Family Economics Review [1978, Number 4]

              Depos\tory
PROPERTY OF THE
LIBRARY
NOV 2 7 1978
University of North Carolina
at Greensboro
HIGHLIGHTS I FALL 1978
1977-78 FOOD CONSUMPTION SURVEY
NEW MORTGAGE DESIGNS
INDEX OF MAJOR ARTICLES IN
FAMILY ECONOMICS REVIEW
MEAT AND MEAT ALTERNATES
DIETARY GOALS-SECOND EDITION
Consumer and Food Economics Institute
Science and Education Administration
U.S. DEPARTMENT OF AGRICULTURE
FAMILY ECONOMICS REVIEW is a quarterly
report on research of the Consumer and Food
Economics Institute and on information from
other sources relating to economic aspects of
family living. It is prepared primarily for home
economics agents and home economics
specialists of the Cooperative Extension
Service.
On January 24, 1978, four USDA agencies-Agricultural Research Service
(ARS), Cooperative State Research Service (CSRS), Extension Service (ES),
and the National Agricultural Library (NAL)-merged to become a new
organization, the Science and Education Administration (SEA), U.S.
Department of Agriculture.
This publication was prepared by the Science and Education
Administration's Federal Research staff, which was formerly the Agricultural
Research Service.
Authors are on the staff of the Consumer and Food
Economics Institute unless otherwise noted.
Editor: Katherine S. Tippett
Consumer and Food Economics Institute
Science and Education Administration
U.S. Department of Agriculture
Federal Building
Hyattsville, Md. 20782
This publication was formerly published as FAMILY ECONOMICS REVIEW - ARS-NE-36
FAMILY ECONOMICS REVIEW
THE 1977-78 NATIONWIDE FOOD CONSUMPTION SURVEY
by Robert L. Rizek
The U.S. Department of Agriculture (USDA)
now has underway a nationwide study of the
food consumption and dietary levels of house­holds
and of food and nutrient intake of
individuals. Results will provide a · new
benchmark of the composition and adequacy
of diets of various segments of the population.
The history of food consumption studies in
this country extends back to the early days of
the USDA. In 1894, Congress mandated the
Department of Agriculture to undertake
"human nutrition investigations," and 4 years
later a writeup of several such studies appeared
in the 1898 YEARBOOK OF AGRI­CULTURE.
The early fledgling studies were small-scale,
intensive investigations, sometimes consisting
of only a handful of respondents. Since the
1930's, however, the USDA has conducted five
food consumption surveys on a national scale:
1935-36, 1942, 1948, 1955, and 1965-66. The
current survey ( 1977-7 8) is the sixth.
In all six national surveys data were
collected on the food consumption of the
household as a unit. In the two latest surveys
(1965-66 and 1977-78), data were also
collected on the food intake of individuals in
the household.
Why New Information Is Needed
Change in the patterns of food consumption
has been shown in every major USDA survey .
During the years between the 1935-36 and the
1948 studies, great strides were made in the
distribution and storage of food products, most
notably in home refrigeration. Such changes
affected the way people purchased and used
food. Between the 1955 and 1965-66 studies,
the availability and consumer acceptance of
many new food products that offered con­venience
changed the cooking patterns in many
American households. Mixes for the pre­paration
of bakery products, such as cakes and
muffins and readymade bakery products are
exampl~s. Because of the decline in "baking
from scratch," significant decreases were noted
in the weekly household consumption of flour,
sugar, and other basic baking ingredients.
FALL 1978
We expect that the 1977-78 survey also will
show changes in the pattern of food con­sumption,
reflecting changes in our way of life,
breakthroughs in food processing and
packaging, and the introduction of many new
products.
The last 10 years have seen many social
changes in America. Some of these may prove
to have a profound impact on our patterns of
food consumption, often in contradictory
ways. On the one hand, Americans have
cultivated a taste for continental dining and
food preparation. On the other hand, there has
been an explosion of fast-food restaurants and
takeout chains to meet growing demand for
convenient and inexpensive food. There are
some indications that family meals and food
preparation are less significant as a part of
family life than in the past. As the number of
women employed outside the home has
increased, time spent in meal preparation may
have declined.
The period since the last national study has
also seen an increase in consumer interest in
food intake as it relates to disease, to weight
control, and to general health. Some people are
concerned about the safety of our food supply
and have turned to "natural" and "health"
foods. In response to this concern, "natural"
foods have been introduced or reintroduced:
Examples are the natural cereal products and
specialty bread items.
The last 10 years have also seen break­throughs
in food processing and packaging as
well as the introduction of numerous new
products. One such breakthrough has come
with the introduction of cooking bags for
frozen produce and meats. While food bags are
clearly a convenience, their use also affects the
nutritional values of their contents. The
proliferation of new products has been
especially marked in the years since the last
national survey. Many more "snack" food
products are on the market. It is reasonable to
expect that consumption of such foods is
greater today than ever before. Often their
forms, and possibly their calorie and nutrient
contents, differ from foods they replace in
diets of the past. Certain extenders of and
3
substitutes for meat appear to have gained in
popularity because of sharp increases in food
prices and moves toward "vegetarian" diets.
Since the last survey, a number of food
programs have been initiated, revised, or
expanded. Nutrition labeling has been
introduced; efforts have been increased to
educate school children and consumers about
food and nutrition; nutrition programs have
been introduced for the elderly, for women,
and for infants and children. Under child
nutrition programs, school lunches and
breakfasts are provided free or at reduced
prices to children of poor and near-poor
families. And, perhaps most notable, the Food
Stamp Program has been expanded greatly.
The survey will help show what impact these
changes have had on family food consumption
and on the nutritional quality of diets of
family members.
The Survey
The complete 1977-78 National Food
Consumption Survey contains a nationwide
survey, a bridging survey, and five
supplemental surveys. Each survey consists of
two parts-household food use and individual
intake.
• The 1977-78 National Food Consumption
Survey (NFCS). The basic nationwide survey is
to yield data from a selfweighting area
probability sample-a representative sample
adequate to provide information from at least
15,000 households in the 48 conterminous
States and the District of Columbia. Interviews
were completed throughout a year's
time-April1, 1977 through March 31, 1978.
In each of the four quarters 3,750 interviews
were conducted.
Individual intake data were collected for all
family members in the April-June quarter. In
the other three quarters, all members of the
household 18 years and under were
interviewed, but only half of those 19 years old
and older were interviewed.
• The "bridging" survey. During April-June
1977, 1,500 households were surveyed by the
1965-66 survey procedures. This will permit
evaluations of differences between results from
the 1965-66 and 1977-78 surveys that are
associated with changes in methodology.
4
• Alaska. Data were obtained from 1,200
households and all members (urban only)
during a 3-month period (January-March
1978).
• Hawaii. Data were obtained from 1,200
households and all members statewide during
January-March 1978.
• Puerto Rico. Data were obtained from
3 0 0 0 households territorywide and all
m'embers during a 6-month period
(July-December 1977).
• Supplemental survey of the elderly.
Household data were collected from 5,000
households in the 48 conterminous States and
the District of Columbia, with one or more
members 65 years or older. Individual intake
data were obtained through 24-hour recalls
from all household members.
• Supplemental survey of low-income
households. Data collected from 5,000
low-income households during the period
November 1977 through March 1978.
Low-income households were defined as either
receiving food stamps or eligible to receive
food stamps.
The 1977-78 National Food Consumption
Survey data were collected and are being
processed under contract by an experienced
firm. The contractor will provide USDA with
taped data that are ready for use. Under a
separate con tract, survey data will be further
processed and tabulated for publication by
USDA in a series of reports and statistical
handbooks.
Although the survey is conducted under
contract, USDA maintains strict controls over
procedures and questionnaire content. The
contract is being carried out under detailed
specifications developed by USDA, including
acceptable performance levels. All technical
information used in data computations and
codings is supplied by the Department. USDA
food and nutrition specialists have participated
actively in developing operating manuals,
training programs, and computer software, as
well as in monitoring the survey. During the
past 40 years, USDA has developed expertise in
carrying out national food consumption
surveys and in working with survey con­tractors.
Also, supervisory staff members are
FAMILY ECONOMICS REVIEW
able to draw upon personal experience gained
in conducting smaller but comparable house­hold
surveys throughout the country for the
Department.
The contract is funded and administered by
the Science and Education Administration
(SEA), U.S. Department of Agriculture. Funds
have been transferred to SEA by other Federal
agencies having special interests in results from
the survey. Funds have been received from the
Social Security Administration; Food and Drug
Administration, and Administration on Aging,
Department of Health, Education, and Welfare;
the National Marine Fisheries Service, U.S.
Department of Commerce; and the Food and
Nutrition Service, USDA.
Operating procedures used in the supple­mental
surveys were, in general, the same as
those used in the 1977-78 NFCS. The
probability sample used in the 1977-78 NFCS
was developed by stratifying U.S. households
(1970 census) by nine regions and three urban­izations
(SMSA central cities, other SMSA 's,
and nonmetropolitan). A total of 114 Primary
Sampling Units (PSU's) were selected, each
having about 600,000 households. Within the
PSU's, 2,500 sampling segments were selected
through area probability sampling. Each
segment contained approximately 100 house­holds
in 1970. By use of predetermined
starting points, every nth housing unit is listed.
In this manner, the sample in each segment was
proportional to the current number of housing
units-and reflects increases or decreases
occurring since 1970.
Through randomization, households in each
segment were allocated to four quarterly
samples (and the "bridging" sample). House­holds
then were scheduled for interview in a
manner which facilitated interviewing at a
uniform rate by day, week, and month
throughout the 3-month period.
The sampling plan is predicated on a 75-per­cent
completion rate, including a 7 -percent
vacancy factor. In 1965-66, the response rate
for the household survey, including vacancies,
was approximately 85 percent.
Several steps were taken in the 1977-78
sample to increase response above 75 percent.
Interviewers made at least six attempts to
contact urban households and five for rural
ones. Each participating household was allowed
to keep the set of stainless steel cups and
FALL 1978
spoons that was used for measuring foods in
the survey. Also, a cash payment of $1 was
made to each person completing the 2-day
diary of individual food intake, in com­pensation
for the extra efforts involved. In
addition, normal actions of the interviewers to
obtain cooperation were augmented, as
required, through such means as long-distance
calls, assignment of specially qualified inter­viewers,
and arrangements for interviews
outside of the home when in-house contacts
were not feasible. At the end of each quarter, a
sample of nonrespondent households was con­tacted.
Household classification data were
obtained and, when possible, a completed
interview. Special efforts were undertaken to
maximize cooperation.
The 1977-78 NFCS, like earlier USDA
surveys, was designed to make effective use of
qualified interviewers who may or may not
have professional training in foods and
nutrition. Emphasis was given to interviewer
selection, training, and followup. Each inter­viewer
was trained in an intensive 5-day
session.
Prior to the interview, an introductory letter
was sent to the sample housing unit. Soon
thereafter, the interviewer contacted the house­hold
and made an appointment for an
interview with the household member(s)
responsible for food planning and preparation.
The respondent was requested to keep
unstructured notes that would assist in a recall
of household food consumption at the time of
the interview.
During the interview, information was
obtained regarding the household, including a
7-day recall of food consumption. Upon com­pletion,
the interviewer began the 3-day food
intake record for individuals, which included a
1-day recall (yesterday) and a 2-day diary
(today and tomorrow). The interviewer
obtained 1-day recalls of food intake from all
eligible household members present-or from
the homemaker, for young children. Con­currently,
she trained household members in
completing the intake diaries. She left the
food-intake schedules at the household for
completion, returning 2 or 3 days later to pick
up the schedules. On her return, the inter­viewer
reviewed the food-intake schedules for
completeness and legibility and assisted in their
completion, when needed.
5
The average interviewing time per household
was approximately 21/2 hours. A similar amount
of time was required in the 1965-66 survey.
Uses of the Data
The overall objective of the survey is to
measure the current status of the U.S. diet,
changes occurring since 1965-66, and elements
involved in the establishment of these dietary
levels. Data are to be provided in a form that is
readily applicable to evaluations of the many
economic, social, educational, regulatory, and
other public policy considerations associated
with people and the foods they eat.
