thrift institu­tions.
As a result of these shifts, about
three-fourths of the balances in small
denomination, ceiling-free savings accounts
and interest bearing checking accounts at
banks and thrift institutions earn variable,
market-determined rates of return.
Super NOW Accounts
The super NOW account is a fully transac­tional,
interest-bearing checking account.
The DIDC authorized banks and thrift insti­tutions
to offer the account beginning in
January 1983. Super NOW's are a hybrid of
existing, low interest-bearing checking
accounts (e.g., NOW accounts) and the new
MMDA's. Super NOW's have unlimited transac­tion
privileges, require a $2,500 initial
deposit and minimum balance, have no
interest rate ceiling, except for account
balances below the minimum, and cannot offer
interest rate guarantees exceeding 1 month.
Like the MMDA, balances in super NOW ac­counts
are federally insured up to $100,000.
Unlike the MMDA, however, financial institu­tions
must hold 12 percent of depositor
balances in reserve; that is, it cannot be
invested by the institution.
The reserve requirements and the potential
volume of transactions make the super NOW
account a relatively expensive financial
instrument for institutions to offer. The
costs of operating the accounts are recover­ed
by paying interest rates somewhat lower
than those offered on MMDA's and charging
service fees. Since their introduction in
January 1983, interest rates on super NOW
accounts have been about 1 percentage point
lower than rates offered on MMDA's (see
table 1). Some institutions pay no interest
4 family Economics Review 1984 No.1
on the portion of the account held to meet
reserve requirements. Fees charged for super
NOW accounts are usually based on number of
transactions and average monthly balance .
Super NOW accounts are offered by most
banks and thrift institutions, but have not
been heavily promoted; therefore, growth has
proceeded at a relatively slow rate. While
the pace of establishing new super NOW
accounts has not been rapid, the size of
accounts established is large. Balances held
in super NOW accounts at commercial banks
averaged $13,500 in March 1983, compared
with $5,000 in regular NOW accounts (!).
Most funds attracted to super NOW accounts
have been from other transaction accounts
such as regular NOW accounts, automatic
transfer accounts, 5 and share draft ac­counts
at credit unions. Ceiling-free super
NOW accounts comprise about one-fourth of
the interest-bearing, transaction deposits
held at banks and thrift institutions.
Evaluating the New Instruments
Banking deregulation and increased compe­tition
in the financial services industry
has resulted not only in the introduction of
new financial instruments but also a broader
range of interest rates, fees, and penalties
offered on accounts. While the financial in­struments
offered to consumers may have the
same or similar sounding names, the specific
terms on accounts can now vary greatly among
service providers. Deciding which account
best meets consumer needs is a three-step
process. First, consumers need to assess the
type of financial services they need;
second, select the type of account that best
meets those needs; and third, evaluate terms
offered by different financial service
providers on the type of account selected.
5 Automatic transfer accounts, usually
known as "sweep" accounts, combine the high
interest features of money market deposits
and the unlimited checking of NOW accounts.
In these accounts, balances above a preset
amount are automatically transferred from a
NOW account to a money market account .
These instruments were promoted briefly by
banks and thrift institutions prior to the
introduction of MMDA's and super NOW
accounts.
••
Three factors determine the financial
service needs consumers have for savings and
transaction accounts: Attitude toward finan­cial
risk, number and size of transactions
each month, and size of balances typically
maintained. Table 2 presents a summary of
the characteristics of MMDA's and super NOW
accounts, as well as their prime competitor,
money market mutual funds, as they apply to
these factors. It also includes two addi-tional
criteria, cost and convenience.
Money market mutual funds best serve the
needs of those who do not feel the need for
a federally insured depository of their
funds, who plan to use the account for only
large transactions, and whose account
Money market deposit accounts serve the
needs of those who are risk averse and,
thus, seek federally insured depositories
for their funds, who plan to use the account
for few transactions, and who maintain rela­tively
large balances in their account. Some
MMDA's offer sliding interest rates, provid­ing
higher rates for higher balances, making
these accounts especially valuable for those
with high average balances. The major disad­vantage
of MMDA's is the reduced rate of
interest paid on balances that fall below
$2,500.
balance may occasionally fall below $2, 500.
While there have been no reported safety
problems with money market mutual funds, the
accounts are not insured, therefore exposing
depositors to some risk of loss in the event
Super NOW accounts meet the needs of
those seeking a federally insured instrument
for their funds, who plan to write many
checks on the account each month, and who
plan to maintain a balance in excess of
$2,500. Fees assessed on super NOW accounts
are often high, however, and interest rates
are usually lower than those offered on
of problems with the fund. Transaction priv­ileges
with money market mutual funds are
usually not limited in number but often must
be a minimum amount, frequently $500. The
chief advantages of money market mutual
funds are that the full interest rate is
paid on the entire balance in the account
and transaction fees are not usually
assessed.
money market mutual funds and MMDA's.
The decision to select a specific account
from among those offered by several finan­cial
institutions is based on finding the
best combination of interest, fees, and con­venience.
The complicated task of comparing
several factors at one time is simplified by
calculating the net rate of earnings on each
account offered. This calculation takes into
consideration the effect of service charges
on the yield of an interest-bearing account.
Table 2. Selected criteria for evaluating interest-bearing transaction instruments
Instrument Safety Liquidity
Money market Uninsured. Usually unlimited
mutual fund number, but
shares minimum amount
for 3rd-party
transactions.
Money market Federal Unlimited personal
deposit insurance deposits or with-account
up to drawals; 6 3rd-
$100,000 party transactions
per account. per month.
Super NOW Federal Unlimited number
account insurance of direct and 3rd-up
to party transactions,
$100,000 of any amount.
per account.
Yield
Market rate,
varies daily;
paid on
entire
balance.
Market rate,
varies at
least
monthly.
Slightly less
than market
rate, varies
at least
monthly.
Cost
No direct service
charges; costs
paid from yield.
Some assess fees
for maintenance
and transactions.
Usually assess
fees for account
maintenance and
transactions.
Convenience
Convenience high for
large transactions;
deposits and with­drawals
can usually
be made by mail or
wire.
Convenience high for
limited transactions.
Convenience very
high for all types
of transactions.
1984 No.1 Family Economics Review 5
The formula is:
Net o;ate = 100 X ~(:~~::ie ac- X ~!:~e:f ) - :::~;~~
earnings count balance interest charges
Annual average account balance
For example, in an account with an average
annual balance of $2,500, annual service
charge of $60, and an 8-percent stated rate
of interest, the net annual rate of earnings
is 5. 6 percent.
Other factors, such as method selected for
determining the account balance, penalties
imposed for excessive transactions, and
other services offered with the account
(e.g., free travelers checks or waiver of
credit card fees) influence the cost and
convenience of financial instruments. The
effects of these factors are usually small,
however, compared to the effects of interest
rates and service charges.
New financial services and instruments
offer the opportunity to earn market­determined
rates of return on funds held for
future needs and current transactions. The
cost of earning these relatively high rates
of return, however, may be passed on to
consumers in the form of higher charges for
financial services. The new savings and
transaction accounts incorporate both these
costs and benefits.
LITERATURE CITED
1. Furlong, Frederick T. 1983. New deposit
instruments. Federal Reserve Bulletin
69(5):319-326.
2. Hefferan, Colien. 1983. Household
wealth: 1962-81. Family Economics Review
1983(3):2-8.
Electronic Funds 'IIansfer
Rapid improvements in electronic data
processing and the development of low-cost
high-speed telecommunications have made '
possible the widespread use of electronic
funds transfer (EFT) by consumers. In many
transactions, EFT can now largely replace
other methods of payment, such as checks
cash, and credit cards. Nonetheless, EFT'~
6 Family Economics Review 1984 No.1
still collectively account for less than
1 percent of all payments in the retail
economy.
The extent to which EFT spreads depends
on the automation of operations by financial
institutions, the extent to which institu­tions
make EFT available to consumers, and
the willingness of consumers to accept EFT
as a means of payment. Evidence indicates
that EFT has grown rapidly during the past
several years and is poised for further
expansion. For example, a Federal Reserve
Board-sponsored study conducted in April
1983 found that of households with checking,
savings, NOW, or share draft accounts, more
than 68 percent had an account with an EFT
feature and used this feature at lea~t occa­sionally;
2 years earlier the proportion was
54 percent. The number of commercial banks
offering access to automated teller machines
(ATM) increased from 19 percent in 1981 to
29 percent in 1982. There is evidence of
similar growth in consumer use of automated
teller machines. Surveys indicate that 71
percent of all households have at least one
account at a financial institution that
offers ATM access and that at least one
person in 32 percent of the households used
an A TM in November 1982.
Electronic funds transfer offers consumers
convenience and self-service in financial
and retail transactions. EFT also provides a
potentially inexpensive alternative to other
forms of payment, particularly checks.
Checks are estimated to cost as much as 50
cents each to process. With expansion in EFT
volume, electronic transfers may become a
far less expensive method of payment.
Consumers have encountered few problems
with account errors and unauthorized
transfers using EFT. The Electronic Funds
Transfer Act of 1978 provides error resolu­tion
procedures and limitations on liability
for unauthorized transfers.
Source: Schroeder, Frederick J., 1983,
Developments in consumer electronic funds
transfer, Federal Reserve Bulletin 69 ( 6) :
395-403.
Creative Residential Finance
By Carolyn Summers Edwards and
Isabelle S. Payton
Economist and social science analyst
Unexpectedly high and volatile interest
rates and inflation have required individ-uals
and families to manage their resources
more carefully than ever before. Achieving
the goal of home ownership has required
understanding and choosing between a vastly
increased array of financing options. Seek­ing
to reduce their risks, institutional
lenders have presented would-be home buyers
with a wide variety of alternative mortgage
instruments (AMI's) •1 These instruments
modify the basic characteristics of the
standard, fixed-rate, level-payment mortgage
(SFPM) and require borrowers to bear higher
costs and/or share interest rate risks.
SFPM's that are still offered generally
carry higher interest rates than AMI's.
Reluctant to accept the risks and uncer­tainties
inherent in AMI's and unable to
afford the costs of SFPM's offered by insti­tutional
lenders, buyers and sellers have
turned to each other. During 1980 and 1981
a home purchased with a cash down payment
and a newly originated institutional first
mortgage or deed of trust tended to be the
exception rather than the rule. A wide
variety of "people-to-people" or creative
finance techniques that minimized the reli­ance
on traditional institutional lending
sources and that sidestepped AMI's and high
interest rates enabled buyers and sellers to
complete their transactions.
Creative residential finance may be
characterized by its custom-tailored nature.
The individual transaction is structured to
satisfy the specific needs of the buyer
and I or seller. Generally, however, creative
finance techniques share in common the pre­servation
of an existing first mortgage or
1AMI's have been discussed in several
previous articles in Family Economics Review
by Carolyn Summers Edwards: "New Mortgage
Designs," fall 1978, pp. 8-16; "Alternative
Mortgage Instruments," 1982 (4): 1-18; and
"Update: Alternative Mortgage Instruments,"
1983(3):26-27.
deed of trust and/or involvement on a short­or
long-term basis by the seller. To find an
affordable means to buy and sell their
homes, sellers assume the risks of acting as
lenders, and buyers enter into comparatively
short-term agreements and often accept
higher prices (!, ~ • .!_!) with the hope that
their personal finances or other financing
alternatives will improve.
Even though the decline in interest rates
has reduced the need for creative finance,
it is not likely that these techniques will
disappear altogether. There will be a con­tinued
need for methods that provide for
manageable down and monthly payments and
that meet the varied needs of buyers and
sellers. This article reviews the character­istics
of creative residential finance tech­niques
and some of the issues involved. The
focus is on transactions between buyers and
sellers of properties used as primary resi­dences
rather than on properties held for
business or investment purposes. The tech­niques
discussed are selected on the basis
of whether their use may involve preserva­tion
of an existing loan and I or seller
involvement. Readers should remember that
terminology varies substantially and that
use of these techniques will be influenced
by the laws of the State and jurisdiction in
which a property is located.
Assumption
Assuming a seller's first mortgage has
been the technique that has provided the
foundation for most creative finance agree­ments.
By preserving existi'ng loans, buyers
are able to take advantage of interest rates
on these loans that are often substantially
lower than current market rates. An assump­tion
can make a purchase possible for a
buyer who otherwise could not qualify for a
loan at current rates. Assuming an existing
loan also means that a greater proportion of
each payment goes to reducing the principal
(11_, _!i, ~).
Transactions typically referred to as
assumptions can take one of two forms. When
a purchaser simply takes over the payments
on an existing loan, ownership is trans­ferred
"subject to" the existing mortgage.
Personal liability for the loan remains with
1984 No.1 Family Economics Review 7
the seller. In the event of default and
foreclosure the buyer can lose the house and
any equity in it, but the seller remains
responsible for any deficiency in the un­likely
event that a foreclosure sale brings
insufficient funds to cover the loan. In a
true assumption the existing loan is trans­ferred
from the seller to the buyer. The
buyer becomes personally liable to pay.
"Subject to" agreements are made between
buyers and sellers. The lender of the exist­ing
loan may or may not be involved. Buyers
should be certain that by entering into such
an agreement the seller will not violate the
terms of the existing loan. In the case of
"subject to" agreements where a lender is
involved, the lender will typically charge a
fee to cover the paperwork involved in
accepting payments from the new buyer; in
the case of true assumptions, additional
fees are generally charged to cover costs of
credit checks and changing the loan papers.
Even if a loan is legally assumable, the
lender is not obligated to release the orig­inal
borrower from liability. In this way
the lender can protect himself from the risk
that an unqualified buyer will assume the
loan.
Sellers who enter into "subject to" agree­ments
or assumptions without a release from
liability are wise to inform their lenders
of the transfer and to ask for notification
in the event the new buyer defaults so that
they can intervene in the event of a threat­ened
foreclosure. Sellers seeking complete
release from liability will need to satisfy
the lender and any insurer that the individ­ual
assuming the loan is credit worthy.
Lenders may not agree to the release, may
alter the terms of the loan, 2 or require
additional fees for the transaction.
Many loans are not assumable because
they contain a due-on-sale or alienation
clause that permits the lender to consider
the loan due and payable on sale or transfer
of the property. Until recently lenders did
not enforce these clauses. With high and
volatile interest rates, however, lenders
2 See section on blended mortgages, p. 12.
8 Family Economics Review 1984 No.1
experienced losses when their costs of
borrowing short-term funds exceeded their
earnings on outstanding long-term loans .
Widespread use of creative finance tech­niques
that legally or illegally sidestepped
due-on-sale clauses slowed the turnover of
loans and exacerbated lenders' problems (_!,
~. _!i, ..!1_). In response, lenders turned to
AMI's, high rate SFPM's, and a concerted
effort to enforce due-on -sale clauses.
As a result of lenders' efforts to block
assumptions through the exercise of due-on­sale
clauses, the legality of these clauses
was called into question and the status of
loans became confused. Eighteen States took
legislative or court action to ban or
restrict the enforcement of due-on-sale
clauses. Loans with these clauses were or
were not assumable depending on varying
policies of lenders and holders of mortgages
and pending court actions.
Resolution of the controversy began in
June 1982 when the U.S. Supreme Court, in
the case of Fidelity Federal Savings and
Loan Association v. de la Cuesta, affirmed
the right of federally chartered savings and
loan institutions to enforce due-on-sale
clauses, even in States with laws or court
decisions prohibiting lenders from doing so.
This right was extended in October 1982 to
State-chartered lenders, as well as those
under the jurisdiction of the Comptroller
of the Currency ( COC) and the National
Credit Union Administration (NCUA), by the
Garn-St. Germain Depository Institutions Act
of 1982. This act established a uniform
national policy governing the use and
enforcement of due-on-sale clauses. Regula­tions
implementing the act identify lenders
subject to the regulations, provide for pre­emption
of State laws restricting the right
of lenders to enforce due-on-sale clauses
when all or any part of the real property
securing the loan is sold or transferred
without the lender's prior consent, provide
for limited exceptions to this power, and
describe specific circumstances (such as
divorce or death of the borrower) in which
lenders may not exercise due-on-sale clauses
( 6).
Many loans are still assumable, however.
With exception of some restricted loans
recently made through State financial agen­cies,
all FHA-insured and VA-guaranteed
mortgages are assumable, including those
currently being written. Conventional loans
that do not contain due-on-sale clauses,
sometimes referred to as "silent loans," are
assumable. These loans were probably written
before 1970.
In some situations, a loan may be assum­able
even though it contains an enforceable
due-on-sale clause. For example, the Federal
National Mortgage Association (FNMA or
Fannie Mae) , a secondary mortgage market
agency that holds mortgages purchased from
lenders to supply funds for additional
loans, will not enforce due-on -sale clauses
in loans that were in its portfolio prior to
November 10, 1980. 3
Finally, the Garn-St. Germain Act made
provisions for limited, continued assumabil­ity
of loans containing due-on-sale clauses
that were originated or assumed in a State
when laws preventing enforcement of such
clauses were in effect. State restrictions
on enforcement of due-on-sale clauses will
apply until October 15, 1985, to loans
issued by State-chartered lenders that were
made or assumed during a "window period"
specified as beginning with the date the
State restriction became official and ending
with the signing of the Garn-St. Germain Act
(October 15, 1982). State legislatures may
act prior to October 15, 1985, to regulate
terms of these "window period" loans and, in
doing so, extend the State restriction on
the enforcement of the due-on-sale clauses
in these specific loans to a period after
October 15, 1985.4 Similar authority to
regulate "window period" loans was given to
the COC and the NCUA. No window period
applies to loans written by federally
chartered savings and loan institutions.
3See later section on blended mortgages,
p. 12.
4 States eligible for this extension option
have been identified as Arizona, Arkansas,
California, Colorado, Georgia, Iowa,
Michigan, Minnesota, Mississippi, New
Mexico, Utah, and Washington. This list is
subject to interpretation of these States'
laws, however.
The main disadvantage to an assumption
is that the buyer generally needs a large
downpayment and/or additional financing to
compensate for the difference between the
purchase price and the outstanding balance
on the assumed loan. Generally, the older
the loan the lower the interest rate but the
smaller the outstanding balance. Many of the
creative finance techniques discussed below
are methods to come up with this additional
financing. Many of these techniques put the
seller in the role of lender, deferring part
of the proceeds of the sale.
Buyers must shop carefully to be sure
their total creative financing package is
better than a new loan at current rates.
Purchase price, interest rate, downpayment,
monthly payments, total financing costs, the
duration of the package, the need for and
availability of refinancing, and the buyer's
tax position are some of the factors that
must be considered. Buyers who can obtain
alternate financing may find that they can
negotiate better selling prices by avoiding
seller-backed financing. Comparison shopping
is made difficult, however, because standard
disclosures are not required with seller­backed
agreements. The custom-tailored
nature of creative finance techniques side­steps
the stapdard forms used by institu­tional
lenders and, thus, eliminates many of
the protections in those forms.
Seller-Held First Mortgage or Deed of Trust
Sometimes the seller will take the posi­tion
as lender of the first mortgage or deed
of trust. The seller agrees to sell to a
buyer for a stated price and the purchaser
agrees to a certain amount down on the
price. The seller defers the remainder of
the proceeds otherwise due from the sale and
"takes back" a first mortgage for the
remainder of the sales price. Such loans are
sometimes referred to as seller "take-backs"
or purchase money mortgages and are subject
to State usury laws.
This can be a good investment for a seller
who is in a financial position to defer
receipt of a major proportion of the pro­ceeds
of the sale. This may be possible, for
example, when a seller does not need to rely
on the proceeds to purchase a replacement
property, when he can arrange similar crea­tive
financing, or when he can use the paper
1984 No.1 Family Economics Review 9
from his buyer as collateral toward another
purchase. The advantages to the buyer can
include a lower interest rate than on a new­ly
originated institutional loan and lower
settlement fees. The seller may waive an
appraisal, and there is generally no loan
placement fee.
In taking the position of lender--by
offering to hold the first mortgage or
through other techniques discussed in this
article--the seller must be particularly
careful to screen potential buyer /borrowers
and secure a sufficient downpayment. Would­be
sellers acting as lenders should be sure
that their decison to lend is based on a
thorough evaluation of the effect of the
transaction on their financial situation.
Seller /lenders need to consider the possible
costs and benefits of receiving their money
over the period of the loan and the diffi­culties
of possible foreclosure proceedings.
They will want to be sure that every precau­tion
is taken that the loan agreement
includes the necessary provisions and pro­tections
and may want to have the agreement
written so that they can use the money owed
as collateral for a new loan.
Programs offered by the secondary mortgage
market agencies, the Federal Home Loan
Mortgage Corporation (Freddie Mac) and
FNMA, can help sellers avoid some of the
difficulties involved in acting as lenders
by providing a way to cash in their other­wise
illiquid asset. Both agencies will buy
first mortgages or deeds of trust that have
been originated with the help of an approved
insititutional lender, that comply with
certain lending principles regarding
appraisal and credit checks, and that meet
certain other criteria. The lending institu­tion
handles the credit report, loan appli­cation,
appraisal, and underwriting and
continues to service the loan. Should the
seller /lender decide to sell the paper, the
lending institution will obtain a commitment
from the secondary institution to buy at a
price determined by market conditions at the
time. R y incurring the cost of dealing with
a lending institution rather than an
attorney, the seller/lender obtains the
ability to sell the paper at a later date
should he choose, administrative and servic­ing
work, and avoids the potentially high
cost and problems associated with trying to
10 Family Economics Review 1984 No.1
sell nonstandard paper at a later date.
There will also be no disruption for the
buyer should the seller/lender decide to
sell the paper; the lending institution will
continue to service the loan. Dealing with a
lending institution in setting up seller­financed
mortgages can also make those loans
eligible for private mortgage insurance,
adding additional security and protection
for the seller /lender in case of borrower
default.
Second Mortgage I Second Deed of Trust
The second mortgage or second deed of
trust is the most frequently used method to
bridge the gap between the purchase price
and the combined funds available from a
downpayment and from an assumed or a new
first loan. A second mortgage is a loan
secured by the property and is junior to the
first mortgage. The first mortgage gives the
lender the initial claim against the value
of the property if the buyer defaults; only
after the first mortgage or trust has been
satisfied can any remaining assets be used
to pay off the second. Because of the
greater risk involved, seconds carry higher
interest rates than first mortgages. When
combined with a below-market rate assump­tion,
though, the payments on the total
financing package usually are lower than
those on a new first loan at current market
rates.
Seconds may take one of two general forms
depending on the source of the loan. As in
the case of seller-held first mortgages,
second mortgages from the seller are refer­red
to as seller "take-backs." Also referred
to as deferred purchase money trusts, these
are described as "soft" money transactions
because no cash changes hands. The seller
defers receipt of the proceeds of the sale.
The second type of second mortgage or deed
of trust is available from banks, credit
unions, mortgage companies, finance compa­nies,
and individual lenders. These "hard"
money loans involve actual money transfers
and generally carry higher interest rates
and stiffer terms than seconds held by
sellers, but may provide a means of assuming
a loan when the seller doesn't want to be
involved.
Regardless of their source, seconds are
generally short term loans--typically 3 to 5
years. Because of the short term, they can
be self-amortizing only if they have very
high payments. To feature the small payments
often needed, seconds typically are balloon
loans; the payments cover interest only, or
are calculated as if the payments will con­tinue
for 20 or 30 years. Tt:e entire balance
becomes due at the end of a shorter pe.riod,
however.
Payments may be deferred altogether for
several years with a "sleeping second." This
arrangement may be used when a buyer will
have difficulty handling the payments on two
loans or qualifying for a new first mort­gage.
The lender, who may be the seller,
holds the second mortgage with no payments
for the first few years. This makes it
easier for the buyer to qualify for a new
first mortgage because the lender of the
first mortgage doesn't consider the deferred
payments as part of the current debt.
Seconds have been widely used in recent
years. Indeed, seller "take-backs" have been
the primary creative finance tool to enable
buyers to assume below-market rate loans.
They have often been the catalyst that made
the difference between a sale/purchase and
none.
Some lenders do not permit secondary
financing or restrict its use depending on
the proportion of the value of the property
being financed. It is important to have
written agreement from the lender of the
first loan when a second mortgage is used to
finance part of the purchase.
Second mortgages are subject to State
usury restrictions. Although some institu­tional
lenders may be exempt from such
restrictions, private lenders rarely are.
Buyers who purchase with short-term bal­loon
seconds take the risk that they will be
able to get affordable refinancing. In some
cases the agreement allows for an extension
in the event the borrower is not able to get
financing that meets certain criteria.
Sellers who choose to defer the proceeds of
their sale by taking back a second must be
aware of the potential risks involved in
assuming that their buyers will be able to
refinance their short-term notes. Dealing
with institutional lenders to obtain mortgage
insurance and /or to insure the salability of
their notes may lessen the potential
problems.
Wraparound
Wraparound financing is another method of
providing the additional funds a buyer may
need when an existing first mortgage is pre­served
(_!_, l.Q_, ~. ~). Sellers or lenders
unwilling to offer a separate second mort­gage
will_ sometimes agree to a wraparound
because they retain some control over the
liens on the property.
Also referred to as an all-inclusive deed
of trust, a wraparound is a second mortgage
with a note that encompasses the balance on
the first mortgage. The lender, typically
the seller, provides the new loan to the
buyer for the difference between the pur­chase
price and the downpayment. The buyer
makes payments on the new loan to the wrap
lender, who continues to make payments on
the existing first mortgage. The term of the
wrap is typically equal to that remaining on
the first . mortgage. Wraps are usually writ­ten
at a rate between that on the existing
first mortgage and the current market rate.
The required downpayment and monthly pay­ments
are lower than would be required with
a newly originated conventional mortgage.
There are several advantages to this type
of financing. By preserving the existing
first mortgage, the buyer gets financing for
the entire amount needed at below current
market rates yet does not have to face
refinancing a shorter-term second mortgage.