The survey aims to link consumers with their
foods in terms of (1) nutritional content and
dietary adequacy, and ( 2) factors associated
with acquisition, preparation, and use of these
foods. Measures are derived at both the house­hold
and the individual level to permit
evaluation of the interactions between
individual consumers and (in most instances)
the larger food consumption unit of which
they are a part.
In the household phase of the survey, food
consumption is measured in terms of final
disposition (consumed or discarded) or
"disappearance" during a 7 -day period. Usage
is measured in the form in which foods entered
the kitchen and by source (purchased, home
produced, received as gift or pay). Quantities
and money values for items from the home
food supply are for foods in the forms they are
found in the marketplace.
In the individual food-intake phase, by
contrast, foods are measured in the form of
their end use. Quantities' are for foods
ingested-at home and away from home. Food
items are identified by source, such as home
food supplies, school lunch, or restaurant meal.
Consumption is reported for a 3-day period, by
day and eating/drinking occasion.
The USDA food consumption survey is part
of a chain of national statistics extending from
consumer expenditures through food and
nutrition to health. The USDA survey is
bounded on one side by the Consumer
Expenditure Surveys of the Bureau of Labor
Statistics and on the other by the Health and
Nutrition Examination Surveys conducted by
the National Center for Health Statistics,
Department of Health, Education, and Welfare.
6
The objective of the USDA survey is to meet a
wide and expanding range of needs for national
data-on consumers, foods, and nutritional
content of diets-that are not available from
other sources. Planned uses of data from the
1977-78 NFCS provide an additional approach
to evaluation of objectives for the survey. A
partial list of projected uses of survey
information that indicate the range and scope
of the data collected follows:
1. Economic and marketing information.
Results from the USDA survey will be used in
improving forecasts of demand and prices for
food and of utilization of marketing services by
providing a new benchmark on U.S. food
consumption patterns. In 1965-66, when the
last benchmark was established, consumers
were responding to what we now regard as long
term stability in food supply-price relation­ships.
Subsequently major changes have
occurred in both the consumer and the food
sector; the influences of these changes have not
been measured. Specific uses of the data for
economic and marketing purposes include:
a. Determining aggregative shifts in
domestic food consumption.
b. Developing current elasticity coeffi­cients
for food consumption and
expenditures and up-to-date measures
of marginal propensities to consume­based
on cash income measures as well
as after-tax income.
c. Evaluating trends in food consumption
and expenditures associated with con­sumer-
oriented elements such as house­hold
income, size, sex-age composition,
education, lifestyle, and eating patterns.
d. Determining changes in food con­sumption
and expenditures in terms of
individual food products, forms, con­venience,
new products, and market
development.
e. Developing new measures of food con­sumption
away from home-what is
eaten, where, when, and at what cost­that
will facilitate evaluations as to
future flows of food through these
outlets.
f. Estimating feasibility of research
directed toward the development of
new foods.
FAMILY ECONOMICS REVIEW
g. Evaluating requirements for agricultural
production, marketing facilities, and
services.
h. Providing to producers and agribusiness
the infor~ation they need in evaluating
consumptiOn trends and projecting
future demand for products and
services.
2. Food and nutrition programs. Results
from the 1977-78 NFCS will provide measures
of the nutritional adequacy of diets of house­holds
participating in the Food Stamp
Program. Data will show consumption patterns
of food-stamp households and relationships
between stamp purchases and receipts and total
expenditures for food. Interrelationships of the
Food Stamp and other food and nutrition
programs will be explored to the extent
feasible in regard to joint effects on food
consumption and dietary adequacy. These
measures, together with other data to be
developed in income elasticities and marginal
propensities to consume foods, should result in
improved evaluations of cost-benefit relation­ships
for food assistance programs.
Findings from the 1977-78 NFCS will
permit a review and updating of the Thrifty
Food Plan, the basis upon which food stamps
are issued. Collateral studies of economies of
scale in household food expenditures will be
undertaken to determine changes, if any , that
should be made in levels of issuance of food
stamps to households of varying size.
Information on food consumption of low­income
households in Alaska and Hawaii also
will be used in evaluating the suitability of the
Thrifty Food Plan in the Food Stamp Programs
for those jurisdictions and changes, if any, that
should be made. Similar information from
Puerto Rico will be used in reexamining the
adequacy of the current Puerto Rico food plan.
3. Updating of USDA food plans. Infor­mation
from the forthcoming survey will be
used in updating the market baskets (quantities
of foods} used in the Department's Thrifty ,
Low Cost, Moderate Cost, and Liberal Food
Plans. These plans, which use the Bureau of
Labor Statistics (BLS) food prices for the
market basket as "movers," provide current
indicators of food price impacts on very low-,
low-, middle-, and upper-in come households of
varying size and sex-age composition. The cost
FALL 1978
of the Thrifty Food Plan is used in determining
the total amount of food stamps to be issued
to households of varying size. Costs of the Low
Cost and Moderate Cost plans are used by BLS
as the food cost components in their statistical
series on costs of living for low- and middle­income
urban working families and elderly
couples. Costs of the USDA food plans also are
used by welfare administrators in developing
household budgets upon which levels of
welfare grants are based.
4. Regulatory programs. Food consumption
survey data are used in estimating the effects
on diets of fortifications in foods, additives
pesticides, and other residues. Household food
consumption surveys provide information on
foods as purchased, which may be used in
developing specifications for levels of fortifi­cation.
Food intake data, by sex-age, income,
and other consumer characteristics, provide the
basis for deriving frequency distributions of
intakes for different foods. From such distri­butions,
estimates are made regarding safety
levels, tolerances to be prescribed, or other
actions to be taken. Use of the 3-day timespan,
rather than the 1-<iay used in 1965, expands
regulatory applications of the 1977-78 NFCS
data.
5. The elderly. 1977-78 NFCS information
will be used in evaluating the well-being of the
elderly in terms of food consumption,
expenditures, nutritional adequacy of diets,
and barriers to attainment of good diets.
Special attention will be given to households
where elder persons are living with others and
the dietary interrelationships within such
households. Relationships between food con­sumption
patterns of the elderly and partic­ipation
in Supplemental Security Income,
Social Security, Food Stamp, and medical
programs for elder citizens will be explored.
6. Fisheries programs. Information from the
forthcoming survey will be used in evaluating
current and future demand for fish and shell­fish,
determining nutritional contributions to
the U.S. diet from different types of fisheries,
and analyzing frequency of consumption by
user characteristics. Information will be used in
evaluating both possible problems affecting
consumer safety and production, processing,
and distribution of fisheries products.
7
NEW MORTGAGE DESIGNS
by Carolyn S. Edwards
The ability to finance a home with a
mortgage has brought home ownership into the
reach of many families. Prior to the availability
of the mortgage as we know it today, the
purchase of a home was financed by a high
interest, 5-to-6-year term loan covering about
50 percent of the value of the home. Periodic
payments during the life of the loan covered
only the interest on the total loan amount. At
maturity, the borrower owed as much as when
the loan was taken out. The entire principal
was due as a balloon payment. The borrower
could pay off the loan, refinance, or face
foreclosure. During the Depression many
borrowers were forced into foreclosure because
they could not meet these payments and were
unable to obtain refinancing. Federal actions in
the midthirties pioneered the development of
the fully amortized mortgage.
Today's standard mortgage, with a fixed,
generally 30-year term, allows the borrower to
pay off the principal and interest in smaller
amounts over the life of the mortgage. The
entire loan is paid off at maturity. Equal
monthly payments, which make at least part of
the family financial situation stable, include
both principal and interest. The initial pay­ments
go mostly toward interest, and the
reduction of principal-or amortization-is
small in the early years. 1 Because interest is
paid only on the unpaid balance of the loan,
the interest portion of each monthly payment
decreases over time, while the principal portion
increases. The characteristic fixed rate of
interest means that borrowers benefit from
unanticipated inflation. They receive a loan
that can be repaid in future, ever-cheapening
dollars. Meanwhile, the value of the house
increases with inflation.
1 For example, on a 30-year, $30,000 mortgage at
9 percent, amortization is greater in the last 5 years
($11,358) than during the first 20 ($11,250). Principal
reduction in the first 5 years would only be $1,317 (5).
Italic numbers in parentheses refer to References at the
end of this article.
8
Overall, however, families are not faring well
in an inflationary economy, especially in the
mortgage and housing markets. Trends in the
cost of housing and the cost and availability of
mortgage credit are making it more difficult to
purchase a home, particularly the first one.
Since the midsixties the economy has been
characterized by periods of high and/or rising
interest rates, rapid inflation, and restrictive
credit policies. As a result, both lenders and
borrowers suffered. Lenders must depend on
short-term funds from savings accounts,
Government agencies, or other short-term
borrowing as sources for long-term mortgage
loans. This maturity mismatch (making long­term
loans from funds borrowed in the short
term) becomes a particular problem when
interest rates on securities such as U .8.
Treasury bonds rise. Lenders experience
disintermediation, or the outflow of deposit
funds, because savers can obtain higher rates
from other investments. Lenders are unable to
adjust their savings account rates high enough
to compete with these other opportunities,
making it more risky and more expensive to
offer mortgage loans.
Additional factors may combine to increase
the mortgage finance problem: Consumers may
decide to spend instead of save their money;
the Government may tighten its money supply
by making funds for lenders more expensive;
and other holders of savings may withdraw
from the mortgage market. Thus, the normal
flow of money into the housing and mortgage
markets is interrupted, and lenders tend to
offer fewer loans and charge higher rates. If
inflation is anticipated, lenders must charge
even higher rates. Borrowers find they must
pay high rates or cannot obtain funds at all.
These higher financing costs along with the
higher cost of buying and operating a home
have combined to make owning a home
increasingly difficult (1, 11, 12).
A great deal of legislative effort has been put
forth and many programs established to deal
with the cost and availability of housing and
mortgage credit. Very little, however, has
focused on the mortgage instrument itself. As
FAMILY ECONOMICS REVIEW
inflation continues and as housing and
mortgage finance problems persist, attention
has turned to an examination of the standard,
fixed-rate mortgage. Some housing specialists
believe that the inflexibility of the standard
mortgage may be adversely affecting borrowers
and lenders alike (1, 9, 14).
While the standard mortgage, in the past, has
permitted many families to own homes, in
today's inflationary economy many potential
borrowers are priced out of the market
altogether because they lack a required down­payment
or because they cannot afford the
monthly payments. The standard mortgage
does not accommodate inflation or the
changing patterns of real family income, as it
ignores the rise in income which many buyers
are likely to experience over the years. The
amount of housing a family can purchase
depends entirely on current income, even
though the home will likely be occupied after
future rises in income. The family pays a higher
portion of income to cover its monthly
mortgage payment during the early years, while
in later years that portion declines as income
rises in both real and inflated terms. The cost
of housing is thus not spread evenly over time.
This forces many families to postpone owner­ship
or to scale down their housing con­sumption.
It is not surprising that many
families move quite often to adjust their
housing to their changing needs and rising
resources.
In addition, exclusive reliance on the one
form of mortgage does not serve the diversity
of needs that families experience through the
life cycle. There is no flexibility to meet
patterns such as the rising incomes of young
couples, often with two incomes; the level
income during middle stages; or the declining
incomes of the retired and elderly. Neither are
periods of income lapse or credit need accom­modated.
Lenders, too, are faced with difficulties
attributable partially to the standard mortgage.
Because earnings on outstanding mortgages do
not keep pace with increases in their costs of
funds for new mortgages, lenders have been
unable to supply the mortgage market as they
might. Potential borrowers must pay an
inflation premium that reflects the lender's
estimate of the future rate of inflation. This
can be an especially difficult burden on
FALL 1978
borrowers during periods of concern over
future patterns of inflation.
In the past few years substantial interest has
emerged in new mortgage designs-alternative
mortgage instruments (AMI's)-as partial
remedy to the problems of housing finance (9).
Initiative came, as would be expected, from the
financial community. While a few State
institutions inserted interest rate adjustment
clauses in their standard mortgages as early as
the 1960's, the first major initiative came from
the Federal Home Loan Bank Board (FHLBB),
the regulatory agency for federally chartered
savings and loan associations (S&L's). The
FHLBB proposed in 1972 and again in 1975 to
grant institutions under its supervision the
authority to experiment with new mortgage
designs. These proposals, however, were
vigorously opposed by congressional banking
and consumer panels, labor unions, and con­sumer
groups ( 18). Since these original
proposals, however, congressional resistance
has lessened, largely due to an increasing
interest in ways to expand homeownership and
to sustain an even flow of funds into the
housing and mortgage markets.