The wrap lender is earning interest on the
full amount of the new loan but only advanc­ing
(deferring, if the seller is acting as
lender) the difference between the total
financing and the outstanding balance on the
existing loan. The lender continues to
reduce the balance on the lower rate first
loan and earns the higher rate on the spread
between the existing loan balance and the
wrap. If a third party acts as the wrap
lender, the seller receives the full pro­ceeds
from the sale and does not have to be
involved in the financing.
1984 No.1 Family Economics Review 11
There are a number of potential problems
with wraparound financing, however. It is
important that payments continue to be made
on the existing mortgage. If the buyer is
concerned about this, he can arrange to make
the monthly payments to the wrap lender with
two checks: one to the holder of the first
loan and the other to the wrap lender for
the remainder of the payment due. The can­celled
checks serve as an indication that
payments have been received on time.
The wrap lender may want to limit the
borrower's ability to refinance or prepay
the loan to ensure a satisfactory return on
the investment. This could present difficul­ties
for the buyer should he want to sell.
Although the seller continues to pay off
the first mortgage, title is conveyed and a
deed is recorded. Wraps can only be written
with assumable first loans. It is important
to be sure that the existing first mortgage
does not contain a due-on-sale clause that
would be violated by the wrap agreement.
Similarly, some lenders do not permit
secondary financing. It is important to have
written agreement from the holder of the
existing first mo.rtgage when a wrap is made.
Since the wrap lender's yield on the funds
advanced is higher than the nominal rate on
the note, wraps must be constructed care­fully
to avoid violation of usury restric­tions.
Wraparound agreements are illegal in
some States.
Land Contract
The buyer with a land contract makes a
down payment and monthly payments directly
to the seller, who retains title to the
property until the contract is paid off or
until an agreed upon condition is met. Also
referred to as a contract for deed, an
installment contract, or a conditional sales
agreement, the land contract is generally
considered a risky way to buy or sell and is
generally treated as a temporary measure.
The land contract generally only stipulates
the financial arrangements of the transac­tion
and the rights and obligations of the
parties during . the payment period. The terms
and conditions of sale are not detailed and
a deed is not recorded in the buyer's name.
12 Family Economics Review 1984 No.1
Because the seller holds title, there are
few protections for the buyer against the
seller encumbering or transferring the
title.
The land contract is often suggested as a
means to purchase when the buyer has little
or no money for a downpayment and monthly
payments. It has also been used as an alter­native
to a wraparound agreement to circum­vent
due-on-sale clauses or restrictions on
secondary financing. In establishing those
cases where lenders may exercise the due-on­sale
clause, however, regulations implement­ing
the Garn-St. Germain Depository Institu­tions
Act of 1982 specifically included land
contracts in the definition of sale or
transfer (even though title is not conveyed).
Because of the potential problems involv­ed,
buyers and sellers should be particular­ly
cautious in entering into land contract
agreements. It is important that the con­tract
cover certain essential elements, that
the contract be recorded, and that the title
and a deed be placed in trust.
Blended Mortgage
A blended mortgage is a new loan offered
by an institutional lender to cover the
total amount financed --the balance on the
existing loan as well as the extra funds
needed to finance the purchase. The interest
rate is below the current market rate but
higher than the rate on the existing mort­gage.
The lender "blends" the below market
rate on the existing loan with a market or
slightly above market rate on the remaining
amount needed to arrive at a rate somewhere
in between. 5
A blended mortgage offers the buyer an
alternative source of funds for financing
the purchase when the seller does not want
to be involved, and may be a better deal
than a wraparound, an assumption with a
seller-held or .institu tiona! second, or a
totally new market rate loan. It may also
offer an alternative to the land contract
5 Although this method doesn't fit the
creative finance definition of preservation
of an existing mortgage and/or seller in­volvement,
it is included because of its
link to the original loan and its contrast
to other techniques used to provide financ­ing
sufficient to enable the purchase.
..
·,
that could be used where the existing loan
is not assumable. The blended mortgage
offers the seller the advantage of receiving
the entire proceeds of the sale at settle­ment
with no further involvement, and
enables the lender an opportunity to retire
a low-yielding loan. Blends may be offered
by the lending institution that originated
the existing loan or by another institution
if the existing loan is assumable.
Lenders often sell their loans in the
secondary market to obtain funds to origi­nate
new mortgages. If the 'existing loan has
been sold to FNMA, the FNMA Resale Finance
Program, which was begun in early 1981, may
be a source for a blended loan (~, ··_!!). This
program offers up to 95 percent new financ­ing
on homes securing mortgages that FNMA
owns. Terms on the new loans vary depending
on the outstanding balance and interest rate
on the existing loan, the number of years
left to repay, and the amount needed and
repayment term on the new loan.
The new loan is issued through an FNMA­approved
institutional lender. The buyer
must meet FNMA credit guidelines and the
home must meet FNMA appraisal criteria. The
new loan can be a fixed rate, an adjustable
rate, or a graduated payment adjustable rate
mortgage. 6 The fixed rate loans carry a
higher interest rate. The new loan will be
asumable for 1 year and contain an enforce­able
due-on-sale clause.
Owners or would-be buyers can check with
the lender who originated the current loan
to see if it has been purchased by FNMA.
Lenders generally continue to service loans
even if they have been sold. Since loan
origination fees and other costs vary sub­stantially,
parties interested in arranging
a blend, whether through the FNMA program
or not, should shop around among lenders.
Buy-Down
In a buy-down arrangement the seller sub­sidizes
the purchase by prepaying a portion
of the interest on the buyer's loan (!, '!_).
A lump sum of money is placed in an escrow
account at settlement and used to supplement
the monthly payments according to a preset
6 See footnote 1 on p. 7.
schedule. The mortgage is written for the
full, current market interest rate, but the
buyer pays at the "bought-down" interest
rate during the buy-down period. The
balance of the monthly payments comes from
the escrow funds.
Buy-downs are most typically arranged in
the context of the purchase of a new home.
The builder makes a nonrepayable, direct
subsidy and isn't involved beyond settle­ment.
Buy-downs may also be arranged in
the resale situation. For example, a seller
with a nonassumable mortgage may offer to
improve a blended mortgage offered by the
original lender by buying it down. Buy-downs
can also be repayable, such as in a "sleep­ing"
second that is to be repaid to the
seller at some agreed upon time after the
buy-down period.
The interest rate on loans may be bought
down temporarily, such as for the first few
years, or for the life of the loan. Subsidy
payments made during the buy-down period
may be in equal amounts or according to a
graduated schedule. For example, the
interest rate could be bought down 2 per­centage
points during the first 5 years or
it could be bought down 3 points the first
year, 2 points the second year, and 1 point
the third year. The buyer begins making the
full payments called for by the contract
interest rate of the loan at the end of the
buy-down period.
A buy-down can make the difference
between whether a would-be buyer can
qualify for a loan or not. The higher pay­ments
that accompany higher interest rates
require higher incomes to qualify. Lenders
qualify buyers on the basis of their ability
to make the monthly payments and can use
the initial lower payments in a buy-down
period rather than what the payments will
be at the end of the buy-down. A buy-down
can make a substantial difference in the
size of the monthly payments. Money used to
buy down the interest rate reduces the
monthly payments by a greater amount than
lowering the price by the same amount.
Hence, the income needed to qualify for a
mortgage with a bought-down rate is less
than the income needed to qualify for a
smaller loan at the market interest rate (!).
Buy-downs have been used extensively by
builders to increase the number of eligible
1984 No.1 Family Economics Review 13
buyers. Authorization for buy-down use with
FHA-insured mortgages and support by agen­cies
in the secondary market <:!) in mid-1981
stimulated their use.
The buy-down is typically a temporary
solution to higher payments. The buyer's
income may increase so that the higher pay­ments
at the end of the buy-down period are
not a problem. In the presence of inflation,
a buy-down smooths the stream of real pay­ments.
If interest rates drop, the buyer can
refinance; any remaining subsidy funds may
or may not be available to the buyer to
defray the costs incurred.
Buying down the interest rate decreases
tax deductions for interest payments during
the buy-down period. After-tax monthly
costs are reduced more for buy-down
purchasers in low tax brackets than for
those in higher tax brackets (~_).
The cost of the buy-down may or may not
be passed on to the buyer in the form of a
higher price. Sellers may find that buyers
are more willing to buy and to pay higher
prices for houses carrying financing subsi­dies.
On the other hand, sellers may be
willing to cut their profits to complete a
sale; this may be true, for example, of
builders anxious to reduce carrying costs of
construction financing.
The buyer who can choose between a lower
price or a buy-down needs to consider the
trade-offs involved. The cash value of the
subsidy payments of the buy-down can be
compared with the lowered price. But there
are other considerations as well. Interest
tax deductions during the early years of
the mortgage are reduced proportionately
more for the buy-down purchaser than for
the buyer with a reduced price (..:!_). The
buy-down purchaser defers these deductions,
needs a larger downpayment to obtain a loan
to meet the larger purchase price, and
incurs greater interest costs over the life
of the loan. Opting for the larger debt and
the buy-down translates into paying more
later for the reduced initial payments (..:!_).
Lease Purchase-Lease With Option to Buy
These techniques provide a way for a
buyer with little or no cash for a down­payment
to move into a house until income or
14 family Economics Review 1984 No.1
financing alternatives improve. The seller
retains the tax benefits of ownership and
receives money for the monthly mortgage
payments.
With a lease purchase agreement, a stand­ard
purchase agreement is negotiated, but
the effective date of sale is left open for
a specified period of time. The buyer pays
the seller monthly rent plus a nonrefundable
consideration for the option to purchase.
Both will be credited toward the down payment
on the option purchase price. Should the
buyer decide not to purchase, the rent and
consideration funds are forfeited.
The lease with "option-to-buy" agreement
is more typical with rental property. In
contrast to the lease purchase agreement
that obligates the renter to buy, the lease
option agreement provides the renter the
choice of eventually buying or not. The
renter has an opportunity to familiarize
himself with the neighborhood and the
property and to decide if he wants to buy.
There is generally no sales contract. The
renter/ potential buyer has the option to buy
while the lease is in effect. There may or
may not be consideration paid for this
option. All or part of any deposit and/or
rental payments may be credited toward the
purchase price. If the <?Ption is not
exercised, the rent and any consideration
paid are forfeited.
Sometimes the agreement stipulates that
the seller will finance the sale or extend
the option if a mortgage with specified
terms can't be obtained. A particular advan­tage
for potential buyers is that the sales
price is usually agreed upon for the dura­tion
of the purchase /lease contract.
Title does not pass to the buyer until
settlement and the option may or may not be
recorded. Landlords are usually reticent to
record options to buy because they don't
want to cloud their title with agreements
that frequently are not exercised. Sellers
must examine their loans for due-on-sale
clauses that can be enforced with lease pur­chase
agreements. The Garn-St. Germain Act
stipulated that a lease of 3 years or less
that does not contain an option to purchase
will not trigger such enforcement. Poten­tially
serious buyer/renters should verify
that the seller/landlord owns marketable
title to the property.
Land Lease
The buyer purchases only the house and
leases the land with a land lease. Because
the value of the land is not financed, the
required downpayment may be substantially
lower. The lease, which may run the length
of the mortgage on the house or for as long
as 99 years, may contain an option to buy so
that rental payments are credited toward the
eventual purchase of the land (see previous
section). In some cases rental payments are
indexed or rise according t.o a preset
schedule.
Land leases are common in Britain, Canada,
and Hawaii . They are also used in parts of
Maryland; hence the name "Baltimore land
leases."
The land lease enables the buyer to take
title and occupy the house with little cash
while waiting for an improvement in his per­sonal
finances and I or for better terms on
available financing. The inclusion of a pur­chase
option may offer the further advantage
of locking in the price of the land.
Although there are exceptions, lease
payments are not tax deductible. Making the
lease assignable can prevent problems in the
event the buyer chooses to sell the house.
Exchange
An exchange of similar properties may
provide an alternative to outright sale and
thereby allow would-be buyers to move into
different residences. This may be particu­larly
important in a situation where reloca­tion
is a necessary part of changing jobs.
Exchanges are more common in real estate
transactions with properties held for busi­ness
and investment purposes where tax
advantages can be substantial. It can be
much more difficult to match the needs and
desires of two parties and their properties
for the purpose of trading homes. Compromise
is more necessary than is typical in the
case of a standard sale and purchase. Addi­tional
financing is often necessary too; one
party may take back a second trust deed or
mortgage to balance the equities in the
houses . Despite the compromises and poten­tial
difficulties, sufficient interest has
been generated that exchange networks have
been started by realtors.
LITERATURE CITED
1. Bigelow, George H. 1979. Wrap around
mortgages: An update. The Mortgage
Banker. November issue, pp. 17-21.
2. Brown, Lynn E. 1982. From boon to
bust in the housing market. New
England Economic Review. May I June
issue, pp. 28-50. Federal Reserve Bank
of Boston.
3. DeMagistris, Robin. 1982. Impact of
"buy downs" on affordability and home
prices. Federal Reserve Bank of New
York Quarterly Review 7(2) :41-45.
4. Dietrich, J. Kimball, et al. 1983. The
economic effects of due-on-sale clause
invalidation. Housing Finance Review
2(1) :19-32.