The FHLBB, in 1974, authorized Federal
S&L's to offer a variant of the standard
mortgage. Also, the Housing and Community
Development Act of 1974 granted statutory
authority for an experimental finance program
under which the Federal Housing Admin­istration
authorized and insured another
variant on a limited, trial basis. This program
was placed on a permanent basis in the Housing
and Community Development Act of 1977.
Several bills and resolutions have been
introduced in both the House and the Senate
supporting AMI's of various forms, and a study
by the Congressional Budget Office addressed
the potential of AMI's to improve housing
affordability (2).
AMI activity in State-chartered savings and
loan associations and mutual savings banks has
become substantial. By the end of 1976, these
lenders had authorized more than 200,000
AMI loans for an aggregate amount of
approximately $8.5 billion. The majority of
these lenders were located in New England,
Ohio, Wisconsin, and California (3). Some
commercial banks in California are also
offering AMI's, and support is growing ( 6, 15,
16).
9
AMI's are also stimulating extensive study
by the academic community. One conference,
involving 13 studies carried out at Massachu­setts
Institute of Technology with the support
of the Department of Housing and Urban
Development and the FHLBB, addressed
theoretical and conceptual issues and reviewed
international experience with AMI's {14). A
major study initiated in 1976 by the FHLBB,
the "Alternative Mortgage Instruments
Research Study" (AMIRS), provides a com­prehensive
and systematic review and analysis
of a number of proposed new mortgage
designs: 21 papers done both by FHLBB
economists and on a contract basis by
universities and research firms covered analyses
of current AMI status, potential demand,
macroeconomic implications, and technical,
legal, and consumer safeguard issues (3, 4). A
conference in May 1978 funded by the Office
of Consumer Education, Department of
Health, Education, and Welfare, and the
Cornell University Department of Consumer
Economics and Housing focused on the effects
of AMI's on consumers.
As a result of the interest from such a
diversity of sources, many AMI designs have
emerged, each representing a different com­bination
of factors. For example, the term of
the loan, interest rate, principal, or a com­bination
of these can be allowed to vary; the
payments of interest may be delayed or gains
earned upon sale of the home shared with the
lender; the principal and monthly payments
can be tied to an index or prices; homeowners
can be allowed to draw on the equity in their
homes; or one interest rate can be used to
compute the principal payments and another
the interest obligations {17). Some are designed
to favor lenders, while some are designed for
greater benefit to borrowers. It is important
that the new mortgage designs be evaluated
with the interest of both groups in mind.
Graduated Payment Mortgages
The primary objective of the graduated
payment types of mortgages (GPM) is to
reduce the initial monthly payments. The
borrower is allowed to make payments in the
early years of the mortgage term that are lower
than would be required with a standard
10
mortgage, and to make up these lower pay­ments
in later years by making payments
higher than would be required with a standard
mortgage. The GPM has a fixed rate of interest,
and the size of payments to be made is known
in advance.
The size and frequency of the increases in
payments are determined by a graduation rate
that may be fixed or varied to meet individual
circumstances. The graduation rate thus tilts
the payment schedule that is characteristically
level for the life of the standard mortgage. The
graduation term determines how long pay­ments
increase-for the entire term of the
mortgage or for a portion of it. For example,
payments might increase by 2 percent annually
for the entire term of the loan, or may increase
by 5 percent annually for 10 years and then
level off. Payments could even start high in the
early years and decrease later for borrowers
anticipating a decrease in income. Families
anticipating substantial growth in income over
a short period of time might therefore prefer a
higher graduation rate and shorter graduation
term.
The amount by which the payments can be
initially reduced will depend upon the
graduation rate and term and whether negative
amortization-allowing the debt on the
principal to increase in the early years-is
acceptable. 2 If the borrower pays only the
interest portion of the payment each month,
the amount of the loan or principal does not
decrease, and no equity is built up; but no
negative amortization takes place either. How­ever,
if the initial payments are reduced to less
than the full amount of the interest due on the
loan, the unpaid interest is added to the
amount of principal owed. In effect, the family
is also borrowing the difference between its
payments and the interest due and paying it off
in the later years. Total borrowing costs are
increased. Equity accumulation is delayed until
payments begin to cover the principal as well as
the interest, and negative amortization means
that the debt actually grows as interest on the
unpaid interest is added to the amount to be
repaid.
2 Negative amortization is illegal under many State
laws.
FAMILY ECONOMICS REVIEW
The standard GPM is characterized by a
fixed graduation rate over the full term, so that
payments rise for a fixed percent on a regular
basis, such as monthly or annually, throughout
the term of the mortgage. Negative
amortization may or may not be involved.
Several variations of the standard GPM have
been designed with reduced graduation terms­payments
increase only once or several times
during the early years of the loan, with
conversion to a fixed-payment, fully amortized
basis thereafter. For example, in a two-step
GPM there are only two levels in the mortgage
payments instead of a whole series of steps.
The flexible payment GPM 's, which were
authorized by the FHLBB in early 197 4, are a
form of two-step GPM's that allow payments in
the first 5 years to cover only the interest
portion of the payments. No negative amorti­zation
is allowed, however, so payment
reduction is limited. Another GPM, the
purchase assistance mortgage, uses a larger
downpayment to reduce the initial mortgage
payments, while still another, the flexible loan
insurance plan (FLIP), places the down­payments
in a savings account. This money and
the interest it bears, rather than being applied
to the principal to build up initial equity, is
applied along with the reduced payments to
cover the normal amount of payments in the
early years. In other GPM's the overall term of
the loan is extended to allow for lower initial
payments ( 3, 5, 17).
Several modified GPM's were authorized on
an experimental basis by Section 245 of the
Housing and Community Development Act of
197 4. Participating private lenders made loans
insured by the Federal Housing Administration
(FHA). Three plans had 5-year graduation
terms with payments increasing annually by
2.5, 5, or 7.5 percent. Two had payments
incr.easing annually by 2 or 3 percent for the
first 10 years of the loan. These plans provided
for between 9 and 25 percent reduction in the
mortgage payments in the first year compared
with the first year payment required of a
comparable standard mortgage. Sometimes
larger downpayments were necessary to be sure
that the outstanding balance never exceeded
the maximum insurable balance under FHA
regulations. Legislation in 1977 broadened this
authority and placed it on a permanent rather
FALL 1978
than a temporary, experimental basis.
Exemptions from State laws were granted
where necessary because of the negative
amortization involved (3) .
The major advantage of the graduated pay­ment
mortgage is based on the fact that the
amount of housing that can be purchased
depends on the relationship between current
income and the initial monthly mortgage pay­ments.
Thus, GPM's reduce the income
required to support a given mortgage,
permitting a family to afford a mortgage for
which they would otherwise not be qualified.
GPM's should, therefore, be attractive to
younger families who might be priced out of
ownership because of an inability to meet the
higher initial monthly payments required with
a standard mortgage, but who expect an
increase in income in the future. The intention
is to have the payments rise as income rises,
and therefore enable a family to achieve a level
of housing that would average out more closely
with expected income. The result of the FHA
experiment with GPM's indicated that these
mortgages allowed qualifying incomes to be as
much as 22 percent lower than what would
otherwise qualify. Most buyers involved were
first-time buyers, and people who were
younger and had lower incomes than other
borrowers with FHA-insured standard
mortgages (3).
Critics of GPM 's point out several problems.
If lower inflation and higher unemployment
ensue, incomes and house prices may not
increase as expected. Some fear that GPM 's
sound too much like the mortgages of the
1920's and 1930's, with borrowers paying only
interest and, therefore, not reducing the face
amounts of their loans. If the GPM involves
negative amortization, and property values do
not increase with the outstanding balance of
the loan, a family wishing to sell early in the
term of the mortgage may be faced with owing
as much as or even more than the face amount
of the original loan. Others point out that
delayed accumulation of equity in the home
may lead to lack of concern for maintenance of
the home, or possibly increases in defaults.
Lenders are hesitant about GPM's. Because of
the lower cash flow in the early years of the
loan, their yield is slightly lower; some may
require higher downpayments to offset fear of
default.
11
From the point of view of both the
borrower and the lender, careful consideration
needs to be given both to the increase in
income that the borrower can anticipate and to
possible increases in the value of the property.
To avoid having the family faced with excessive
increases several years into the mortgage, the
graduation scale must be appropriate to its
particular situation. If income can be
anticipated to rise at least as rapidly as
increases in payments, and the value of the
property increases in excess of the negative
amortization, payments should not become
excessive and little chance of default should
exist. Reports from the AM IRS study recom­mended
that GPM's be offered with limited
graduation terms and rates and with an
additional safeguard of a one-time option to
convert to a standard mortgage (1 0).
Variable Rate Mortgages
The most controversial of the AMI's are the
variable rate types of mortgages (VRM), which
allow the interest rate on a mortgage to rise
and fall with changing money market con­ditions
instead of remaining fixed for the term
of the mortgage as with a standard mortgage.
The rate is raised or lowered according to some
predetermined reference index, shifting some
of the risks of changing interest rates from the
lender to the borrower.
The objective is to permit home mortgage
lenders to smooth their earning patterns so that
returns on their investments are more in line
with the costs they face. By permitting home
mortgage lenders to adjust what they earn on
mortgage loans to reflect the cost of obtaining
money for loans, VRM's might encourage
lenders to make mortgage commitments when
they might otherwise be unwilling.
Although the VRM removes the hedge
against inflation that home buyers enjoy with
the fixed rate mortgage, funds for new
borrowers may become more available and at
lower rates, since lenders will not need to
increase interest rates to cover unanticipated
inflation.
As interest rates rise or fall, changes in the
mortgage could be implemented in several
ways:
1. The monthly payments could be allowed
to rise or fall. For example, a 9-percent,
12
30-year, $30,000 mortgage would normally
have monthly payments of about $242. If the
rate were allowed to increase by 0.5 percent
per year and by 2.5 percent overall (a
limitation now proposed), monthly payments
would rise to $252 in the 2d year, $284 in the
5th, and $294 by the 11th (1 0).
2. The term of the mortgage could be
lengthened or shortened. While this may seem
most desirable to the borrower, modest
increases in the interest rate can lead to a
situation where payments do not cover the
interest and at least $1 of principal-thus, no
principal reduction or amortization is taking
place and interest costs become excessive. For
example, a 9-percent, 30-year, $30,000 loan
with monthly payments of $242 would only
allow an interest rate increase of up to 9.68
percent before the loan would not amortize. A
9.68-percent, $30,000 loan with monthly pay­ments
of $242 would require 215 years to
amortize (5).
3. Both the level of the monthly payments
and the term of the mortgage could be allowed
to vary. This would lessen the magnitude of
changes necessary in the monthly payments
while overcoming the problem of extending the
term too far, but adds some complexity (5,
17).
While there generally are restrictions on the
frequency and magnitude of the changes
allowed, the level and pattern of payments to
be made over the entire life of the mortgage are
unknown when the VRM contract is initiated,
requiring a greater ability to be flexible with
respect to housing costs on the part of the
borrower. This uncertainty and fears that sharp
increases in payments could force monthly
payments beyond the borrower's ability to pay
have been the source of a great deal of criticism
of and resistance to VRM's.
Federally chartered savings and loan
associations under the jurisdiction of the
FHLBB are not authorized to offer the VRM.
Many State-chartered financial institutions are
expressly prohibited from VRM use under their
respective State laws. In other States, usury
laws make VRM use difficult, although some
States are placing legal interest rate ceilings on
a floating basis. However, in several States the
use of VRM's by commercial banks and State­chartered
savings and loan associations is
FAMILY ECONOMICS REVIEW
growing. At the end of 1976, 81 State­chartered
ins~ituti?ns were offering VRM's (3).
Mortgages w1th mterest-adjustment clauses­essentially
VRM's-have been used in the Mid­west
since the 1960's, particularly in
Wisconsin. VRM's are prevalant in New
England, and also in California, where some
institutions write the majority of their
mortgages in this form ( 8, 16). A combination
of consumer safeguards restricting VRM use
and inducements in the form of favorable
terms, and sometimes lower initial interest
rates, have probably added to consumer
acceptance in California. Because interest rates
have not varied substantially since VRM
adoption there, though, evaluation of the
impact of changed payments has been limited.