5. Esaki, Howard. 1982-83. Economic
effects of enforcing due-on-sale
clauses. Federal Reserve Bank of New
York Quarterly Review 7(4):33-36.
6. Federal Home Loan Bank Board. 1983.
Preemption of State due-on-sale laws.
Federal Register 48(94):21554-21563.
7. Federal National Mortgage Association.
1981. Buy downs take off. Seller
Servicer 9(2):14-15.
8. Findlay, M. C. and F. E. Fischer. 1983.
On adjusting the price of "creatively­financed"
residential sales: Cash
equivalence vs FFV A. Housing Finance
Review 2(1) :63-80.
9. Gallagher, Douglas D. 1981. Below
market rate loans for refinances,
resales, or assumptions. Federal Home
Loan Bank Board Journal 14(9): 15-17.
10. Galowitz, Sam W. 1976. How to use wrap
around financing. Real Estate Law
Journal 5(2):107-137.
11. Hill, G. Christian. 1981. Financing
concessions conceal a real slump in the
prices of homes. Wall Street Journal.
August 7 issue, pp. 1, 19.
12. Kramer, Charlene Kahlor. 1981. Every­body
wins: FNMA's resale/refinance
program gains acceptance. Seller
Servicer 8(2):3-5.
13. Miller, Peter G. 1983. Pros and cons of
assumables. Washington Post. June 11
issue, pp. E4, 6.
1984 No.1 Family Economics Review 15
14. _____ • 1983. FHA, VA loans are
among those that are assumable.
Washington Post. June 18 issue, E9, 10.
15. • 1983. Who is responsible to
lender for assumable loans? Washington
Post. June 2 5 issue, E3, 4.
16. Ozanne, Larry, and Alan Winger. 1982.
Economics of due-on-sale--adapted from
the task force report on due-on-sale.
Federal Home Loan Bank Board Journal
15(3):16-19.
17. Preiss, Beth, and Robert Van Order.
1981. An Economic Analysis of Due-on­Sale
Clauses. HUD PDR 63. U.S. Depart­ment
of Housing and Urban Development,
Office of Policy Development and
Research.
18. Valachi, Donald J. 198 0. Installment
sales of mortgaged real estate and the
wrap around mortgage. The Appraisal
Journal 48(2):9-14.
19. Zumpano, Leonard V. 1980. The wrap
around mortgage: Uses and limitations.
Housing and Society 7(3):185-192.
Some New USDA Publications
The following are for sale from the Super­intendent
of Documents, U.S. Government
Printing Office, Washington, D.C. 20402,
(202) 783-3238.
FOOD CONSUMPTION: HOUSEHOLDS IN
THE UNITED STATES, SEASONS AND
YEAR 1977-78. June 1983. Stock
No. 001-000-04335-8. $7.50.
• "'<IRON CONTENT OF FOOD. Revised April
1983. Stock No. 001-000-04331-5. $2.75
CONSERVING THE NUTRITIVE V ALOES
IN FOOD. Revised April 1983. Stock
No. 001-000-04304-8. $2.25.
FOOD PURCHASING GUIDE FOR GROUP
FEEDING. Revised June 1983. Stock
No. 001-000-04353-6. $5.00.
16 family Economics Review 1984 No.1
Characteristics of New Housing,
1982
An annual joint publication of the U.S.
Department of Commerce, Bureau of the
Census, and the U.S. Department of Housing
and Urban Development, Characteristics of
New Housing, 1982, provides statistics on
selected physical and financial character­istics
of new housing. Figures are presented
for 1978-82 to allow for comparison and
identification of trends. The report
includes chapters on single-family and
multifamily housing completed in 1982,
single-family houses sold during 1982, and
contractor-built houses started.
An estimated 1,006,000 new houses were
completed in 1982; this represents about a
20-percent decrease from the 1981 estimate
of 1,266,000. About 632,000, or 63 percent,
of these completed structures were single­family
houses. Continuing the trend toward
smaller houses that began in 1978, the
median size of single-family dwellings
completed in 1982 was 1,520 square feet,
compared with 1, 550 square feet in 1981 and
1, 65 5 in 197 8. In addition, proportionately
fewer single-family houses completed in 1982
were built with basements, garages, fire­places,
two or more bathrooms, or three or
more bedrooms. The use of central air­conditioning
increased in 1982, continuing a
long-lasting trend. About one-half of the
single-family homes completed in 1982 were
heated with electricity and about 40 percent
were heated with gas. The proportion heated
with oil continued to decline; 3 percent
compared· with 8 percent in 1978 were heated
with oil.
There were an estimated 37 4, 000 new multi­family
structures containing two or more
units _completed in 1982. Of these, about 40
percent were for sale, compared with 37
percent in 1981 and 18 percent in 1978. A
decrease in median square footage of multi­family
units showed up for the first time in
1982. Smaller units were also evidenced by
an increase from 1981 in the proportion of
units with one bedroom and a decrease in the
proportion of units with two or more bed­rooms.
Proportionately more multifamily
units completed in 1982 had air-conditioning
and two or more bathrooms than in 1978.
The average sales price of new single­family
houses sold rose from $62, 500 in 1978
to $83,000 in 1981 and $83,900 in 1982, and
varied by the type of financing. The average
sales price of houses financed by FHA­insured
mortgages was $61,900; prices of
houses with VA-guaranteed financing averaged
$72,400; while houses financed with conven­tional
mortgages had an average sales price
of $99,300. Of the houses sold in 1982, 30
percent had closing costs included in the
sales price. Closing costs were included
most frequently in the sales price of homes
financed with VA-guaranteed mortgages
( 4 2 percent) •
The average price per square foot for
houses for which figures were available was
$39.75 in 1982 compared with $38.20 in 1981
and $28.50 in 1978. The price index of new
single-family houses of comparable quality
sold in the United States rose from 157.4 in
1981 to 161.5 in 1982 (1977=100).
Single copies of Characteristics of New
Housing: 1982, Construction Report C25-82-
13, are available from Customer Service Pub­lications,
Bureau of the Census, Washington,
D.C. 20233, for $4.25. Make check payable
to "Superintendent of Documents."
Census '80 Product Primers
The Bureau of the Census is publishing a
series of booklets to make it easier to use
the statistics from the 1980 census. The
Bureau's College Curriculum Support Project
will develop a primer for each of the major
1980 census products. The primers are pre­pared
primarily for college-level instructors,
but are useful for self-study as well. Each
primer includes background information on
the content of the data product, exercises
suitable for classroom use designed to teach
census concepts and data use skills, a pre­sentation
outline with additional references,
and answer keys for each exercise.
Seven product primers have been issued so
far. The first five primers focus on the
Number of Inhabitants (PC80-1-A) State
reports, the General Housing Characteristics
(HC80-1-A) reports, the Advance Estimates
(PHC 80-S2) reports, the Block Statistics
(PHC 80-1) reports, and the General
Population Characteristics (PC80-l-B) reports,
Primers 6 and 7 feature two microfiche
products that summarize Summary Tape Files
(STF's) 1 and 3.
The primers, which are $1 per single copy
(25-percent discount on orders of 100 or
more going to a single address), may be
ordered from the Data User Services
Division, Customer Services Division, Bureau
of the Census, Washington, D.C. 20233.
Statistical Abstract of the
United States, 1982-83 and
USA Statistics in Brief
The over 1, 600 tables and charts in this
103rd edition of the Statistical Abstract
provide a socioeconomic picture of the
United States, with data from over 250
government and private agencies. Statistics
for the most recent year, as well as
historic data, allow for illustration of
trends over time. Chapters cover such topics
as population, vital statistics, immigration,
health and nutrition, public lands, national
defense, travel, prices, and welfare
services. New tables include health care
coverage, enrollment in private schools,
lifetime earnings, and cash and noncash
benefits for persons with limited income.
The guide to sources lists over 1, 000
statistical publications for further
reference. A pocket-sized summary, USA
Statistics in Brief, is included with the
Statistical Abstract and is available
separately.
The Statistical Abstract of the United
States, 1982-83 is available in some commer­cial
bookstores in larger cities, from the
U.S. Department of Commerce district
offices, and through the U.S. Government
Printing Office for $15 (cloth), Stock
No. 003-024-05009-9; or $11 (paper), Stock
No. 003-024-05010-2. USA Statistics in Brief,
the summary insert, is available separately
for $0.50 from the Data User Services
Division, Customer Services, Bureau of the
Census, Washington, D.C. 20233.
1984 No.1 Family Economics Review 17
USDA 1983 Thrifty Food Plan
By Richard L. Kerr, Betty B. Peterkin,
Andrea J. Blum, and Linda E. Cleveland
Economist, deputy director, and home
economists
Consumer Nutrition Division
Human Nutrition Information Service
The thrifty food plan has been revised.
The proposal to use the revised thrifty food
plan as the basis for benefits in the Food
Stamp Program appeared on July 29, 1983, in
the Federal Register (~) • In July 1983, the
revised plan replaced the thrifty food plan
developed in 1975 as the basis for the "Cost
of Food at Home," released monthly by USDA.
The Cost of Food at Home for July 1983 also
reflects 1983 revisions of the low-cost,
moderate-cost, and liberal food plans. 1
What is the Thrifty Food Plan?
The thrifty food plan is the least costly
of four food plans developed by the Human
Nutrition Information Service (HNIS) in
1983. Like the more costly plans, this plan
specifies the quantities of different types
of foods (food groups) that households miEht
use to provide nutritious diets for house­hold
members. The thrifty food plan includes
larger proportions of the foods that are
economical sources of nutrients than the
other plans.
The quantities of 31 food groups suggested
in the thrifty food plan for men, women, and
children of different ages are shown in
table 1. These quantities can be totaled for
household members to determine the food plan
for any household.
Why was the Thrifty Food Plan Revised?
The Department has prepared guides for
selecting nutritious diets at different
levels of cost for almost 50 years. Such
guides, or food plans, are revised from time
to time to take into account new information
about nutritional needs, nutritive values of
foods, food consumption, and food prices.
1 For information about the other USDA food
plans see Family Economics Review 1983(2):
12-21.
18 family Economics Review 1984 No.1
Quantities of food groups in the thrifty
food plan were last revised in 1975 (3). The
1975 plan was based on the Recomme;ded
Dietary Allowances ( RDA) released in 197 4 by
the National Academy of Sciences-National
Research Council (NAS-NRC) and food
consumption data from a nationwide food
consumption survey conducted by USDA in
1965-66.
The thrifty food plan was revised in 1983
for several reasons:
Dietary standards used in the 1975
food plan needed revision. In 1980 NAS-NRC
revised the RDA (2). Recommended amounts
of ascorbic acid, vitamin B 6, vitamin B 12 ,
thiamin, riboflavin, phosphorus, and magne­sium
were changed for some sex-age cate­gories.
The major changes were increases in
ascorbic acid for all categories and in
vitamin B6 for some categories. The 1980
RDA were used to define the lower limit for
nutrients and the level of food energy in
the plan. Also fat, cholesterol, caloric
sweeteners, and sodium were controlled at
moderate levels in the 1983 food plan. Of
these dietary factors, only fat was con­trolled
in the 1975 plan, although attempts
were made to control the level of choles­terol
by limiting the number of eggs and to
control the level of sweeteners by limiting
the amount of sugar and sweets.
New information on the content of nu­trients
in foods has become available since
1975. Also, the nutritive values of some
foods have changed since 1975. For example,
the enrichment levels for certain B vitamins
in bread and flour were increased in 197 5.
The most recent food composition data avail­able
in HNIS's Nutrient Data Bank were used
to estimate the nutrient content of foods in
the food plan. Levels of food energy, fat,
protein, calcium, iron, magnesium, vitamin A
value, thiamin, riboflavin, niacin, vitamin
B 6, vitamin B 12, and ascorbic acid were
estimated for the earlier plan; in addition,
levels of zinc, phosphorus, folacin,
vitamin E, cholesterol, caloric sweeteners,
and sodium were estimated for the 1983 plan.
Table 1. Thrifty food plan, 1983: Quantities of food for a week1
Cl!ild
Food group
1-2 3-5 6-8 9-11
years years years years
Vegetables, fruit:
Potatoes (fresh weight) • • • • • • • • • 0.47
High-nutrient vegetables • • • • • • • • • 52
Other vegetables • • • • • • • • • . • • • • • • • 60
Mixtures, mostly vegetable;
condiments • • • • • • • • • • • • • • • • • • • • • .01
Vitamin-C-rich fruit'............ 1.19
Other fruit' ••.•••••.•••••••••• :. • 97
Grain products:
Whole-grain/high-fiber
breakfast cereals............... 5.44
Other breakfast cereals • • • . • • • • • s. 30
Whole-grain I high -fiber flour,
meal, rice, pasta............... .11
Other flour, meal, rice, pasta... .88
Whole-grain/high-fiber bread . • • • .09
Other bread..................... • 38
Bakery products, not bread..... .06
Grain mixtures . • • . . • • • • • • • . • • • . • . 08
Milk, cheese, cream:
Milk, yogurt (quarts) 6 •••••••••• 3.42
Cheese.......................... .04
Cream, mixtures mostly milk..... .15
Meat and alternates:
Lower-cost red meats, variety
meats •••••••••••..•.•.•••.•••••
Higher-cost red meats, variety
meats ••••••••••..••••••••.•••••
Poultry •••••••.•••••••.•••••••••
Fish, shellfish ..•••••.••••••••..