Variations of the standard VRM include the
Canadian roll-over mortgage (ROM), so named
because of its widespread use in Canada.
Several States have begun to use this VRM. The
ROM is characterized by periodic refinancing­generally
every 5 years-at the current interest
rate. While it is similar to a standard VRM in
that the interest rate is adjusted to reflect
current market conditions, it is essentially a
standard mortgage, with a fixed rate of interest
and known, fixed monthly payments for a
specified period. The mortgage may be
renegotiated once or several times. Monthly
payments are calculated in the same manner as
a standard 25- or 30-year mortgage, but may be
changed every 5 years. At the end of the
5 years, the loan must be repaid or renego­tiated.
The ROM maintains the advantage of
increased flexibility to the lender and offers
the advantage to the borrower of 5 years of
payments which are set in advance, allowing
more certainty in financial planning than under
the standard VRM. At the end of the 5 years
the borrower may have several options to
adjust the mortgage. The borrower who
benefits from a lower initial rate, however,
risks losing that advantage when the loan is
renegotiated ( 3, 5, 1 7).
Other variations of VRM's have been widely
studied but are generally not being proposed
for use because of their complexity or
problems of implementation. The differential
VRM attempts to take inflation into account
so that the payments rise at about the same
rate as the price level by making adjustments to
FALL 1978
the payments based on comparisons between
different interest-rate indexes.
Some VRM designs are based on two interest
rates. Generally, a single interest rate is used to
calculate the interest owed on the outstanding
balance and to determine the monthly pay­ments.
It is not necessary, however, that only
one rate be used for both these functions. The
use of two rates could allow for the more
responsive yield needed by lenders, yet provide
a more stable payment pattern for the
borrower. By using two rates, by allowing one
or both to vary, and by allowing other
mortgage features such as the term and
payments to vary, many more mortgages can
be designed; this is the basis of several
variations of the VRM. With the dual rate
VRM, a short term interest rate would be used
to compute interest on the outstanding
balance, but a long term interest rate would be
used to compute the monthly payment. This
would combine the advantages of more
responsive yield to the lender and less
variability in the payments for the borrower.
The constant payment factor VRM uses two
interest rates, but holds the rate used to
determine monthly payments (the payment
factor) constant. The objective with this VRM
is again to provide a more flexible yield to the
lender, but an even more stable borrower
payment pattern than the standard or dual rate
VRM's. The use of two interest rates can also
be used to design VRM's which lessen some of
the difficulties involved in providing VRM's
with level payments ( 3, 5, 17).
As a result of the FHLBB study, a number
of consumer safeguards specific to VRM's are
being proposed (10). 3 These include proposals
that:
1. Lenders be required to disclose, before
loan origination, the maximum amount that
payments could become at the time at which
the rate could first be raised, as well as the
maximum that the payments could ever
become.
2. The index used to adjust the interest rate
should be a reliable measure of market interest
3 The proposed safeguards are generally the same as
or more conservative than current California VRM
regulations or regulations proposed by the FHLBB in
1975 (10).
13
rates, beyond the influence of lenders applying
it, clearly explainable, and as free as possible
from the influence of unusual circumstances.
3. The maximum allowable rate changes
should be held at 0.5 percent per year and 2.5
percent overall.
4. Changes could be made only on the
anniversary of the contract; decreases would be
mandatory, while increases would be at the
discretion of the lender (unused increases could
be used later directly or to offset a decrease).
5. A 45-day notice of an increase would be
required.
6. Prepayment would be allowed without
penalty whenever the current contract rate rose
above the initial rate.
7. The borrower may have the option of
extending the maturity of the loan up to 40
years rather than accept payment increases.
8. For the Canadian rollover mortgages, the
lender would assure the borrower that
refinancing would be available and would
charge expenses involved in the renegotiation
of the mortgage, such as loan fees and title
insurance, only once.
VRM 's appear to be strongly favored by the
financial community ( 6, 15). These AMI's have
met with strong resistance, particularly where
few restrictions on their implementation were
imposed and borrowers had no choice between
mortgage forms. Without restrictions and safe­guards,
VRM 's could place substantial hardship
on borrowers, leading to defaults and closing
even more potential buyers out of the housing
market.
VRM's will require substantial consumer
education. The potential VRM borrower needs
to know (13):
14
1. Initial and maximum possible interest
rates, the magnitude and frequency of
allowable interest rate changes, and how
these changes will be implemented-by
changes in payments, in term, or both.
2. Initial and maximum possible payments
and/or term, and the magnitude and
frequency of allowable payment and/or
term changes.
3. Length of advance notification.
4. Prepayment rights.
5. Index to be used.
VRM's are not, however, necessarily bad for
all consumers. A number of price and non price
features are being offered in VRM contracts as
incentives to consumer acceptability. These
include lower initial interest rates, lower
closing costs, interest on escrow accounts, a
line of credit, and deletion of prepayment
penalties. The assurance that the loan may be
assumed by a qualified buyer or transferred to
another home may be particularly
advantageous features for families who might
move. For some consumers a VRM may be
better than no mortgage at all if funds are
particularly difficult to obtain, and for others,
increases in interest rates may offer income tax
advantages (3, 7).
Reverse Annuity Mortgages
One form of AMI that is stimulating a great
deal of interest despite its complexity is the
reverse annuity type of mortgage (RAM).
Generally, the RAM is a loan, secured by a
house, that is used to purchase an annuity,
which provides a source of future income.
Whereas standard and alternative mortgages
involve committing future income to acquire
an asset in the present, RAM's enable the
families whose mortgage has been largely or
completely paid off to commit equity in an
asset owned in the present to receive income in
the future. The former enables the accumu­lation
of wealth; the latter allows the use of
wealth already accumulated (3).
RAM's are specifically designed for the
elderly and retired who often find themselves
with low and fixed incomes, but with sub­stantial
assets tied in the equity in their homes.
To take advantage of this asset, however, they
must sell and move. This requires a break with
the emotional ties of what may have been a
long-standing family home; it also poses the
uncertainty that the proceeds of the sale will
cover their expenses for their remaining years.
Many, therefore, remain in their homes often
unable to adequately maintain the ho,me or
handle rising costs such as property taxes.
RAM's enable these homeowners to use the
accumulated equity in their homes as a source
of income without having to sell and leave their
homes. At the same time some equity is still
retained, increases in the value of their homes
FAMILY ECONOMICS REVIEW
may still be enjoyed, and bequests may still be
made. RAM's may thus be used to even out the
pattern of lifetime earnings for a family, or
provide the only means by which a family
could remain in its home.
Because there are many ways wealth can be
liquidated, many forms of RAM's can emerge.
This means that there is a great deal of
potential for designing RAM's flexible to
individual circumstances, but it also leads to a
great deal of complexity and possible con­fusion.
There are basically two types of RAM's,
split equity and nonrepayable loans. Split­equity
contracts allow the owner to remain in
the home until death, while giving up rights to
the proceeds when the home is sold. The lender
essentially purchases the home through regular
payments to the borrower. In the purest sense,
then, because they involve actual sale of the
property and no mortgage loan, split-equity
contracts are not truly RAM's.
Nonrepayable RAM's may take many forms ,
but all generally involve the purchase of an
annuity contract with funds received from
interest-only mortgage loans. Basically, the
lender, using the house as collateral, purchases
an annuity contract. The annuity is then paid
to the homeowner each month, after deducting
the mortgage interest payment to the lender.
The mortgage principal, which was used to
obtain the annuity, is repaid to the lender after
the death of the homeowner. With nonrepay­able
types of RAM's, no repayment of
principal is required during the borrower's life
unless the property is sold.
RAM's appear very promising, but they
present substantial problems and complexities
which will require continued study and
development. They are being recommended for
future use, but with considerable attention on
an individual basis until guidelines and safe­guards
can be developed (3, 4, 10).
Other AMI's
Many other types of AMI's with. many
variations have been proposed and studied. As
with some of the various GPM's and VRM's,
these are not generally being recommended for
development and adoption at this time. Soi?e
are very complex; others would involve major
legal tax or administrative problems for
impl~ment~tion or would not offer an
FALL 1978
acceptable balance between advantages and
disadvantages for both borrowers and lenders.
Some, however, may continue to be considered
and should be included in a discussion of
AMI's.
Under the price level adjusted mortgage
(PLAM), the outstanding balance and/or the
payments are adjusted to reflect trends in
inflation. Payments vary directly with the p1ice
level and are thus rising in nominal terms but
constant in real terms. If incomes and prices
move together, the proportion of income
devoted to housing will not change. The
PLAM 's directly address the problem of
inflation, but would be very complex to
introduce (3, 5, 17).
The deferred interest mortgage (DIM)
involves a lowered initial interest rate and thus
lower initial payments for a specific period of
time. (It is essentially a two-step GPM.) If the
house is sold at the end of that time, the lender
receives the deferred interest plus a fee from
the proceeds of the sale. Assuming property
values continue to rise, this should present no
problem to the household. If the house is not
sold, the borrower must refinance, generally
with a standard mortgage at the current market
rate for the remaining balance. The borrower
can either reimburse the lender, or the deferred
interest and fee can be amortized over the
remaining term. The DIM could enable the
borrower to reduce initial payments or
purchase a more expensive home~ and i~ _could
be particularly attractive for mobile families.
Some AMI's represent a combination of
other AMI's. For example, the PLAM might be
offered with either a single or dual rate VRM
feature, or the GPM and VRM could be
combined in such a way as to capture the
features of the GPM that are beneficial to the
borrower with the VRM features which aid the
lender. Still other AMI's may involve sharing
the appreciation or equity in the home with
the lender or government agency and allowing
for reduced interest rates or payments ( 3, 5,
17).
AMI's are not being viewed as a panacea to
housing finance problems; the objective is not
to replace the standard mortgage but to expand
the number and range of alternatives available.
Based on the premise that one mortgage cannot
meet the diverse needs of borrowers and
15
lenders, the GPM, VRM, Canadian rollover, and
reverse annuity mortgages have been recom­mended
for adoption for all mortgage lenders
on a nationwide basis. Consumer safeguards
that apply to all AMI situations, as well as
those that apply to particular instruments, are
included in the recommendations. These safe­guards
emphasize disclosure and choice, to
insure that borrowers will be aware that a
choice is available and that they be presented
with information adequate to base their
decisions upon ( 4, 1 0).
References
1. Board of Governors of the Federal Reserve
System. 1972. Federal Reserve Staff
Study: Ways to moderate fluctuations
in housing construction. Washington,
D.C.
2. Congressional Budget Office. 1977. Home­ownership:
The changing relationship
of costs and incomes, and possible
Federal roles. Washington, D.C.: U.S.
Government Printing Office.
3. Federal Home Loan Bank Board. 1977.
Alternative mortgage instruments
research study. Papers from Volumes I,
II, III. Washington, D.C.
4. . 1978. Board announces alter-native
mortgage study. Federal Home
Loan Bank Board Journal 11(2): 2-6.
Washington, D.C.
5. . 1976. Brief definitions of
selected alternative mortgage
instruments. Washington, D.C.
6. Federal National Mortgage Association.
1976. Largest bank backs rollovers,
varying payment mortgages as sound
reform. Seller/Servicer, May/June,
p. 10, 16. Washington, D.C.
7. Hanna, S. 1975. Simulation of variable
rate mortgages. Housing Educators
Journal 2(2): 25-33.
8. Hyatt, J. C. Dec. 30, 1977. New
forms of mortgages are designed to suit
buyers' financial circumstances. Wall
Street Journal, p. 18.
9. Kaplan, D. M. 1976. The alternative
mortgage instruments research study: A
progress report. Federal Home Loan
Bank Board Journa/9(10): 6-12.
10. . 1977. Preliminary staff report
16
on the alternative mortgage instruments
research study. Hearings on Alternative
Mortgage Instruments, presented before
the Subcommittee on Financial
Institutions, Committee on Banking,
Housing and Urban Affairs, U.S.
Senate. Washington D.C.
11. Kaplan, D. M., and Hartzog, B. G., Jr.
1977. Residential mortgage markets:
Current developments and future
prospects. Journal of the American
Real Estate and Urban Economics
Association 5( 3): 302-312.
12. Lessard, D., and Modigliani, F. (editors).
197 5. Inflation and the housing
market: Problems and potential
solutions, pp. 13-45. In Conference B
Series No. 14 New Mortgage Designs for
Stable Housing in an Inflationary
Environment. Boston: Federal Reserve
Bank of Boston. j13. Meeks, C. B.
1976. Review of residential mortgage
alternatives. Proceedings, 1976 Annual
Conference, American Association of
Housing Educators. Columbus, Ohio.
14. Modigliani, F., and Lessard, D. (editors).
1975. New Mortgage Designs for Stable
Housing in an Inflationary Environ­ment.
Conference B Series No. 14.
Boston: Federal Reserve Bank of
Boston.
15. National Thrift News. Jan. 19, 1978.
National savings and loan league won't
drop support for variable rate
mortgages. New York, N.Y.
16. Riedy, M. J. 1976. California sets an early
pace with variable rate experiment.
Seller/ Servicer, May/June, pp. 11-13.
17. Smith, D. L. 1976. Reforming the
mortgage instrument. Federal Home
Loan Bank Board Journal9(5): 2-9.
18. U.S. Senate, 94th Congress. 1975. Variable
rate mortgages. Hearings before the
Committee on Banking, Housing and
Urban Affairs, 1st Session on the
FHLBB proposed regulations relating to
variable rate mortgages. Washington,
D.C.: U.S. Government Printing Office.
FAMILY ECONOMICS REVIEW
INDEX OF MAJOR ARTICLES PRINTED IN
FAMILY ECONOMICS REVIEW, 1966-781
BUDGETS
Clothing
Title
Clothing Quantity Budgets for
Individuals
USDA Clothing Budgets: Annual Costs
USDA Clothing Budgets: 1975 Costs
Cost of Raising a Child
Child-Rearing Costs at Two Levels
of Living, by Family Size
Cost of Raising a Child
Food
The Appropriate Family Food Plan
Bargain Hunting: Meat and Meat
Alternates
Comparing Costs of Fresh Vegetables
and Fruits
Cost of Food at Home and the New
Consumer Price Index
The Cost of Meats and Meat Alternates
Cost of Milk and Milk Products as
Sources of Calcium-an Update
The Cost of Poultry, Whole and Parts
Cost of the Lean in Ground Beef
Economical Meals for a Month
The Effect of Consumer Credit on
Food Expenditures
Food for the Baby ... Cost and
Nutritive Value Considerations
Food Plans and Family Budgeting
How Food Dollars Were Divided,
1965 and 1975
The Part of Income That Goes for Food
Textured Soy Protein as a Ground
Beef Extender
Household Work
Time and Its Dollar Value
Time Spent in Household Work by
Homemakers
Time Used by Husbands for
Household Work
1 Not a complete list. Excludes most Food and
Agricul tural Outlook Conference materials. Also, when
FALL 1978
Author
Britton, V.
Britton, V.
Britton, V.
Pennock, J. L.
Pennock, J. L.
Peterkin, B.
Peterkin, B.
Peterkin, B.
Kerr, R. L.
Peterkin, B.
lsom, P.
Peterkin, B.
Cromwell, C.
Cromwell, C., and
McGeary, B.
Courtless, J.
Peterkin, B., and
Walker, S.
Peterkin, B.
Cromwell, C., and
Kerr, R.
Peterkin, B.
Odland, D., and
Adams, C.
Walker, K. E., and
Gauger, W. H.
Walker, K. E.
Walker, K. E.
Issue
Fall1974
Summer 1974
Summer 1975
December 1970
March 1970
Fall 1976
Fall1978
December 1969
Summer 1978
Fall1974
Summer 1976
Winter 1974
Winter 1974
Fall1975
March 1971
Fall1976
Spring 1975
Summer 1977
Winter 1974
Summer 1976
Fall1973
September 1969
June 1970
two or more articles on one subject were printed, only
the most recent was included in this Index.
17
Title
CLOTHING AND TEXTILES
New Developments
Flammability Standards for Sleepwear:
A Cost-Benefit Analysis
New Developments in Clothing and
Textiles
Nonwoven Fabrics: An Overview
Textile News: Fabric Flammability
Textile News: The Energy Situation
Spending
Stretching the Clothing Dollar
ENERGY
Consumer Appliance Decisions:
Using Energy Labels
Electric Power: A Crisis Ahead?
Energy Conservation in and Around
the Home
Energy Extension Service
Energy Expenditures and Appliance
Ownership of Farm-Operator
Households
Energy Prices and Their Impact
on Families
Household Energy Adjustments
In-Home Energy Monitor: A test of
Consumer Response
FAMILY FINANCE
Credit
18
A Simplified Method of Finding
the Annual Interest Rate on
Installment Credit
Bankruptcy and Its Alternatives
Consumer Installment Credit
Credit Unions
Family Adjustments to Debt Payments
Family Use of Credit
The Management and Use of Credit Cards
Some Considerations in Family Credit
Decisions
Other
Education as an Investment
Factors to Consider in Selecting
a Savings Account
Author
Polyzou, A., and
Dardis, R.
Polyzou, A.
Harries, N. G.
Harries, N. G.
Harries, N. G.
Britton, V.
Ruffin, M. D.
Doss, M. J.
Pifer, G.
Liersch, J. M.
Ruffin, M. D.
Ruffin, M. D.
Smith, R. B.
Hutton, R. B.
Homes, E. G., and
Jaeger, C. M.
Boerman, C. M.
Jennings, C. L.,
and Tippett, K. S.
Edwards, C. S.
LeFebvre, J ., and
Tippett, K. S.
Smythe, K. D.
Boerman, C. M.
Smythe, K. D.
Magrabi, F. M.
Rudd, N.
Issue
Fall1977
Summer 1977
Summer 1975
Fa111974
Summer 1974
Fa111975
Summer 1978
September 1972
Spring 1974
Summer 1978
Winter 1977
Fall1974
Spring 1977
Summer 1978
September 1966
Summer 1977
Fall1977
Fa111977
December 1972
March 1970
Summer 1977
June 1969
December 1971
Summer 1973
FAMILY ECONOMICS REVIEW
Title Author Issue
FAMILY FINANCE-continued
Other-continued
Financial Assets: The Changing Rudd, N. Summer 1973
Family Portfolio
Variable Annuities-Retirement Rudd,N. Fall1974
Income With Growth Potential
What Price Increases Mean for Mork, L. F., and Winter 1974
Families Magrabi, F. M.
FOOD
Convenience
Convenience and the Cost of Plate Cromwell, C., and Summer 1974
Dinners and Skillet Main Dishes Odland, D.
Convenience Foods-1975 Cost Update Traub, L. G., and Winter 1976
Odland, D.
Nutritive Value and Cost of Isom, P. Fall1976
"Fast Food" Meals
Nutrients
Potassium in Common Foods Murphy, E. W., and Summer 1973
Mangubat, A. P.
Zinc in Foods Willis, B. W., and Spring 1975
Mangubat, A. P.
Other
The Dietary Goals and Food on the table Peterkin, B. Winter-Spring 1978
Dietary Goals for the United States Shore, C. J. Fall1978
Establishing and Implementing Leveille, G. A. Winter-Spring 1978
Dietary Goals
Food Safety in the Home Jones, J., and Summer 1976
Weimer, J.
Nutrition Labeling for the Consumer Peterkin, B. Summer 1973
Unit Pricing and Open Dating Taylor, E. F. June 1972
U.S. Dietary Goals Hegsted, D. M. Winter-Spring 1978
Preservation
Food Canning by U.S. Households Redstrom, R. September 1970
Home Canning Davis, C. Spring 1977
Home Food Preservation in U.S. Redstrom, R. June 1971
Households
Home Gardening and Incidence of Kaitz, E. F. Spring 1977
Freezing and Canning
Home Gardening and Preservation Spring 1977
of Fruits and Vegetables
Special Diets
Dietary Guidance for Food Stamp Peterkin, B. Winter 1976
Families
Organic Foods-an Update Cromwell, C. Summer 1976
Vegetarian Diets Raper, N. R. Summer 1974
FALL 1978 19
Title
HOUSEHOLD EQUIPMENT
Freezers
Freezer Food Concerns
Homefreezer Management Survey:
I. The Families and Their Freezers
Homefreezer Management Survey:
II. Some Characteristics of
Freezer Use
Homefreezer Management Survey:
III. More on freezer Use
Homefreezer Management Survey:
IV. Advantages and Disadvantages
of Freezer Ownership; Defrosting
Practices; Costs
Laundry
The Cost of Doing Laundry at Home
Detergents and Our Water
Figuring the Cost of Doing
Laundry at Home
Service-Life
Service-Life Expectancy of
Household Appliances
Service Life of Appliances by
Selected Households
HOUSING
The Cost of Buying a Home
Expenditures for Improving and
Repairing the Family Home
Housing in Multiunit Buildings
A Lower Mortgage Rate?
Mobile Homes
New Mortgage Designs
Rental Housing in the United States
LEGISLATION
The Magnuson Moss Warranty Act
National Health Insurance: Issues
for Consumers to Consider
No-Fault Insurance
POPULATION
20
The Fastest Growing Minority:
The Aging
Other Families:
Families Without Spouses
The Outlook for the Labor Force
Young Adults
Author
Lawyer, J. H.
Redstrom, R.
Restrom, R.
Redstrom, R.
Restrom, R.
Mark, L. F.
Alter, H.
Mark, L. F.
Tippett, K. S.,
and Ruffin, M. D.
Tippett, K. S.
Mark, L. F.
Krass a, L. G.
Krassa, L. G.
Mark, L. F.
Krass a, L. G.
Edwards, C.
Krassa, L. G.
Marr, J.
Kline, K. L.
Doss, M. J.
Brotman, H. B.
Kline, K. L.
Klein, D.P.
Mark, L. F.
Issue
Spring 1974
September 1966
March 1967
June 1967
September 1967
Fall1975
June 1971
December 1970
Summer 1975
Summer 1978
September 1969
Spring 1975
Summer 1975
September 1971
December 1972
Fall1978
Winter 1974
Summer 1978
Fall1974
December 1971
March 1972
Summer 1974
Winter-Spring 197 8
Summer 1974
FAMILY ECONOMICS REVIEW
Title Author Issue
SURVEY DATA
Consumer Expenditure Survey 1960-61
Clothing Expenditures for Individuals Britton, V. March 1968
Clothing Expenditures of U.S. Families Britton, V. September 1966
The Effect of Family Size on Mork, L. F. March 1967
Expenditures
Family Expenditures for Medical Care Pennock, J. L. March 1966
Farm Family Spending for Insurance, Ellis, M. J. June 1966
Gifts, and Contributions
Home Production and the Family's Food Pennock, J. L. September 1966
How Families Spend Their Food Dollars Peterkin, B., and March 1966
Clark, F.
Purchases of Various Types of Clothing Britton, V. September 1968
for Men, Women, and Children
Sources of Expenditure Data Pennock, J. L. December 1970
Household Food Consumption Survey 1965
Better Diets Possible by Shifting Ward, C. December 1970
Food Expenditure Pattern
Breakfast Patterns of Boys in the Pao, E. December 1970
North Central Region
Changing Food Consumption in the Adelson, S. F. September 1967
United States
Changing Patterns of Family Food Clark, F. December 1966
Spending
Changing Patterns of Potato Clark, F., and June 1968
Consumption Peterkin, B.
Diets of Low-Income Families Eagles, J. A. March 1969
Diets of Men, Women, and Children Swope, D. A. March 1969
Distribution of the Food Dollar by Chassy, J. December 1970
Families in Four Regions and in
the Low-Cost Food Plan
Expenditures for Food Away From Home LeBovit, C. December 1967
Family Diets Costing Less Than Peterkin, B. September 1971
the Economy Plan
Food Expenditures in the South Steele, P. December 1968
Food Patterns of the Elderly Pao, E. December 1971
Food Prices Paid by Large and Peterkin, B. December 1972
Small Families
Food Spending Patterns of Southern Ward, C. Fall1975
Black Households
Food Use in Farm and Urban Households Peterkin, B., and September 1968
in 1955 and 1965 Rauschert, M.
Household Food Spending Affects Ward, C. June 1972
Diet Adequacy
Household Use of Convenience Foods Bivens, G. E. December 1967
Money Value and Adequacy of Diets Peterkin, B., and September 1969
Compared With the USDA Food Plans Clark, F.