Bacon, sausage, luncheon meats .
Eggs (number) ••••.•.•••••••.•••
Dry beans, peas, lentils
(dry weight) 7
••••••••••••••••••
Mixtures, mostly meat, poultry,
fish, egg, legume ••••••••.•••••
Nuts (shelled weight), peanut
butter •...••••••••..•••••••...•
Other foods: 8
Fats, oils •••••••••••••..••••••••
Sugar, sweets •••••••••••••••.•••
Soft drinks, punches, ades
(single-strength) ••••••••••••••
.93
.15
.35
.02
.18
3.00
.27
.05
.09
.14
.10
.39
0.82
.67
• 70
.02
1.24
.92
.33
.27
.14
1.23
.10
.65
.10
.06
3.06
.05
.15
.69
.ll
.48
.02
.32
2.90
.18
.06
.24
.33
.36
.57
1.04
1.05
.97
.05
1.32
1.61
.17
.19
.12
1.85
.09
1.01
.42
.07
3.39
.08
.34
.70
.13
.64
.02
.31
1.90
.18
.01
.13
.58
• 78
.65
1.11
1.17
1.25
.07
1.62
1.86
.24
.26
.ll
1. 73
.11
1.27
.58
.ll
4.17
.11
.30
.92
.[9
.70
.03
.24
2.50
. 24
.01
.15
.67
.87
.87
Mile
12-14 15-19 20-50 51 years 12-19 20-50 51 years
years years years and over years years and over
1.29
1.65
1.35
.02
1.08
l.ll
.38
.05
.20
2.15
.15
1.68
.19
.02
3.99
.11
.10
1.20
.18
.90
.03
. 26
2.20
.59
.02
.37
.73
1.20
.87
2.22
1.08
1.15
.06
1.17
1.04
.27
.12
.22
2.34
.17
1.33
.43
.13
3.91
.11
.24
1.49
.26
.90
.02
.27
3.10
.58
.03
.14
.93
.95
1. 51
1.50
1.61
1.86
.13
1.13
1.20
.17
.21
• 15
1.81
.24
1.85
.56
.23
2.00
.13
.41
1.40
.39
.96
.04
.56
4.10
.45
.13
.17
.76
1.01
1.17
1.55
1.52
1.33
.06
1.00
1.41
.13
.12
.21
1.1!7
.21
1.33
.30
.15
1.63
. 12
.26
1. 73
.54
• 71
.04
. 49
4.~0
. 59
.15
.22
.60
.76
.32
1.27
1.14
1.08
.07
2. 02
1.30
.30
.39
.16
1.~2
.21
1.04
.36
.31
4.36
.27
.35
1.75
.20
.20
.04
.24
4.10
.35
.20
.09
.22
.31
1.12
1.16
1.91
2.68
.02
1. 73
.93
.12
.19
.15
1.81
.34
• 59
.12
.37
2.37
.29
.03
1.60
.35
. 95
.04
.45
4.40
.41
.13
.28
.28
.21
.40
0.90
2.28
2.03
.02
1.35
1.37
.17
.27
.18
1.32
.29
.29
.to
.19
2. 17
.32
.26
1.95
. 55
.70
.04
.45
4.10
.43
.15
.08
.21
.22
.38
1Quantities are for food us purchased or brought into the household from garden or farm. Food is for preparation of all
meals and snacks for a week. About 5 percent of the edible purts of food is assumed to be discarded as plate waste, spoilage,
etc.
2Pregnant and lactating females usually require added nutrients and should consult a doctor for recommendations about diet
and supplements.
3Quantities in pounds, except milk which is in quarts, and eggs which are by number.
'Frozen concentrated juices are included as single-strength juice.
5Cereal fortified with iron is recommended.
6 Quantities of dry and evaporated milk and yogurt included as their fluid whole milk equivalents in terms of calcium content
7Count 1 pound of canned dry beans--pork and beans, kidney beans, etc.--as 0.33 pound.
8 Small quantities of coffee, teu, and seasonings are not shown . Their cost is a part of the estimated cost for the food plan.
1984 No.1 Family Economics Review 19
More recent information on food eaten
by men, women, and children of different
ages on a nationwide basis has become avail­able.
USDA's Nationwide Food Consumption
Survey 1977-78 (NFCS) provided information
on the food intake of individuals in the
households eligible to receive food stamps
(~) o It also provided detailed information
on the quantities and money value of food
used (purchased, home-produced, or received
as gift or pay) by the total household (]_).
Data from this study were used to estimate
the quantities of foods used to prepare
meals and snacks for men, women, and chil­dren
of different ages. These quantities of
foods made up the food consumption patterns
which were used as starting points in devel­oping
the new plan. Quantities were speci­fied
for 31 food groups, an increase from
the 17 groups in the earlier plan. The num­ber
of food groups was increased to group
foods with high and low content of certain
dietary components not considered in the
1975 plan and to help deal with the increas­ed
use of commercially prepared foods.
Shifts have occurred in food prices
since 1975. Prices for most foods increased,
but some increased more sharply than others.
Prices paid by survey households in 1977-78,
updated to 1981 levels, were used in
revising the plan.
Food plans for older adults were
changed from individuals 55 years and over
in 1975 to 51 years and over in 1983 to be
consistent with the RDA age groupings o Food
plans for the infant and for pregnant and
lactating women were discontinued in 1983.
Data and Procedures Used in
Revising the Plan
Data from the Survey of Food Consumption
in Low-Income Households, conducted as part
of NFCS, were used as the basis for the food
consumption patterns and base food prices in
the thrifty food plan development o In this
part of the survey, conducted from November
1977 through March 1978, data were collected
for about 4,400 housekeeping households
eligible for the Food Stamp Program. Data
included quantities and prices (or costs) of
foods used by the household during the week
prior to the household interview (7) and the
food intake of household members the day
20 Fam ily Economics Review 1984 No.1
before, the day of, and the day following
the interview (~). Food consumption behavior
and prices paid by households eligible for
the Food Stamp Program were considered
most appropriate as a starting point for a
thrifty food plan used to determine program
benefits.
The food plan was developed by starting
with usual food consumption patterns calcu­lated
from survey data. This approach was
used because researchers believe that a
nutritious diet that disrupts usual eating
habits the least is most likely to be ac­ceptable
to families. These food consumption
patterns are estimated quantities as
purchased of foods (classified into 31 food
groups) that survey households used to pre­pare
a week's meals and snacks for people in
given sex-age categories. Each food group
has an average nutritive value and price
associated with it, based on selections
within groups typical of those made by sur­vey
households. A computerized mathematical
model was used to find the combination of
food groups at a given total cost that met
dietary standards for each sex-age category
with the least change from quantities in
food groups in the consumption pattern. This
combination of food groups is the food plan
for the sex-age category.
Dietary standards for the 1983 plan, based
on the 1980 RDA (2), were determined after
extensive study of the dietary change needed
in food consumption patterns to meet various
sets of standards (!_, _!, .E_). These standards
and the rationale for their use are
described in the March 1983 issue of the
Journal of Nutrition Education (!). Briefly
they are:
RDA for food energy, protein, six
vitamins (A, B12• thiamin, riboflavin, niacin,
and C), and three minerals (calcium, magne­sium
·, and phosphorus).
RDA for iron, except 90 percent of the
RD A for the child 1 to 2 years old.
Eighty percent of RDA for zinc, folacin,
and vitamin E. Levels below RDA were used
in recognition of the limited food composition
data for all three of these nutrients.
Another consideration was that the U.S. food
supply does not provide enough zinc and
folacin to meet RDA for the population.
0. 0 2 milligrams of vitamin B 6 per gram
of protein in the food plan. The Food and
Nutrition Board based RDA for vitamin B 6
on this ratio.
Moderate levels of fat (35 percent of
energy or less), cholesterol (350 milligrams
per day or less), caloric sweeteners (12
percent of energy or less), and sodium
(1,600 milligrams per 1,000· calories or
less) •
None of the food consumption patterns for
the food plan met all of the dietary stand­ards
(table 2). Nutritional shortcomings
occurred despite the fact that, in deriving
the consumption patterns, quantities of
food in food groups were proportionately
adjusted to make the patterns provide enough
food to meet the midpoint of the RDA range
for energy. Calcium, zinc, iron, magnesium,
and folacin were the problem nutrients.
Young children, teenage girls, and women
had the greatest shortages. Levels of fat,
sweeteners, and sodium in consumption
patterns for almost all categories exceeded
the specified standards, and also exceeded
the cholesterol standard. Therefore, in
developing the food plans, adjustment to the
patterns was required for all sex-age
categories.
In the food plan there is an allowance for
some discard of edible food during prepara­tion,
as plate waste, or because of spoil­age.
Food specified in the 1983 food plan is
sufficient to provide the dietary standard
for calories and nutrients for each sex-age
category and to allow for some food discard.
Table 2. Nutritional shortcomings in food consumption patterns 1 used as a basis for the
1983 thrifty food plan
Nutrient
Below standard:
Calcium, zinc ..........•....•..
Iron ...•....•........•........•
Magnesium ••••••.••••••••••••••
Folacin ..•....•...............•
Above standard:
Fat ••••••••••••••• • • • • • · • • • • • • •
Sweeteners .................... .
Sodium ..•.•.•..................
Cholesterol ................... .
Sex-age category with pattern not
meeting dietary standards
Children, 1-2 years; males, 51 years and over;
females 12 years and over
Children, 1-2 years; females, 12-50 years
Males, 15-19 years and 51 years and over;
females 12 years and over
Males, 51 years and over; females, 12 years and over
Most
Most
All
Primarily males, 15 years and over
l Estimated quantities as purchased of foods in 31 food groups used to prepare all meals
and snacks for a week. Developed using data from USDA's Survey of Food Consumption in
Low-Income Households.
1984 No.1 Family Economics Review 21
1983 Thrifty Food Plan
Table 3 summarizes the weekly quantities
of food from 11 major food groups in the
food consumption patterns and the 1983 and
1975 thrifty food plans, totaled for the
four-person household.
The 1983 thrifty food plan meets all die­tary
standards and food cost specifications.
To achieve these, adjustments to food con­sumption
patterns were required. Generally,
these adjustments increased the quantities
of economical food sources of those nutri­ents
which were short of goals in consump­tion
patterns (table 2) and contain low to
moderate levels of fat, cholesterol, caloric
sweeteners, and sodium.
Differences in the 1983 and 1975 thrifty
food plans result from differences in both
food consumption patterns and dietary stand­ards
used in their development. For most
sex-age categories, lower quantities of
fats, sugars, bakery products, and eggs in
1983 than in 1975 resulted partly from lower
consumption of foods in these food groups by
households in the 1977-78 survey than in the
Table 3. Quantities of food for a week1 for a 4-person household, 2 by food consumption
pattern, and 1983 and 1975 thrifty food plans
Food group 3
Potatoes (fresh weight) ••••••••••••••••
Other vegetables, fruit 5
••••••••••••••••
Cereal, flour .......................... .
Bread ..........•...•...•...............
Other bakery products •••••••••••••••••
Milk, cheese, ice cream
(milk equivalent in quarts) 6
•••••••••••
Meat, poultry, fish ••• · •••••••••• _ •••••••
Eggs (no.) ............................ .
Dry beans, peas, nuts
(dry, shelled weight) 7
••••••••••••••••
Fats, oilp ............................. .
Sugar, Sweets ......................... .
Food
consumption
pattern
4.7
22.7
5.3
4.2
2.9
15.4
17.2
16.5
1.1
2.2
3.8
Thrifty food plan
1983 1975
Pounds 4
4.8 6.2
24.2 20.6
9.3 7.3
5.5 6.9
2.5 3.9
14.2 14.5
10.9 8.3
12.9 13.8
2.0 1.7
2.3 2.6
2.9 3.6
1Quantities are for food as purchased or brought into the household from garden or farm.
Food is for preparation of all meals and snacks for a week. Food quantities are increased by
5 percent above the amount required to meet dietary standards for the thrifty food plan to
allow for nutrients lost as discarded edible food.
2Man and woman 20-50 years, children 6-8 and 9-11 years.
3Small quantities of coffee, tea, seasonings, soft drinks, punches, and ades that are a
part of the food plan are not shown.
4Quantities in pounds, except milk which is in quarts, and eggs which are by number.
5Frozen concentrated fruit juices are included as single-strength juice.
6Quantities of dry and evaporated milk and yogurt included as their fluid whole milk equiv­alents
in terms of calcium content.
7Count 1 pound of canned dry beans--pork and beans, kidney beans, etc.--as 0.33 pound.
zz Family Economics Review 1984 No.1
1965-66 survey. More meats, dry beans,
vegetables, fruit, cereal, and flour were
needed in the 1983 plan than in the 1975
plan, partly to help provide desired levels
of folacin and zinc, nutrients not con­sidered
in the earlier plan. Lower standards
for fat and newly introduced standards for
caloric sweeteners and cholesterol for the
1983 plan were also factors.