Nutrients From a Dollar's Worth of Peterkin, B., and June 1968
Food, Northeast Region Ward, C.
FALL 1978
21
Title Author Issue
SURVEY DATA-continued
Household Food Consumption Survey 1965-continued
Quality of Diets in U.S. Households
in Spring 1965
Ready-to-Eat Breakfast Cereals in
U.S. Diets
Seasonal Variation in the Money Value
of Food Consumed at Home by Urban,
Rural Nonfarm, and Farm Households
Seasonal Variations in U.S. Diets
Use of Apples by U.S. Households
Other Surveys
Expenditures and Value of Consumption
as Measures of Level of Living
Expenditures and Value of Consumption
of Farm and Rural Nonfarm Families
in North Carolina
Gifts and Handed-Down Clothing
Important in Family Wardrobes
The 1977-78 Nationwide Food
Consumption Survey
Transportation and Farm-Operator
Households
WOMEN
Employment and Earnings of Women
Mothers in the Labor Force
Women and Credit
Women and Homeownership
Women 65 Years of Age and Over
MISCELLANEOUS
22
Sources of Government Data Useful
in Family Economics Research
Adelson, S. F., and
Peterkin, B.
Peterkin, B.
Beloian, A. M.
Beloian, A. M.
Swope, D. A.
Pennock,J. L.,and
Mork, L. F.
Mork, L. F., and
Pennock, J. L.
Britton, V.
Rizek, R. L.
Hoerman, C. M.
Rudd, N.
Ruffin, M.D.
Tippett, K. S.
Krassa, L. G.
Mork, L. F.
Jennings, C. L.
March 1968
December 1970
September 1971
March 1971
September 1969
June 1970
September 1970
September 1969
Fall1978
Winter 1977
Fall1973
Fall1973
Fall1973
Fall 1973
Fall1973
Spring 1977
FAM1LY ECONOM1CS REVIEW
HOUSING DEVELOPMENTS
HUD Statistical Yearbook, 1976
The 1976 STATISTICAL YEARBOOK has
been issued by the U.S. Department of Housing
and Urban Development (HUD). The Yearbook
contains statistical and financial information
on HUD programs and on the characteristics of
program recipients. One section includes results
of the 1975 Annual Housing Survey. The
Yearbook is available from the Superintendent
of Documents, U.S. Government Printing
Office, Washington, D.C. 20402, for $5 (Stock
No. 023-000-00414-3).
Housing and Community Development Act
of1977
The Housing and Community Development
Act of 1977, which became law in October
1977, contains provisions that should help
families purchase and maintain their homes.
Title III of the act, "Federal Housing
Administration Mortgage Insurance and
Related Programs," contains the most far
reaching of those provisions.' Specifically, this
title raises to $60,000 the maximum loan
amount a buyer can obtain using Federal
Housing Administration (FHA) insurance. This
action is especially important in high-cost areas
of the country where first mortgages have been
rising above the previously allowed maximum
of $45,000. The act also lowers the down­payments
required for FHA loans to 3 percent
on the first $25,000 and 5 percent on the
additional amount. These two provisions make
'The act is omnibus legislation that contains nine
titles (sections). These titles cover community develop­ment,
housing assistance programs, FHA mortgage
insurance, lending powers of Federal Savings and Loan
Associations, rural housing, national urban policy,
flood and riot insurance, community reinvestment, and
other provisions. A summary of the act (Public Law
95-128) is available from the Office of Public Affairs,
Department of Housing and Urban Development, 451
7th Street, SW., Washington, D.C. 20410. (Ask for
HUD-380-2-P A, October 1977.)
FALL 1978
FHA loans more attractive and more easily
available to moderate income buyers­especially
young, first-time buyers with limited
savings.
Other provisions of Title III include an
increase in the loan ceiling for mobile home
and home improvement loans, and an
extension of the maximum length of loans for
some mobile home units and for home
improvements. Also, the experimental program
which enabled HUD to offer a graduated
payment plan with FHA-insured mortgages was
placed on a permanent basis. Graduated
payment mortgages are aimed at helping
younger, first-time homebuyers by allowing for
lower monthly payments during the early years
of ownership.
The act also deals extensively with com­munity
development and housing assistance
programs and provisions relating to neighbor­hood
conversion and housing rehabilitation.
Title IV expands powers of Federal Savings and
Loan Associations and should allow for greater
investments in single-family homes and multi­family
buildings, and for larger home improve­ment
loans. Title VIII, entitled the Community
Reinvestment Act, encourages public and
private sector cooperation in local community
investment. Rural housing, housing counseling,
and provisions for the elderly and handicapped
are also among issues that are addressed by the
new act.
Interest Rates for FHA and VA Loans
Effective June 1978 the maximum allowable
interest rate for Federal Housing Admin­istration
(FHA) and Veterans Administration
(VA) single-family home mortgage loans was
increased from 9 to 9-1/2 percent.
This increase brings these rates in line with
other competitive rates and, along with the
new provisions of the Housing and Community
Development Act of 1977, should increase the
availability of financing for moderate-income
buyers.
23
Federal Credit Unions
Effective May 25, 1978, Federal credit
unions (CU's) will be authorized to finance the
purchase of mobile homes with maturities of
15 instead of the previously allowed 12 years.
This is part of the expanded authority granted
Federal CU's with the April 1977 amendments
to the Federal Credit Union Act of 1934. (See
FAMILY ECONOMICS REVIEW, Fall 1977
issue, p. 13.)
Final regulations authorizing Federal CU's to
make residential real estate loans, powers also
granted in the April 1977 legislation, have also
been released. Effective May 8, 1978, qualified
credit unions will be authorized to offer
30-year mortgages on one-to-four family
dwelling units that serve as the principal
residence of the member.
CONSUMER AWARENESS OF CREDIT COSTS
Preliminary results of a consumer awareness
survey conducted in 1977 for the Federal
Reserve Board indicate that Truth in Lending
has contributed significantly to increased con­sumer
awareness of credit costs. Survey results,
which were compared with two earlier surveys
conducted for the Federal Reserve Board in
1969 and ~-q70,' show that although awareness
of annual percentage rates charged for con­sumer
credit increased sharply in the first 15
months after Truth in Lending went into
effect, there have been significant further
increases over the last 8 years (see table). In
1977, 55 percent of the consumers surveyed
were aware of the annual percentage rates
charged for closed-end credit; 65 percent were
aware of rates charged for retail revolving
credit; and 71 percent were aware of rates
charged for bank credit cards.
1 See "1970 Survey of Consumer Awareness of
Credit Costs," Family Economics Review, June 1971,
p. 26.
24
There was considerable variation in both the
level of awareness and the extent of improve­ment
among the users of different types of
closed-end credit. Users of credit for the
purchase of new automobiles and home
improvements had the highest rates of aware­ness
in 1977-71 and 67 percent, respectively­and
the largest improvement in awareness since
1969. Users of credit for the purchase of used
automobiles had the lowest level of awareness
in 1977-38 percent-and the smallest improve­ment.
The awareness of annual percentage rates
charged on closed-end credit was higher among
customers of credit unions (66 percent),
finance companies (58 percent), and banks (52
percent), than among those who obtained their
credit from retail dealers (42 percent).
Source: Board of Governors of the Federal Reserve
System, 197 8, Annual Report to Congress on Truth in
Lending for the Year 1977, 19 pp., plus appendix A
and B.
FAMILY ECONOMICS REVIEW
'%j
>
t""'
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Awareness of annual percentage rates charged for consumer credit by characteristics of consumers using
credit, 1969, 1970, 1977
Group
All consumers
Education:
Some high school or less
High school ............ .
Some college or more ... .
Age:
Under 35 years ......... .
35-49 years ............ .
50 years or more ......•.
Income: 1
Less than $7,500 ....... .
$7,500-$12,499 ......... .
$12,500-$17,499 ........ .
$17,500 or more ........ .
Closed-end credit
1969
15
9
18
18
15
15
13
6
15
16
18
1970
38
26
38
51
40
41
36
24
29
37
48
1977
55
41
54
65
55
58
49
33
49
56
64
Open-end credit
Retail revolving
1969
35
20
32
48
40
39
27
19
28
37
43
1970
Percent
56
30
54
69
65
62
42
27
43
57
65
1977
65
45
61
76
69
73
56
43
55
58
77
Bank credit card
1969
27
16
19
39
35
27
21
11
23
29
33
1970
63
40
51
77
68
63
59
61
54
57
68
1977
71
51
65
80
76
75
65
59
60
66
78
1Income categories for 1969 and 1970 were adjusted to 1977 dollars using the Consumer Price Index.
Slight adjustment of categories was made in 1977 to accommodate the scales used by the interviewers.
Source: Board of Governors of the Federal Reserve System, 1978, Annual Report to Congress on Truth in
Lending for the Year 1977, 19 pp., plus appendix A and B.
BARGAIN HUNTING: MEAT AND MEAT ALTERNATES
by Betty Peterkin
With food prices on the rise, food shoppers
are especially alert for food bargains. The meat
counter is a good place to start. Usually foods
found there-meat, poultry, and fish-cost
more than other foods that make up meals.
Selecting with care at the meat counter can
result in worthwhile savings.
The best buys are the cuts, grades, and types
of meat, poultry, and fish that provide cooked
lean meat for the lowest cost. Costs of 3-oz
servings of cooked lean meat based on average
retail prices in U.S. cities, April 1978, illustrate
the potential savings from careful selection
(table 1). For example, beef liver and
hamburger cost about half as much as equal­size
servings of chuck roast of beef and fish
fillet. Chicken and turkey (from the whole
bird) cost less than half as much as pork loin
roast and round beefsteak. The amount
actually served, of course, may be more or less
than the 3 oz for which costs are shown in the
table, depending on personal preference or on
the size of pieces, such as chicken parts, chops,
or steaks.
In addition to replacing expensive meat,
poultry, and fish items with cheaper ones, the
budget-minded shopper can replace some meats
with alternates such as eggs, dry beans and
peas, and peanut butter. These foods are
suitable replacements because they provide
protein and most other nutrients for which
meat, poultry, and fish are valued. Cheese can
also be used. It can be counted on for the same
nutrients except iron and is a good source of
calcium while meat is not. Protein of vegetable
origin, such as dry beans and peanuts, generally
is rated lower in quality than the protein from
animal sources. Because of this it is a good idea
to have a little milk, egg, or meat at meals with
these foods.
Cost of Protein From Meats and Alternates
One way to determine good buys among
meats and meat alternates is to compare the
costs of quantities of them that provide equal
amounts of protein. Table 2 shows the cost of
26
quantities required to give 20 g of protein­about
one-third of the recommended allowance
for a day for a man. Costs for bread and milk
are shown, too. Although these foods are not
generally used to replace meat in meals, they
provide worthwhile amounts of protein in most
diets.
Foods are listed in table 2 in order by
increasing cost of 20 g of protein in April
1978. These costs do not include the expense
of fuel needed for cooking. Dry beans, peanut
butter, beef liver, eggs, chicken, hamburger,
and turkey are the least costly protein sources
of the meats and alternates listed. Protein from
certain chops, steaks, and roasts, and from
frozen fish fillets costs twice as much or more.
Bacon, pork sausage, and bologna are also
high-cost items mainly because large amounts
of them are required to provide 20 g of
protein.
How much of a food it takes to give 20 g of
protein, in table 2, along with the cost, is
important information for the meal planner.
While a small serving of cooked lean meat from
beef, pork, lamb, veal, turkey, or fish provides
20 g of protein or more, well over a serving of
some meats and meat products is required: 10
slices of bacon, 31;2 frankfurters, or four to six
1-oz slices of luncheon meats, for example.
Amounts of other foods needed to provide
20 g of protein are also larger than the usual
serving- more than a cup of cooked or canned
dry beans, 5 tablespoons of peanut butter, 3 oz
of American process cheese, or 3 eggs. It takes
over 8 slices of bread or 2-1 /3 cups of whole
milk for 20 g of protein. Obviously, smaller
amounts of these foods will be used with other
foods that give protein. Many popular main
dishes are combinations of expensive and less
expensive sources of protein. Examples are
frankfurters and beans, luncheon meat
sandwiches, and bacon and eggs.
The food energy (calorie) value of the
quantity of meats and alternates to provide
20 g of protein, also shown in table 2, may be
helpful, especially to people who are trying to
control their weight. Avoiding the use of large
FAMILY ECONOMICS REVIEW
amounts of high-calorie items, even if such
items are economical sources of protein, and
counting on lower calorie foods most of the
time to provide the protein, vitamins, and
minerals needed can be an aid in controlling
weight.
April 1978 prices of some beef items-chuck
roast and liver-had not returned to the high
levels of 1974. However, prices of the more
expensive beef steaks and roasts in April 1978
exceeded 1974 levels. Of those items com­pared,
fish prices increased the most-30 to 60
percent- between 1974 and 1978. Most pork
items were up 30 to 40 percent from 1974;
however, most of these increases occurred
between 1974 and 1976. Comparatively small
price increases occurred for poultry and
luncheon meats between 1974 and 1978.
Changes in Food Costs Since 1974, 1976
The best buys among meats and alternates
may change, of course, as prices change. For
example, U.S. average retail prices of certain
items declined between April of 1974 and
1978, while others increased sharply (table 3).
The price of dry beans, unusually high in
1974, was about 30 percent lower by 1976 and
Table 1. Cost of 3 oz of cooked lean meat from specified meat, poultry,
and fish at April 1978 prices
Food
Beef liver ................. .
Hamburger .................. .
Chicken, whole, ready-to-cook
Turkey, ready-to-cook ...... .
Chicken breasts ............ .
Pork picnic ................ .
Ham, whole ................. .
Chuck roast of beef, bone in
Ocean perch, fillet, frozen .
Ham, canned ................ .
Haddock, fillet, frozen .... .
Rump roast of beef, boned .. .
Round beefsteak ............ .
Pork loin roast ............ .
Veal cutlets ............... .
Pork chops, center cut ..... .
Sirloin beefsteak .......... .
Rib roast of beef .......... .
Porterhouse beefsteak •......
Lamb chops, loin ....•.......
Price
per
pound 1
$0.82
1. 03
.65
.81
1.18
.96
1. 39
1.11
1. 82
2.33
2.03
1.86
1. 96
1. 52
3.26
1. 96
2.14
2.06
2.63
3.54
Part of a Cost of
pound for 3 oz 3 oz
of cooked of cooked
lean meat lean meat
0.27 $0.22
.26 .27
.48 .31
.40 .32
.35 .41
.46 .44
.35 .49
.45 .so
.29 .53
.25 .58
.29 . 59
.34 .63
.34 . 6 7
.so .76
.25 .82
.45 .88
.43 .92
.45 .93
.52 1. 37
.46 1. 63
lAverage retail prices in u.s. cities, Bureau of Labor Statistics, U.S.
Department of Labor.
FALL 1978
27
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00
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0 z
0
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Table 2. Cost of 20 g of protein from specified meats and meat alternates at April 1978 prices
Food
Beans, dry ...•.....••...•.•.
Peanut butter •.•...•....•...
Bread, white enriched 5 ••••••
Beef liver .••.•••....•.••.••
Eggs, large ..•..•....•••••.•
Chicken, whole, ready-to-cook
Hamburger .•.•.....•.....••••
Milk, whole fluid 7 ••••••••••
Turkey, ready-to-cook •.••..•
Chicken breasts •••..•••••..•
Pork picnic •...••.•••..•.•.•
Tuna, canned .....•..•..••..•
American process cheese ••.•.
Chuck roast of beef, bone in
Ham, whole ••.•..•..•..••.••.
Round beefsteak •....••.•.•..
Rump roast of beef, boned .•.
Liverwurst ....•..•.••••....•
Frankfurters ....•..•....•.••
Pork loin roast .....••......
Salami •....•....•••.......•.
Sardines, canned ...•••...••.
Ham, canned •••..............
Sirloin beefsteak ...•.•.....
Ocean perch, fillet, frozen
Bologna ..•........•.•......•
Rib roast of beef ....•....•.
Pork chops, center cut ....••
Veal cutlets ••.........•....
Haddock, fillet, frozen .••.•
Pork sausage .......•........
Porterhouse beefsteak .•.....
Bacon, sliced ........••..•.•
Lamb chops, loin ....••..•.•.
Market
unit
lb
12 oz
lb
lb
doz
lb
lb
~ gal
lb
lb
lb
6.5 oz
8 oz
lb
lb
lb
lb
8 oz
lb
lb
8 oz
4 oz
lb
lb
lb
8 oz
lb
lb
lb
lb
lb
lb
lb
lb
Price
per
market
unit 1
52.4
75.2
35.9
81.8
79.4
65.1
102.6
86.7
80.6
118.2
95.7
78.1
92.8
110.7
139.4
196.1
185.7
80.8
137.0
151.8
102.6
59.1
233.3
213.8
182.3
91.9
206.3
195.7
326.3
203.3
159.6
263.0
187.9
354.1
Part of
market unit
to give 20 g
of protein2
.24
.23
.51
.24
.25
.37
.24
.29
.35
.25
.32
.44
.38
.35
.29
.22
.26
.60
.36
.33
.so
.94
.24
.28
.36
.73
.33
.35
.21
.35
.52
.34
.52
.31
!Average retail prices in U.S. cities, Bureau of Labor Statistics, U.S.
De~artment of Labor.
One-third of the daily amount recommended for a man.
3Food energy (calories) provided by amount to give 20 g of protein.
Calorie values assume that meats are baked or broiled, unless otherwise
specified, and that separable fat and drippings are not eaten.
4Rank was determined based on the cost of 20 g of protein from various
items for each of 3 periods.
Cost of
20 g of
protein
$0.13
.17
.18
.20
.20
.24
.25
.25
.28
.30
.31
.35
.35
.39
.40
.43
.48
.48
.so
.51
.52
.56
.56
.60
.66
.67
.68
.68
.70
. 72
.83
.89
.99
1.09
Food
energy
(calories) 3
300
460
620
170
250
6 160
230
370
120
6 130
130
240
320
150
130
110
130
430
490
170
360
210
210
120
6 240
500
150
160
100
6 170
530
130
450
110
Items ranked for economy as
sources of protein4
April
1978
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
April April
1976 1974
1
2
3
4
5
7
6
8
9
11
12
10
13
14
16
15
18
19
17
22
20
23
25
24
21
28
27
29
30
26
32
31
34
33
3
1
2
9
4
5
7
6
11
8
12
10
13
21
14
17
23
22
20
16
24
15
19
25
18
29
26
27
34
28
30
33
32
31
5Bread and other grain products, such as pasta and rice, are frequently
used with a small amount of meat, poultry, fish, or cheese as main dishes
in economy meals. In this way the high quality protein in meat and cheese
enhances the lower quality of protein in grain products.
6Fried.
7Although milk is not used to replace meat in meals, it is an economical
source of good quality protein. Protein from nonfat dry milk costs even
less than protein from whole fluid milk.
"%j
;x:.
t""
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<0
-.1
<Xl
Table 3. Change in prices of meats and meat alternates, April 1974 to 1978 and 1976 to 1978 1
Change in price Change in price
Food April 1974 April 1976 Food April 1974 April 1976
to to to to
April 1978 April 1978 April 1978 April 1978
Percent Percent
Beef: Poultry:
Chuck roast, bone in -11 20 Chicken, whole,
Hamburger 1 20 ready-to-cook 17 7
Liver -22 6 Chicken breasts 21 8
Porterhouse steak 28 15 Turkey, whole,
Rib roast 33 20 ready-to-cook 6 8
Round steak 10 11
Rump roast 6 7 Fish:
Sirloin steak 21 14 Haddock, fillet, frozen 36 29
Pork:
Ocean perch, fillet,
frozen 66 40
Bacon, sliced 51 10 Sardines, canned 56 13
Chops, center cut 31 6 Tuna, canned 36 24
Ham, canned 33 3
Ham, whole 28 0 Other:
Loin roast 36 7 Bread, white enriched 5 2
Picnic 14 1 Beans, dry -33 - 2
Sausage 37 7 Cheese, American process 23 9
Other meat: I
Eggs, large 2 2
Milk, whole, fluid 8 5
Lamb chops, loin 66 23 Peanut butter 29 8
Veal cutlets - 5 8
Luncheon meat:
Bologna 20 14
Frankfurters 14 15
Liverwurst 8 4
Salami 11 11
~ lAverage retail prices in U.S. cities, Bureau of Labor Statistics, U.S. Department of Labor.
remained at this lower level in 1978. Prices of
American process cheese and peanut butter
were 20 to 30 percent higher in 1978 than in
1974, while other items priced-bread, eggs,
and milk-were up less than 10 percent from
1974 levels.
Despite food price changes, the relative
economy of meats and meat alternates as
sources of protein was much the same in April
1978 as 2 and 4 years earlier (table 2). The
food shopper using the cost of 20 g of protein
as a guide would have found the same foods
among the least costly. Dry beans, beef liver,
and turkey were somewhat better buys com­pared
with other items in April 1978 than in
197 4. However, they were among the better
buys in both periods.
How To Compare Costs Using Local Prices
The costs of meats and meat alternates in
this article are based on average prices in U.S.
cities in April 1978. Local prices, which may
be somewhat different, can be used with the
part of a pound or market unit required to
provide a 3-oz serving of cooked lean meat
(table 1) or 20 g of protein (table 2) to figure
comparable costs. To do this, multiply the
local price by the part of a pound or other
market unit shown. For example, in table 1 the
price of turkey, $0.81 per pound, times the
part of a pound required for a 3-oz serving,
0.40 pound, equals the cost of a serving, $0.32.
If the local price of turkey were $0.90, the cost
of a 3-oz serving would be $0.36
($0.90 X 0.40 = $0.36).
DIETARY GOALS FOR THE UNITED STATES
by Carole]. Shore
The second edition of the "Dietary Goals for
the United States," published in January 1978
by the Senate Select Committee on Nutrition
and Human Needs, responds to many of the
questions raised about the original goals
published in February 1977. 1 In many respects
the second edition is like the first: Goals are
proposed for the same dietary substances and,
except for salt, the levels proposed are
essentially unchanged (see box). The second
edition introduces a new goal concerning
weight control and suggests ranges for selected
dietary substances in addition to the specific
levels suggested by the first edition.
Original goals did not mention excess calorie
consumption or excess alcohol intake as poor
nutritional practices. The new goals state: "To
avoid overweight, consume only as much
energy (calories) as is expended; if overweight,
1 See Family Economics Review, Winter-Spring
197 8, for a discussion of these goals.
30
decrease energy intake and increase energy
expenditure." Footnotes have been added to
explain that the average energy contribution of
alcohol in diets of adults is approximately 210
calories per day.
In the second edition the total carbohydrate
goal is at 58 percent of the energy intake, as it
was in the original report. Goals for carbohy­drate
and sugar are clarified in the second
edition by identifying two types of sugars,
"naturally occurring" sugars and refined or
processed sugars. "Naturally occurring" sugars
are those obtained from fruits, vegetables,
milk, and whole grains. The new goal recom­mends
increased consumption of only complex
carbohydrates and "naturally occurring"
sugars. The goal aimed at decreasing sugar
consumption is clarified in the second edition
to include only "refined and processed" sugars.
The goal for salt was relaxed from 3 g daily
to about 5 g daily because the higher allowance
"is a more appropriate level of salt intake to
recommend at this time for the general
population."
FAMlLY ECONOMICS REVIEW
""')
.>....
~
•D
-1
()::)
w
......
Dietary
substances
Food energy
Carbohydrate
and sugar
Fat and fatty
acids
Cholesterol
Salt
COMPARISON OF DIETARY GOAL RECOMMENDATIONS
First edition dietary goals
No recommendation.
1) Increase carbohydrate consumption to
account for 55 to 60 percent of the
energy (caloric) intake.
2) Reduce sugar consumption by almost
40 percent to account for 15 percent of
total energy intake.
1) Reduce overall fat consumption from
approximately 40 percent to about
30 percent of energy intake.
2) Reduce saturated fat consumption to
account for about 10 percent of total
energy intake; and balance that with
polyunsaturated and monounsaturated
fats, which should account for about
10 percent of energy intake each.
Reduce cholesterol consumption about
300 mg a day.
Reduce salt consumption by about
50 to 85 percent to approximately
3 g a day.