Another, and perhaps more understandable,
way to show the 1983 thrifty food plan is in
terms of household measures of food as
served on a daily basis. Selected foods in
the plan for four individuals are shown in
table 4.
Procedures Used to Estimate Costs
To estimate the cost of foods in the
thrifty food plan, an assumption is made
that families following the plan select the
kinds and amounts of foods in each of the
food groups that low-income survey house­holds
selected on the average. For example,
the percentage of total meat used by the
selected survey families that was ground
beef, beef chuck, stewing beef, and so
forth, is assumed in the plan. These average
selections are believed to provide the most
reliable basis for food guides to be used
nationwide.
The average prices paid for almost 2, 400
different foods are used as a basis for
estimating the costs. These prices reflect
differences in container size, brands,
quality of food, and price levels of stores
selected by low-income families.
Table 4. A day's food as served for 4 individuals: 1983 thrifty food plan
Food 1
Vegetables, fruit .................. .
Cereal, pasta, dry •••••••••.•••••••
Bread 3
•••••••••••••••••••••••••••••
Bakery products 3
•••••••••••••••••••
Milk , yogurt ...................... .
Cheese (per week) •••••••••••••••••
Meat, poultry, fish, boned 4
••••••••
Eggs (per week) ..................•
Cooked dry beans, peas, nuts •••••
Fats, oils ......................... .
Sugar, sweets ..................... .
Soft drinks, punches, a des ••••••••
Unit
l/2 cup
1 oz 2
1 slice
1 slice
1 cup
1 oz
1 oz
no.
1/2 cup
1 tbsp
1 tbsp
1 cup
Qlild
6-8
years
3.4
2.7
6.2
.9
1.7
1.2
2.1
1.8
.3
2.3
3.7
.2
Ol.ild
9-11
years
Wormn
20-50
years
Number of units
4.0
2.9
6.7
1.2
2.1
1.6
2.4
2.4
.4
2.7
4.2
.2
4.9
2.6
5.8
.3
1.1
4.4
4.1
4.2
.7
.9
.7
• 1
1 Excludes commercially prepared mixtures, except bread and bakery products.
2 1 oz of dry cereal or pasta is about 1 serving.
Man
20-50
years
4.3
2.7
8.4
1.2
.9
2.0
4.0
3.9
.7
3.1
4.9
.3
3Bread is commercially prepared bread and bread assumed to be made at horne from flour
and meal and some milk, fat, and sugar, in terms of food as purchased. Ingredients used
other than flour and meal in homemade bakery products in excess of those required to make
bread are included in the group of the ingredient. Bakery products shown are only
commercially prepared types .
4Lean parts of meat and poultry. Includes some bacon, sausage, and luncheon meats.
1984 No.1 Family Economics Review 23
Cost of foods in the food plans are
estimated each month by use of the following
procedures:
1. Prices paid by the low-income survey
households are updated by use of the per­centage
change in price indexes of detailed
food expenditure categories from the time of
the survey to the month of the estimate.
Indexes for these food expenditure catego­ries
are based on prices collected each
month by the Bureau of Labor Statistics
(B LS) from a representative sample of stores
in selected cities across the country. For
example, survey households used as a basis
for the thrifty food plan paid an average
price of about $1.00 a pound for ground beef
in 1977-78. If the index for the food
expenditure category containing ground beef
reported by B LS in a given month were 60
percent higher than the index reported in
1977-78, a price of $1.60 ($1.00 plus 60
percent of $1.00) would be used for ground
beef in estimating the cost of the thrifty
food plan for that month.
2. The updated prices for foods in each
food group for each food plan are weighted
by the average amounts of foods used by the
survey households to derive prices per
unit--pound, quart, or number--for the food
groups.
3. The prices per unit are then multiplied
by the number of the units of food groups in
the plan for each sex-age category (table 1)
to determine the cost of foods from each
food group.
4. Costs for the food groups for each
category are totaled. These totals, rounded
to the nearest 10 cents, are released as the
cost of food at horne for a week. Unrounded
weekly costs are multiplied by 4. 333, then
rounded to the nearest 10 cents to estimate
the cost for the month.
The general cost level of the 1983 food
plan is the same as for the 1975 food plan;
however, the 1983 food plan for some sex-age
categories cost more, while the plan for
other categories cost less than in earlier
plans. Costs for the new plans for women 51
years and over are substantially higher. The
new plans for preschool-age children, teen­age
girls, women 20 to 50 years, and men 51
years and over are also more costly. Con­versely,
new plans for school-age children,
teenage boys, and men 20 to 50 years are
24 Family Economics Review 1984 No.1
less costly. These changes in food cost
relationships result from changes in food
consumption patterns and the costs associ­ated
with changing patterns to meet the
dietary standards for the various sex-age
categories.
Sample Meal Plans
Sample meals, with recipes and lists of
foods used in their preparation, have been
developed for families of four persons
following the revised thrifty food plan.
These meal plans illustrate some of the many
ways food in this revised food plan can be
combined into economical and nutritious
diets. Copies of the meal plans, Making Food
Dollars Count--Nutritious Meals at Low Cost,
USDA HG-240, are available for 50 cents from
the Consumer Information Center, Pueblo,
Colo. 81009.
Food Plan Development--An Ongoing Proje~t
The maintenance of the USDA food plans-­development,
interpretation through publi­cations
for leaders and consumers, and
periodic estimates of costs--is an ongoing
project of HNIS. The food plans are
evaluated and revised, as required, when new
information becomes available on food con­sumption,
food prices, food composition, and
nutritional requirements.
Each food plan is only one of many com­binations
of food groups that could be
developed at the given cost level. Amounts
in food groups in the food consumption
patterns could be changed in other \Vays to
provide nutritious diets. While such other
combinations would deviate further from con­sumption
patterns, they might be acceptable
to some families.
Other food plans at similar costs could be
developed if selections of food groups were
not assumed to be typical of the selections
of survey households. If the foods within
the groups were limited to those that are
especially inexpensive or especially nutri-ent
dense, the quantities in food groups in
the food plans probably would not be
required to deviate from food consumption to
the extent the 1983 food plans do. For exam­ple,
if only nonfat dry and fluid skim milk
were used, the extra calories and cost of
the typical assortment of milk assumed in
the 1983 food plans could be used for other
foods in the food plan. For purposes of
establishing food plans at different costs
for use nationwide and estimating the
nutrient content and cost of foods in the
food plans, foods within food groups used on
the average by households with different
levels of food costs are believed to be most
reasonable.
LITERATURE CITED
1. Cleveland, Linda . E., et al. 1983.
Recommended dietary allowances as
standards for family food plans. Journal
of Nutrition Education 15(1) :8-14.
2. National Academy of Sciences, National
Research Council, Food and Nutrition
Board. 1980. Recommended Dietary
Allowances, 9th Edition.
3. Peterkin, Betty B., Judy P. Chassy, and
Richard L. Kerr. 1975. The Thrifty Food
Plan. CFE(Adm)326. U.S. Department of
Agriculture, Consumer and Food
Economics Institute (now known as Human
Nutrition Information Service).
4. Peterkin, Betty B., Carole J. Shore, and
Richard L. Kerr. 1979. Some diets that
meet the dietary goals for the United
States. Journal of the American Dietetic
Association 74(4) :423-430.
5. Peterkin, Hetty B., et al. 1981. Changes
in dietary patterns: One approach to
meeting standards. Journal of the
American Dietetic Association
78(5):453-459.
6. U.S. Department of Agriculture, Food and
Nutrition Service. 1983. Thrifty food
plan; proposed revision. Federal Register
48(147):34700-34707.
7. , Science and Education
Administration, Consumer Nutrition
Center. 1981. Food consumption and
dietary levels of low-income households,
November 1977-March 1978. Nationwide
Food Consumption Survey 1977-78.
Preliminary Report No. 8.
8. • 1982. Food and nutrient
intakes of individuals in 1 day in
low-income households, 1977-1978.
Nationwide Food Consumption Survey
1977-78. Preliminary Report No. 11.
Technical, Conceptual, and
Administrative Lessons of the
Income Survey Development
Program
This publication contains papers presented
at a conference in October 1982 evaluating
the results of the Income Survey Development
Program (ISDP). The ISDP was established in
1975 by the U.S. Department of Health,
Education, and Welfare (now known as the
U.S. Department of Health and Human
Services) and the U.S. Department of
Commerce to carry out research on measure­ment
concepts, data collection, and data
processing strategies needed for the Survey
of Income and Program Participation (SIPP).
The SIPP, which is scheduled to begin data
collection in October 1983, will be a national
longitudinal household survey to collect
data on cash and in-kind income, assets and
liabilities, taxes, expenses, program eligi­bility
and participation, labor force history
and status, disability, and pension coverage
The SIPP will provide more comprehensive
household data than either the Consumer
Expenditure Survey or Current Population
Survey, the primary sources of Federal data
on households.
Seventeen papers that were background
reading for conference participants are
organized into seven chapters and cover
what was learned from the ISDP and identify
where further research is needed. A paper
by the editor that was written after the
conference, "Measuring Income and Program
Participation," provides an overview by dis­cussing
the need for comprehensive income
data and summarizing the papers and con­ference
discussions. Extensive references
include an annotated ISDP bibliography of
materials generated over the 7-year history
of the program. This publication is avail­able
for $5 from the Center for Coordination
of Research on Social Indica tors, Social
Science Research Council, 605 Third Avenue,
New York, N.Y. 10158.
1984 No.1 Family Economics Review 25
Energy Efficiency Ratings Revised
The Department of Energy is revising
energy efficiency ratings for labeling home
appliances to reflect new average annual
electricity costs. 1 Average annual electri­city
cost estimates are changed as frequent­ly
as once a year if costs change by more
than 15 percent.
Regulations adopted as a result of the
Energy Policy and Conservation Act of
1975 2 require that seven categories of
home appliances carry efficiency labels:
(1) Refrigerators and refrigerator-freezers,
(2) freezers, (3) dishwashers, (4) water
heaters, (5) clothes washers, (6) room
air-conditioners, and ( 7) furnaces. The
energy efficiency label must comply with the
format developed by the Federal Trade Com­mission
and must contain the actual test
results of the average annual cost in use,
the amounts and dollar values of electricity
consumed, and the range of high and low
values of efficiencies of com parable models.
Consumers may use the information on these
labels to note the relative efficiencies of
models of a given year. 3
Consumers should be warned, however,
against comparing ratings among models of
different years. Because electricity is one
1Federal Trade Commission, 1983, "Final
rule revision; Rules for using energy cost
and consumption information used in labeling
and advertising of consumer appliances under
the Energy Policy and Conservation Act,"
Federal Register 48(64) :13972.
2Federal Trade Commission, 1979, "Final
rule revision; Rules for using energy cost
and consumption information used in labeling
and advertising of consumer appliances under
the Energy Policy and Conservation Act,"
Federal Register 44(224):66466.
3More information regarding home appliance
labeling and the Energy Policy and Conser­vation
Act may be found in "Consumer appli­ance
decisions: using energy labels," by
Marilyn Doss Ruffin, Family Economics
Review, summer 1978 issue, p. 10.
26 family Economics Review 1984 No.1.
of the variables used in determining the
efficiency rating of an appliance, a change
in this cost estimate will result in a
change in the rating even if the appliance
itself has not been changed. Identical
models may have different ratings reflecting
only energy costs. For example, if only the
energy costs increased, later models would
appear less efficient than earlier models.
The range of efficiency ratings of all
models could also vary among years as a
result of changes in energy costs, limiting
cross-year comparisons.
Characteristics of Participants in
Adult Education
Persons participating in adult education
tend to have higher education levels, higher
incomes, and higher labor force participa­tion
rates than persons who are not partici­pating
in adult education (see table). Most
are white and under 55 years of age. This
picture of adult education participants is
based on a National Center for Education
Statistics (NCES) survey which reported that
13 percent of adults 17 years of age or
older participated in adult education
activities at the time of the survey •1 Adult
education was defined as all courses and
organized educational activities taken part
time. Participants included part-time
students in an elementary school, secondary
school, college, or vocational school, as
well as those who took a course in a non­degree
program. Of the 21 million adult
education participants, 1 million were also
enrolled full time in another educational
program.
1The survey, Participation in Adult
Education, conducted from May 1980 through
May 1981, was the fifth of the triennial
series begun in 1969 by the Bureau of the
Census under contract with NCES.
Sources: U.S. Department of Education,
National Center for Education Statistics,
1982, Digest of Education Statistics, 1982;
U.S. Department of Education, National
Center for Education Statistics, 1982,
Participation in Adult Education, 1981.
Selected characteristics of participants in adult education: United States, 1981
[Numbers in thousands]
Olaracteristic
Total ......................................•...
Highest level of education ·completed:
Less than 4 years of high school •••••••••••••
4 years of high school •••••••••••••••••••••••
1-3 years of college ......................... .
4 or more years of college ...................