Second edition dietary goals
To avoid overweight, consume only as much
energy (calories) as is expended; if over­weight,
decrease energy intake and increase
energy expenditure.
1) Increase the consumption of complex car­bohydrates
and "naturally occurring" sugars
from about 28 percent of energy intake to
about 48 percent of energy intake.
2) Reduce the consumption of refined and
processed sugars by about 45 percent to
account for about 10 percent of total
energy intake.
No change.
No change.
Limit the intake of sodium by reducing
salt to about 5 g a day.
Committee members retained the goal of
reducing cholesterol consumption to about
300 mg daily, but they noted the debate over
the relationship between dietary cholesterol
and heart disease, and affirmed the value of
eggs as "an excellent, inexpensive source of
protein, vitamins, and minerals, particularly for
children, premenopausal women, and the
elderly." The Committee said its recom­mendation
intends neither eliminating egg
consumption nor specifying an amount of eggs
to consume.
Recommendations of the Committee with
respect to the use of meat, poultry, fish, and
dairy products were changed. The original goals
suggested that Americans "decrease con­sumption
of meat and increase consumption of
poultry and fish." This edition urges Americans
to "decrease consumption of animal fat and
choose meat, poultry, and fish which will
reduce saturated fat intake." Unlike the
original report which suggested substituting
nonfat milk for whole milk, this edition states,
"Except for young children, substitute lowfat
milk for whole milk, and lowfat dairy products
for high fat dairy products."
As shown in the chart on page 32, current
sources of food energy, such as fat, protein,
complex carbohydrate, and sugar, would
change if the second edition of the Dietary
Goals were adopted. Increased carbohydrate
and naturally occurring sugar consumption and
decreased fat consumption would result.
The Consumer and Food Economics
Institute is reviewing the goals as presented in
the second edition in terms of diets to meet the
goals for men, women, and children. However,
because the levels of dietary substances
specified as goals in the second edition are
essentially the same as in the first report, diets
to meet the new goals are expected to be
similar to those presented in the 1978 Winter­Spring
issue of FAMILY ECON0l'v11CS
REVIEW, pp. 11-29.
Sources: Select Committee on Nutrition and Human
Needs, United States Senate, 95th Congress, 1st
Session: February 1977, Dietary Goals for the United
States, Committee Print, December 1977, Dietary
Goals for the United States, 2d Edition, Committee
Report.
PERCENT OF ENERGY INTAKE
CURRENT
DIET
**
DIETARY
GOALS
32
46 12 42
Carbohydrate Protein Fat
D
58 12 30
Carbohydrate Protein Fat
D *Refined and processed only **Second edition
Distribution of energy from dietary substances in
current diet (based on food disappearance data)
and in the Dietary Goals, second edition.
FAMILY ECONOMICS REVIEW
SOME NEW USDA PUBLICATIONS
(Please give your ZIP code in your return address when you order these.)
Single copies of the following are available free from the Office of Governmental and Public
Affairs, U.S. Department of Agriculture, W~shington, D.C. 20250:
• INSECTS AND RELATED PESTS OF HOUSE PLANTS. G 67. Revised October 1977.
• FOOD AND YOUR WEIGHT. G 74. Revised November 1977.
• CHEESE IN FAMILY MEALS-A GUIDE FOR CONSUMERS. G 112. Revised September
1977 ..
• BEEF AND VEAL IN FAMILY MEALS: A GUIDE FOR CONSUMERS. G 118. Revised
February 1978.
• HOW TO BUY CANNED AND FROZEN FRUITS. G 191. Revised July 1977.
• HOW TO BUY DAIRY PRODUCTS. G 201. Revised January 1978.
• CONTROL OF INSECTS ON DECIDUOUS FRUITS AND TREE NUTS IN THE HOME
ORCHARD-WITHOUT INSECTICIDES. G 211. Revised October 1977.
• WHAT TO DO WHEN YOUR HOME FREEZER STOPS. L 321. Revised February 1978.
• FOOD FOR THRIFTY FAMILIES. [Unnumbered.] Revised March 1978.
• QUICK-QUIZ. [Unnumbered.] 1978. (Booklets adapted from a computerized quiz at the
USDA exhibit at the Museum of Science and Industry, Chicago, Ill.)
-GOOD NUTRITION.
-SCHOOL LUNCHES AND FOOD STAMPS.
-HOW TO COOK.
-WHAT FOOD COSTS.
FOOD AWAY FROM HOME
Consumers spent $52 billion in 1976 for
food away from home. This represented 30
percent of expenditures for all food-up from
26 percent in 1966. Conversely, the share of all
food going for food at home dropped from 74
to 70 percent during the same period.
In 1975, almost 39 percent of food away
from home was eaten in conventional
restaurants, lunchrooms, and cafeterias, or was
catered. This represents a decline from 45
percent 10 years earlier. Refreshment places­mostly
fast-food establishments-increased
FALL 1978
their share of the away-from-home food
market from 10 to 26 percent between 1965
and 1975. The share going to hotels and motels
remained the same at 5 percent, while the share
for other outlets such as schools, stores, and
recreational places declined.
Source: U.S. Department of Agriculture, Economics,
Statistics and Cooperatives Service, 1978, Perspec­tives:
Ea,ting out- fast foods, National Food Review,
NFR-1 , pp. 33-34.
33
c.:>
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0
~
0
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t_:l:j
~
Cost of food at home estimated for food plans at 4 cost levels, June 1978, U.S. average1
Sex-age groups
FAMILIES
Family of 2 : 3
20-54 years •••..••.•.•• •
55 years and over .•.....
Family of 4:
Couple, 20-54 years and
children--
1-2 and 3-5 years
6-8 and 9-11 years
INDIVIDUALS 4
Child:
7 months to 1 year •.....
1-2 years ..•••••••.•.•..
3-5 years ..•••••••.•....
6-8 years •.•.•.••.•.••..
9-11 years ....•••••.....
Male:
12-14 years •••••.•..•...
15-19 years ...•••.•.....
20-54 years •....••••..••
55 years and over ••.•.••
Female:
12-19 years .•.••.••..•..
20-54 years •••.•.••.•.••
55 years and over •......
Pregnant .•••.•••....•.•.
Nursing .•.••.•••.••.••..
Thrifty
plan2
26.20
23.50
36.80
44.20
5.20
5.90
7.10
9.00
11.40
12.10
13.40
13.10
11.70
10.90
10.70
9.70
13.50
14.30
Cost for 1 week
Low-cost Moderate-plan
cost plan
Dollars
34.30
30 . 60
47.60
57.30
6.30
7.50
8.90
11.60
14.50
15.40
17.20
17.20
15.20
13.90
14.00
12.60
17.30
18.30
43.00
37.90
59.50
72.00
7.80
9.30
11.10
14.60
18.30
19.40
21.50
21.70
18.90
17.20
17.40
15.60
21.30
22.80
Liberal
plan
51.60
45.30
71.20
86.30
9.20
11.00
13.30
17.50
21.90
23.20
25.90
26.10
22.70
20.60
20.80
18.50
25.20
27.10
Thrifty
plan2
113.40
101.90
159.30
191.60
22.50
25.40
30.80
39.20
49.30
52.50
57.90
56.70
50.50
47.10
46.40
42.10
58.50
62.00
Cost for 1 month
Low-cost Moderate-plan
cost plan
Dollars
148.50
132.60
206.10
248.40
27.50
32.40
38.70
50.40
63.00
66.90
74.40
74.40
65.80
60.20
60.60
54.70
74.80
79.30
186.70
164.30
258.00
312.30
33.70
40.20
48.10
63.30
79.30
84.00
93.40
94.20
81.90
74.70
75.50
67 .-so
92.10
98 . 80
Liberal
plan
223.60
196.40
308.90
374.10
39.80
47.80
57.80
75.80
95.00
100.50
112.20
113.30
98.50
89.10
90.00
80.00
109.40
117.30
1Assumes that food for all meals and snacks is purchased at the store and prepared at home. Estimates for each plan
were computed from quantities of foods published in the Winter 1976 (thrifty plan) and Winter 1975 (low-cost, moderate­cost,
and liberal plans) issues of Family Economics Review. The costs of the food plans were first estimated using
prices paid in 1965-66 by households from USDA's Household Food Consumption Survey with food costs at 4 selected levels.
USDA updates these survey prices to estimate the current costs for the food plans using information from the Bureau of
Labor Statistics' "Estimated Retail Food Prices by Cities" from 1965-66 to 1977 and "CPI Detailed Report," tables 3 and
9, after 1977.
2Coupon allotment in the Food Stamp Program based on this food plan.
310 percent added for family size adjustment. See footnote 4.
4The costs given are for individuals in 4-person families. For individuals in other size families, the following
adjustments are suggested: 1-person--add 20 percent; 2-person--add 10 percent; 3-person--add 5 percent; 5-or-6-person-­subtract
5 percent; 7- or-more-person--subtract 10 percent.
()
0
rn
-t
0
"T1
"T1
0
0 c
l>
-t
J:
0 s
m
CONSUMER PRICES
Consumer Price Index for all urban consumers
(1967 = 100)
Group
All items ................... .
Food ...................... .
Food at home ............ .
Food away from home ..... .
H . 2 OUSlng ••••• ••••••••••••••
Shelter ................. .
Rent .................. .
Homeownership ......... .
Fuel and other utilities 2
Fuel oil, coal, and
bottled gas .......... .
Gas (piped) and
electricity .......... .
Household furnishings
and operation 2 ••••••••••
Apparel and upkeep ........ .
Men's and boys' apparel ..
Women's and girls' apparel
Footwear ................ .
Transportation ............ .
Private ................. .
Public .................. .
Medical care .............. .
Entertainment l ............ .
Other goods and services 2 ••
Personal care ........... .
1New series.
June
1978
"195.3
213.8
213.9
217.8
202.0
208.9
163.6
225.3
217.5
295.1
236.5
177.6
159.9
157.8
150.0
163.8
185.5
185.0
187.2
217.9
176.2
181.0
181.1
May
1978
193.3
210.3
209.7
215.8
199.9
206.6
162.7
222.5
215.5
295.6
232.5
176.0
159.8
157.7
150.7
163.4
183.2
182.6
187.4
216.9
176.2
180.4
180.3
Apr.
1978
191.5
207.5
206.5
214.0
198.3
204.7
161.5
220.4
213.9
296.6
229.2
175.0
158.4
156.7
149.0
161.7
181.1
180.3
187.3
215.7
175.6
179.8
179.1
June
1977
181.8
193.6
191.9
200.6
189.0
190.3
152.9
203.9
201.8
283.1
213.0
177.1
153.9
153.8
146.0
156.8
179.2
178.7
183.2
201.8
158.4
170.6
2Series has been changed to include additional items. For details, see
News, U.S. Department of Labor, Bureau of Labor Statistics, "The Consumer
Price Index--January 1978," pp. 15-17, USDL-78-145.
Source: U.S. Department of Labor, Bureau of Labor Statistics.
WORK DISABILITY IN THE UNITED STATES: A CHARTBOOK
"Work Disability in the United States: A
Chartbook," issued by the U.S. Department of
Health, Education, and Welfare, Social Security
Administration, presents data on the socioeco­nomic
and medical status of the disabled. The
chartbook provides information on the age,
race, education, and marital patterns of the dis­abled.
In addition, there are statistics on the
type of disability, limitations of activity, medi­cal
care use and payment, and employment and
income of the disabled.
FALL 1978
The chartbook is for sale for $1.60 by the
Superintendent of Documents, U.S. Govern­ment
Printing Office, Washington, D.C. 20402.
(Stock No. 017-07 0-00302-8)
35
FAMILY ECONOMICS REVIEW
FALL 1978
CONTENTS
Page
The 1977-78 Nationwide Food Consumption Survey................. .. .......... . 3
Robert L. Rizek
New Mortgage Designs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Carolyn S. Edwards
Index of Major Articles Printed in FAMILY ECONOMICS REVIEW, 1966-78 . . . . . . . . . . 17
Housing Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Consumer Awareness of Credit Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Bargain Hunting: Meat and Meat Alternates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Betty Peterkin
Dietary Goals for the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Carole J. Shore
Food Away from Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Work Disability in the United States: A Chartbook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Regular Features
Some New USDA Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Cost of Food at Home
Consumer Prices ... . ..................................................... .
34
35
Issued September 1978
36
FAMILY ECONOMICS REVIEW