Annual family income:
Less than $7,500 .•.•••..••.•••••.•••...•••.••
$7,500-$9,999 •••.•...••......••••.••••..•••••
$10,000-$14,999
$15,000-$19,999
$20,000-$24,999
$25,000-$49,999
............................................................ ............................................................
$50,000 and over ••••••••••..••••.•.•••••••.••
Not reported ................................ .
Labor force status:
In labor force ............................... .
Employed .•.•...............•.......•.....•.
U nem played ...................•....•.......
Not in labor force ...........................
Racial/ethnic group:
White, non-Hispanic ...•.......•..•.......•...
Black, non-Clispanic .•....•...................
Hispanic .................•......•........•.•.
Other •.•............•.......•.•.......•..••..
Age:
17-34 years ........•..........••....•....•.•.
35-54 years .....................•........•...
55 years and over ..............•.•...........
Sex:
Men ••••••••••••••••••••••••••••••••••••••••••
Women . ..............•...•.............•.....•
Adults in
population 1
Number
165,830
51,043
63,208
27,052
24,526
27,326
10,903
25,440
21,173
22,257
39,933
8,673
10,124
107,394
99,862
7,531
58,436
135,675
17,381
8,992
3,816
70,787
48,568
f 46,475
77,983
87,449
1Persons 17 years of age and over on the date of the survey.
Participants in
adult education
Number Percent
21,252 12.8
2,059 4.0
6,998 11.1
5,307 19.6
6,889 28.1
1,726 6.3
888 8.1
2,791 11.0
2,784 13.1
3,366 15.1
7,307 18.3
1,634 18.8
755 7.5
17,640 16 .4
16,798 16.8
842 11.2
3,612 6.2
18,674 13.8
1,298 7.5
770 8.6
511 13.4
11,450 16.2
7,333 15.1
2,470 5.3
9,359 12.0
11,893 13.6
Sources: U.S. Department of Education, National Center for Education Statistics: 1982,
Digest of Education Statistics, 1982, p. 154; 1982, Participation in Adult Education, 1981,
pp. 8, 19-20; 1983, The Condition of Education, p. 160.
1984 No.1 Family Econo mi c s Rev i ew 27
Labor Force Statistics
Derived From the
Current Population Survey;
aDatabook
This two-volume bulletin, issued by the
U.S. Department of Labor, Bureau of Labor
Statistics, is the first comprehensive
historical collection of national data derived
from the Current Population Survey. Month­ly,
quarterly, and annual average statistics
on the labor force status of the population
are classified by a variety of demographic,
social, and economic characteristics in 172
tables. Explanatory notes follow the tables
in both volumes to provide detailed infor­mation
on collection, concepts, definitions,
historical comparability, and sample
variability. Volume I contains monthly data
(unadjusted for seasonality) and annual
average data on the noninstitutional popula­tion,
members of the armed forces, the labor
force, employment, and unemployment; annual
average data for industry employment cross­classified
by occupation, women and blacks
employed in occupations and industries, and
duration of unemployment by age, sex, and
race; and data collected once a year on
school enrollment, educational attainment,
multiple jobholding, work experience, hours
of work and earnings, and the labor force
status of working mothers with children.
Volume II contains monthly and quarterly
seasonally adjusted data for over 3, 000
labor force series. The data book may be
ordered from the U.S. Government Printing
Office, Washington, D.C. 20402, as follows:
Volume I, Stock No. 0-383-218/153, $14;
Volume II, Stock No. 0-383-219/152, $12.
Health Care Coverage and
Insurance Premiums of Families,
1980
In 1980, 87 percent of all families had
health insurance coverage from a private or
public source, or both. Multi person families
were slightly more likely (88 percent) than
one-person families (85 percent) to have
28 Fam il y Economics Review 1984 No.1
coverage. Health insurance coverage varied
somewhat by income, labor force participa­tion,
and age of the head (see table 1).
Families most likely to have coverage were
those where the head was 65 years of age or
over (the elderly), primarily because of the
presence of public health insurance programs
for this age group. Families least likely
to have coverage were those earning less
than $10,000 and those in which family
members had inconsistent work patterns.
A majority of families in the United
States (54 percent) had private health
insurance only, 18 percent had both public
and private health insurance, 15 percent had
only public health insurance, and 13 percent
had no known coverage. Multiperson families
were more likely (58 percent) than one­person
families (46 percent) to have private
health insurance only. Although a large pro­portion
of low-income families (income less
than $10,000), unemployed families, families
headed by persons in poor health, and elder­ly
headed families had some health insurance
coverage, _these groups were least likely to
have private health insurance only. This was
particularly evident for elderly families,
most of whom qualified for medicare
benefits.
A majority of families with private health
insurance paid at least part of their
premiums; 61 percent of multi person families
and 56 percent of one-person families paid
some or all of their premiums. Families that
had private health insurance coverage were
more likely to pay all of their premiums if
they earned less than $10,000, or had no
family member working, or had an elderly
head of the household. These types of
families are less likely to have the type of
employment where health insurance premiums
are provided as a fringe benefit.
Average out-of-pocket expense per year
for premiums were $472 for multiperson
families and $244 for one-person families.
For families who paid only part of their
premiums, the amount spent differed very
little by income groups (see table 2);
Table 1. Families with health care coverage, by type of family, type of coverage, and selected
characteristics, 1980
01aracteristics
Multi person families ••••••••••••••
1979 family income:
Less than $10,000 ••••••••••••
$10,000-$19,999 ••••••••••••••
$20,000-$34,999 ••••••••••••••
$35,000 or more ••••••••••••••
Family employment status:
No family member worked •••••
Some family members worked
but none worked every week
Only 1 family member
worked every week ••••••••••
2 or more family members
worked every week ••••••••••
Perceived health status of
head of family:
Poor or fair ••••••••••••••••••
Good or excellent ••••••••••••
Age of head of family:
Under 65 years •••••••••••••••
65 years and over ••••••••••••
One-person families •• , •••••••••••
1979 income:
Less than $10,000 .......... ..
$10,000-$19,999 ••••••••••••••
$20,000-$34,999 ••••••••••••••
$35,000 or more ............ ..
Employment status:
Did not work ................•
Worked, but not every week ..
Worked every week •••••••••••
Perceived health status:
Poor or fair ................. .
Good or excellent ••••••••••••
Age:
Under 65 years •••••••••••••••
65 years and over ••••••••••••
Total
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1 May not total to 100 due to rounding.
Families with known coverage
Total
88
84
89
91
93
94
81
88
90
91
88
87
99
85
82
86
93
91
89
76
84
88
84
78
98
Private
health
insurance
only
Public Public
health and
care
only
private
Percent distribution1
58
21
61
77
80
17
43
67
77
30
64
67
3
46
32
68
83
75
18
54
75
17
53
67
3
13
36
9
3
2
38
18
7
3
27
9
10
27
20
27
5
6
3
37
11
3
41
14
8
43
18
27
19
11
11
39
20
14
10
34
15
9
69
19
23
12
5
14
34
11
6
30
16
4
51
Families
without
known
coverage
12
16
11
9
7
6
19
12
10
10
12
18
14
7
9
11
24
16
13
16
22
2
Source: Dicker, Marvin, 1983, Health care coverage and insurance premiums of families: United
States, 1980, NCHS National Medical Care Utilization and Expenditure Survey, Preliminary Data
Report No. 3, U.S. Department of Health and Human Services, National Center for Health
S ta tis tics •
1984 No.1 Family Economics Review 29
Table 2. Average annual health insurance expenses for
families with out-of-pocket expenses, by type of family,
premium payment status, and 1919 family income, 1980
Average out - of-pocke t expenses
1979 family income
Multi person families:
Less than $10,000 •••
$10,000-$19,999 .....
$20,000-$34,999 .....
$35,000 or more •••••
One-person families:
Less than $10,000 •••
$10,000-$19,999 .....
$20,000-$34,999 ••••••
$35,000 or more •••••
Paid all
premiums
$483
581
750
900
236
312
5031
487 1
1 Unreliable because of small sample size .
Paid part
of premiums
$342
387
395
459
179
152
1851
1611
Source: Dicker, Marvin, 1983, Health care coverage
and int>urance premiums of families: United States , 1980,
NCHS National Medical Care Utilization and Expenditure
Survey, Preliminary Data Report No. 3, U.S. Department
of Health and Human Services, National Center for
Health Statistics.
partial payment of health insurance premiums
by another party lowers the overall out-of­pocket
cost of health insurance to the
consumer and creates a uniform premium
among consumers regardless of socio­economic,
demographic, or health character­istics.
Of families who paid the total
premium themselves, out-of-pocket cost
increased with family size and family
income. Out-of-pocket expense ranged from
$236 for one-person families earning less
than $10,000 to $878 for three-person
families with incomes of $20,000 or more.
Larger families use greater amounts of
health care resources than smaller families,
and wealthier families are more able to
afford high-priced, quality health insurance
than lower income families.
Source: Dicker, Marvin, 1983, Health care
coverage and insurance premiums of families:
United States, 1980, NCHS National Medical
Care Utilization and Expenditure Survey,
Preliminary Data Report No. 3, u.s.
Department of Health and Human Services,
National Center for Health Statistics.
JO Family Economics Review 1984 No .1
Characteristics of the Population
Below the Poverty Level
Between 1980 and 1981, the number of
persons below the poverty level rose from
29.6 million to 31.8 million, 11 n increase of
7.4 percent. During the same period, the
poverty rate rose from 13.2 to 14.0 percent.
Contributing to the increase in poverty were
the recession that began in mid-1981 and the
10 .4-percent increase in consumer prices
during that year. The poverty rate in 1981
for blacks was 34 percent, for those of
Spanish origin, 26 percent, and for whites,
11 percent.
Increases in the poverty population were
widespread and occurred in every region and
in both metropolitan and nonmetropolitan
areas. The farm poverty population, however,
remained the same. A separate poverty thres­hold
for farm families is no longer deter­mined
•1 The average poverty threshold for a
family of four persons was $9,287 in 1981,
about 10.4 percent higher than in 1980.
About one-half of all families below the
poverty level in 1981 were maintained by
women with no husband present. Also, about
one-half of all children living in house-holds
headed by women were below the
poverty level, compared with about one-tenth
of children living in married -couple families.
The number of poor persons 65 years and
over (3.9 million) and their poverty rate
( 15.3 percent) remained about the same as in
1980. This was primarily due to the indexa­tion
of social security and supplemental
security income to reflect high price levels.
1A revised definition of poverty appeared
in Family Economics Review 1983(1): 19.
Source: U.S. Department of Commerce,
Bureau of the Census, 1983, Characteristics
of the population below the poverty level:.
1981, Current Population Reports, Consumer
Income, Series P-60, No. 138.
\0
.C.,D.
z
0
...,
"3...' .
.....
'< ,
n
0
:J
0
.3.. ..
n
CJ)
"' ~
.<... .
~
~
""
Cost of food at home estimated for food plans at 4 cost levels, October 1983, U.S. average 1
Cost for 1 week Cost for 1 month
Sex-age group
Thrifty Low-cost Moderate- Liberal Thrifty Low-cost Moderate- Liberal
plan plan cost plan plan plan 2 plan cost plan plan
FAMILIES
Family of 2: 3
20-50 years •••••••••••••••••••••••• $35.20 $44.20 $54.40 $67.10 $152.70 $191.80 $236.00 $290.60
51 years and over •••••••••••••••••• 33.30 42.30 51.90 61.80 144.80 183.30 225.00 268.00
Family of 4:
Couple, 20-50 years and children--
1-2 and 3-5 years •••••••••••••••• 51.20 63.60 77.50 94.50 222.00 275.90 335.90 409.50
6-8 and 9-11 years ............... 58.70 74.80 93.30 111.90 254.50 324.10 404.40 484.90
INDIVIDUALS 4
Child:
1-2 years •••••••••••••••••••••••••. 9.20 11.10 12.90 15.50 40.00 48.30 56.10 67.20
3-5 years •••••••••••••••••••••••.•• 10.00 12.30 15.10 18.00 43.20 53.20 65.30 78.10
6-8 years •••••••••••••••••••••••••• 12.20 16.20 20.20 23.60 52.90 70.00 87.60 102.30
9-11 years •••••••••••.••••••••••••• 14.50 18.40 23.60 27.30 62.80 79.70 102.30 118.40
Male:
12-14 years ........................ 15.20 20.90 26.00 30.50 66.00 90.50 112.80 132.20
15-19 years •••••••••••••••••••••••• 15.90 21.70 26.80 31.00 68.80 94.10 116.20 134.50
20-50 years •••••••••••••••••••••••• 16.80 21.40 26.70 32.10 73.00 92.80 115.90 139.10
51 years and over •••••••••••••••••• 15.30 20.30 24.80 29.60 66.50 87.80 107.60 128.50
Female:
12-19 years •••••••••••••••••••••••• 15.20 18.10 21.90 26.40 65.70 78.60 94.80 114.30
20-50 years •••••••••••••••••••••••• 15.20 18.80 22.80 28.90 65.80 81.60 98.60 125.10
51 years and over ••••••••••••••••• 15.00 18.20 22.40 26.60 65.10 78.80 96.90 115.10
1Assumes that food for all meals and snacks is purchased at the store and prepared at home. Estimates for the thrifty food
plan were computed from quantities of foods published in Family Economics Review, 1984 No. 1. Estimates for the other were
computed from quantities of foods published in Family Economics Review, 1983 No. 2. The costs of the food plans are estimated
by updating prices paid by households surveyed in 1977-78 in USDA's Nationwide Food Consumption Survey. USDA updates
these survey prices using information from the Bureau of Labor Statistics (CPI Detailed Report, table 3) to estimate the costs
for the food plans.
2Coupon allotment in the Food Stamp Program based on this food plan.
310 percent added for family size adjustment. See footnote 4.
"The 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--s ubtract 10 percent.
()
0
!:!1.
.0... ..
'T.:I
0
0
0. a.
:z:
0 a <D
Consumer Prices
Consumer Price Index for all urban consumers [1967 = 100]
Group
All i terns •••••••••••••••••••••••••••••••• • • •
Food •••••••••••••••••••••• • • • • • • • • • • • • • • •
Food at home ••••.••••••••••••••••••••••
Food a way from home •••••••••••••••••••
Housing ••••••••••••••••••••••••••••••••••
Shelter •••••••••••••••••••••••••••••••••
Rent, residential •••••••••••••••••••••
Fuel and other utilities ••••••••••••••••
Fuel oil, coal, and bottled gas •••••••
Gas (piped) and electricity •••••••••••
Household furnishings and operation ••••
Apparel and upkeep ••••••••••••••••••.•••
Men's and boys' •••••••••••••••••••.••••
Women's and girls' ••••••••••.•••••••••••
Footwear •••••••••••••••••••••••••••••••
Transportation •••••••••••.•••••••••••••••
Private •••••••••••••••••••••••••••••••••
Public ••••••••••••••••••••••••••••••••••
Medical care ••••••••••••••••••••••••••••••
Entertainment •••••••••••••••••••••••••••• #
Other goods and services •••••••••••••••••
Personal care •••••••••••••••••••••••••••
~t.
1983
302.6
292.9
282.3
323.9
32?.~
349.8
240.4
374.4
624.7
435.6
239.4
200.7
192.1
168.6
208.6
305.0
300.4
368.2
362.9
249.1
296.8
263.3
Sept.
1983
301.8
292.6
282.5
322.2
326.4
348.5
239.5
376.4
623.2
440.5
238.9
200.4
190.8
168.8
208.0
303.7
299.2
366.6
361.2
247.5
294.4
263.0
Source: U.S. Department of Labor, Bureau of Labor Statistics.
Aug.
1983
300.3
292.2
282.5
321.0
324.8
346.6
238.2
37 5.1
619.0
439.1
238.0
197.3
188.3
164.2
205.7
302.4
298.0
365.0
360.0
246.6
289.0
262.1
~t.
1982
294.1
287.0
279.4
310.7
210.7
/ 342.8
228.9
363.4
677.2
413.4
235.4
195.5
188.6
163.0
206.8
295.5
291.1
356.3
338.7
240.3
271.2
252.9
ORDER FOAM MAIL TO: Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402
Credit Card Orders Only
Enclosed is S 0 check,
0 money order, or charge to my
Deposit Account No.
Total charges$. __ Fill In the boxes below.
II I II 111-0 g~~~i~o. I I I I I I I I I I I I I I I I I I
Order No .. ____ _ Expiration Date I I
Month/Year L. ...J.L-1---L-.J
Please enter my subscription to FAMILY ECONOMICS REVIEW
at $8.50 per year. (Add $2.15 for other than u.s. mailing).
Company Of personal name
I I I I I I I I I I I I I I I I I I I I I I I I I I
Additional address/attention line
~tr~etl ad~rJss I I I I I I I I I I I I I I I I I I I I I
b· I I I I I I I I I I I I I I I I I I I I I I I I I I I I I
tty State ZIP Code
IIIIIIIIIIIIIIIIIIIIIWIIIIII
(or Country)
I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I
PLEASE PAINT OR TYPE
:52 Family Economics Rev i ew 1984 No.1
For Office Use Only
Quantity Charges
................ Enclosed
................ To be mailed .... .
................ SubscriptiOflS .............. ..
Postage.......... . ................ ..
Foreign handling
MMOB
OPNR .
. UPNS
..... D1scount
.............. Refund
<tr UB. GOVERNllJ!lNT PIUNTINO OFll'ICE: 1984 - 428-()65 - 814/286
Index of Articles in 1983 Issues
CLOTHING
Consumer Perspectives: Imported vs. U.S.-Made Apparel •••••••••••••••••••••••.••
Recent Trends in Clothing and Textiles ••••••••••••••••••••••••••••••••••••••••••••
Textile Fibers in Clothing, Home Furnishings, and Other Consumer Products •••••••
FAMILY FINANCES
Budgets for a Retired Couple--Final Report. ••••••..•••••••••••••••••••.•••••••••••
Characteristics of Households Receiving Selected Noncash Benefits, 1981 •••••••••••
Consumer Price Index: Changes in Homeownership Component ••••••.•••••••••••••••
Family Financial Management Curriculum Sourcebook ••••••••••.•••••.•••••••••••••••
Federal Student Aid Programs, 1983-84 •••••••••••••••••••••••••••••••••••••••••.••
Household Wealth, 19 62-81 ••••••••••••••••••.•••.•••••••••••••• --::: •..••••••••••••••
Income and Poverty Rates: Farm and Nonfarm Residence •••••••••••••••••••••••••••
Journey to Work •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Lifetime Earnings Estimates of Men and Women, 1979 •••••••••••••••••••••••••••••••
Measuring the Effect of In -Kind Transfers on Poverty ••••••••••.••••••••••••••••••
Mortgage Money Guide •••.•••••••.••••••••••••.••••••••••••••••••••••••••••••••••••
New York City Family Budget Standard •••••••••••••.•••••••••••••••••••••••••••.•.
Out-of-Pocket Expenditures for Personal Health Services ••••••••••.••••••••••••••••
Prescribed Medicines: Use, Expenditures, and Sources of Payment ••••••••••.••••••
Sources of Retirement Income ••••••.•••••••••••••••••••••••••••••••••••••••••••••••
Unemployment: The Effects on Family Income and Expenditures •••••••.•••••.•.••••
Unpaid Family Workers •••••••••••••••••••••••••••••••••••••.••••••••••••••••••••••
Update: Alternative Mortgage Instruments ••••.••••••••••••••••••••••••••••••••••••
Work Experience, Earnings, and Family Income ••••••••••••••••••••••••••••••.••••
Workdays Missed Without Pay ••••••••••••••••••••••••••••.••••••••••••••••••••••••
FAMILY LIVING
Characteristics of American Children and Youth, 1980
Fertility of American Women, June 1981 •••••••••••••••••••••••••••..••••••••••••••.
Households and Families, March 1982 •••••••••••••••••••••••.••••••••••••••••••••••
Marital Status and Living Arrangements ••••••••••••••••••••••••••••••••••••••••••••
The Nation's Families, 1960-90 •••••••••••.••••••••••••••••••••••••••••••••••••.••••
FARM LAB OR TRENDS
Classification of Women as Farmers: Economic Implications ••••••••••••••••••••••••••
Farm Women's Triad of Roles •••••••••••••••••••••••••••••••••••••••••• • • • • • • • • • • • • •
Women Farm Operators •••••••••••••••••••••••••••••••••••• ••••••• • • • • • • • • • • • • • • • • • •
FOOD
Food Shopping Skills of the Rich and the Poor •••••••••••••••••••••••• • • • • • • • • • • • • •
Making Food Dollars Count •••••••••••••••••••••••••••••• • • • • • · • • • • • • • • • • • • • • • • • • • •
Nutrient Content of the U.S. Food Supply, 1909-81. •••••••••••••••••• • • • • • • • • • • • • •
USDA 1983 Family Food Plans •••••••••••••••••••••••••• ••••••••••••••• • • • • • • • • • • • • •
MISCELLANEOUS
Census of Agriculture ••••••••••••••••••••••••• •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Directory of Computerized Data Files, 1982 ••••••••••••••••• • •• • • • • • • • • • • • • • • • • • • • •
Interpreting Statistical Data in Family Economics ••••••••• • • • • • • • • • • • • • • • • • • • • • • • • •
National Social Data Series ••••••.••••••••••••••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Preliminary Data From the 1980-81 Continuing Consumer Expenditure Survey •••••••
Revised Labor Force Series From Current Population Survey ••• • •• ·• • • • • • • • • • • • • • • •
Page Issue No.
13 3
2 2
2 4
31 1
20 1
32 1
10 2
16 3
2 3
16 1
23 3
7 4
22 2
27 4
25 2
24 2
35 1
18 3
2 1
21 4
26 4
6 4
9 1
30 1
30 1
21 3
26 1
20 3
8 4
10 1
17 4
8 3
23 4
21 2
12 2
20 1
27 4
21 1
23 4
27 4
22 3
1984 No.1 Family Economics Review 33
Index of Articles in 1983 Issues
CLOTHING
Consumer Perspectives: Imported vs. U.S.-Made Apparel ......................... .
Recent Trends in Clothing and. Textiles •••••••••••••••••••••••••••••.•• , ••••••••• ,.
Textile Fibers in Clothing, Home Furnishings, and Other Consumer Products •••••••
FAMILY FINANCES
Budgets for a Retired Cou pie--Final Report •••••••.•••••••••••••••••••••• , ••••..•••
Characteristics of Households Receiving Selected Noncash Benefits, 1981 •••••••.•••
Consumer Price Index: Changes in Homeownership Component ••••••••••••••••••••••
Family Financial Management Curriculum Sourcebook ••••.•••••••••••••••••••••••• , ••
Federal Student Aid Programs, 1983-84 •••••••.••••••••••••••••••••••••••••••••..• ,
Household Wealth, 1962-81 •••••••••••••••••••••••••••••••••••• • -::: •••••••••.•.•••••
Income and Poverty Rates: Farm and Nonfarm Residence ••••••••••••.••••••.•••••••
Journey to Work ••••••••••••••••••••••••••••••••••••••••• , •.•••••••••••••••••••••••
Lifetime Earnings Estimates of Men and Women, 1979 •••••••••••••••••••••••••••••••
Measuring the Effect of In-Kind Transfers on Poverty •••••••••••••••••••••••••••••
Mortgage Money Guide ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••.••
New York City Family Budget Standard •••••••••••.•••••.•••••••••••••••.•••••.••••
Out-of-Pocket Expenditures for Personal Health Services ••••••.••••••••••••.••••••.
Prescribed Medicines: Use, Expenditures, and Sources of Payment ................ .
Sources of Retirement Income ••••••••••••••••••••••••••.•.••••.••••••••••••.•••.•••
Unemployment: The Effects on Family Income and Expenditures ••••••••••••.•••••••
Unpaid Family Workers •••••••••••••••••••••••••••••••••••••••••••••• • • • • · • • • • • • • • •
Update: Alternative Mortgage Instruments ••••••••••••••.•••••••••••• • • • · • • • • • • • • • •
Work Experience, Earnings, and Family Income •••••••••••••••••••••••.••• •• • • · • • •
Workdays Missed Without Pay •••••••••••••••••••••••••• • • • • • • • • • • • • • • • • • • • • • • • • • • •
FAMILY LIVING
Characteristics of American Children and Youth, 1980 •••••••••••••••••••••••••••••
Fertility of American Women, June 1981 ••••••••••••••••••••••••••••• • • • • • • • • • • • • • • •
Households and Families, March 1982 ... : • .......................... • .. • • • .. • • • ....
Marital Status and Living Arrangements •••••••••••••••••• • ••••• •••• • • • • • • • • • • • • • • • •
The Nation's Families, 1960-90 ••••••••••••••••••.•••••• • • • • • • • • • • • • • • • • • • • · • • • • • • • •
FARM LABOR TRENDS
Classification of Women as Farmers: Economic Implications •••••••••• • • • • • • · • • • • • • • • •
Farm Women's Triad of Roles •••••••••••••••••••••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • · •
Women Farm Operators •••••••••••••••••••••••••• • • • • • • • • • • • • • • • • · • • • • • • • • • • • • • ' ' • • •
FOOD
Food Shopping Skills of the Rich and the Poor ............................... ·" .. •
Making Food Dollars Count ••••••••••••••• • • • • • • • • • • • • • • · • • • • • • • • • • • • • • • • ·'' • ·' • · ·'
Nutrient Content of the U.S. Food Supply, 1909-81 ........................... " .. •
USDA 1983 Family Food Plans ••••••••••••••••••• •• • • • • • · • • • • • • • • • • • • • • • • • · • • • • • • ·' •
MISCELLANEOUS
Census of Agriculture •••••••••••••••• • • • • • • • • • • • • • • • • • • • • • • • ·' • ·' '· • • • ·''' ·' '''' ''
Directory of Computerized Data Files, 1982 ..................... "•"""" "·"" •
Interpreting Statistical Data in Family Economics ••• • • • • • • • • • • • • • • • · • • • • • • • • • • • • • • •
National Social Data Series ••••••••••••• • • • • · • • • • • • • • • • • • • • • • • • • • • • ·' '' •