Family Economics Review [1986, Number 1]

              Editor
Marilyn Doss Ruffin
Managing Editor
Sherry Lowe
Editorial Assistant
Nancy J. Bailey
Family Economics Review is
published each quarter by the
Family Economics Research
Group. Agricultural Research
Service. United States
Department of Agriculture.
Washington. D.C.
The Secretary of Agriculture has
determined that the publication
of this periodical is necessary in
the transaction of the public
business required by law of this
Department. Use of funds for this
periodical has been approved
by the Director of the Office of
Management and Budget
through March 31. 1987.
Contents may be reprinted
without permission. but credit to
Family Economics Review
would be appreciated. Use of
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Family Econop1ics Review is
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and single copy requests to
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issue.)
Suggestions or comments con­cerning
this publication should
be addressed to:
Marilyn Doss Ruffin Editor.
Fa mily Economics Review,
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USDNARS. Federal Building.
~
Economics
Review
1986 No. 1j'_F_o_r_B_ut-.ld-i-ng_U_s_e~O-nl_y_]
Deposito a
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Contents: 1 1ers ty of Nortl. lA~
~ "')
Fede r al Sources of Family Economic Data
Frankie N. Schwenk
Terms , Concepts, and Acronyms in Family Financial Planning
Joyce Pitts
Convenience and the Cost of the "Newer" Frozen Plate Dinners
and Entrees
Dianne D. Odland , Ruth S. Vet tel, and Carole A. Davis
Bulk Foods--Cost and Other Considerations
Dianne D. Odland
Abstracts
Revision of the Consumer Price Index in 1987
Women and Social Security--Findings From the New Beneficiary
Survey
Economic Characteristics of U.S. Households--2d Quarter 1984
Second Edition of Dietary Guidelines Available
R~gular Features
Cost of Food at Home
Some New USDA Publications
Index of Articles in 1985 Issues
Consumer Prices
Room 442A Hyattsville. Md. 20782. Is su ed February 1986
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Federal Sources of Family
Economic Data
By Frankie N. Schwenk
Family economist
The Federal Government collects, analyzes,
and disseminates vast quantities of data.
The data are used to assess status, measure
trends, or provide a basis for policy and
program decisions. They are collected with
careful procedures, the samples often are
large, the cost to users is low, .and copy­right
restrictions do not apply.
The availability and easy accessibility of
Federal data provide family economists with
extensive information useful in addressing
family economic issues. Of particular
interest are data related to the economic
well-being of families and individuals (for
example, income, assets, and expenditures),
the economy (prices and unemployment), and
population characteristics (age distribu-tion,
family composition, and mobility).
This article outlines major sources of
family economic data available from Federal
agencies and discusses considerations in the
use of these data. It includes a Directory
of Data Files and a Directory of Catalogs
(pp. 6-12).
TYPES AND SOURCES OF SURVEY DATA
Survey data are collected from households
and individuals or from other sectors such
as financial institutions and business
establishments. Family economists usually
analyze household surveys, but also use
information from nonhousehold sectors for
comparisons, so the Directory of Data Files
includes some nonhousehold sector data
(Flow of Funds, National Income and Product
Accounts (NIPA), and Labstat files) in
addition to the household surveys.
Data are available as microdata
(individual responses usually available on
computer tape) or summary data (totals or
averages usually presented in printed
tables) •1 All of the household surveys
1The use of the terms "microdata/summary
data" is distinct from the use of the terms
"microdata I macrodata" to describe household
and aggregate data.
listed in the directory have microdata
tapes which contain responses from the
individuals or households, allowing analysis
of relationships between household charac­teristics
and expenditures or other economic
behavior. Primary published sources of
summary data from these surveys are named
in the directory. To obtain detailed ordering
information for the microdata tapes or
printed materials, contact the agency listed
with the survey description. Addresses and
phone numbers are in the accompanying
Directory of Catalogs.
Several new data sources are !lvailable.
The Survey of Income and Program Partici­pation
(SIPP) has extensive coverage of
income, as well as labor force experience
and participation in major government pro­grams.
Periodic questions add information on
assets, liabilities, education, and other
related topics. Each of the 20,000 house­holds
in the sample is interviewed every 4
months for a period of 2-1/2 years. The
first interviews were in 1983. A new panel
is initiated each year. Quarterly data are
published in a Current Population Report
(P-70) series and are available on microdata
tapes.
Another continuing survey, the Consumer
Expenditure Survey (CES), contains compre­hensive
expenditure data. Previously con­ducted
once a decade, it now is conducted
on a continuing basis, 20 percent of the
sample being replaced each quarter. The
1980-81 data are available in microdata
tapes and printed tables for both the
interview survey and the diary survey. The
interviews, conducted every 3 months for
5 collections, asked 5,000 respondents to
recall major expenditures. The diary survey
asked another 5, 000 consumer units to record
expenditures on frequently purchased small
items for 2 weeks.
These two continuing surveys, SIPP and
CES, and the ongoing Current Population
Survey (CPS) provide much of the available
national data on the economic status and
trends of households. Adding to these are
periodic and one-time studies such as the
Survey of Consumer Finances, National
Medical Care Utilization and Expenditure
Survey, National Food Consumption Survey,
1986 No.1 Family Economics Review
Social Security New Beneficiary Survey,
Residential Energy Consumption Survey,
American Housing Survey, and others, many
of which are described in the accompanying
directory. Surveys on health, National
Health Interview Survey (HIS) and National
Health and Nutrition Examination Survey
(HANES), and education, High School and
Beyond ( HS &B) and National Longitudinal
Study of the High School Class of 1972
(NLS), are included in the Directory of Data
Files because they provide data on human
capital.
CONSIDERATIONS IN USE OF HOUSEHOLD
SURVEY DATA
While many surveys make a contribution to
the study of family economic well-being, it
usually is difficult to compare or merge
their results. For instance, S IPP, CE S, and
CPS all are representative of a national
population and have data on income. However,
the exact population represented and the
definition of income vary among the three
surveys. Thus, use and interpretation of
survey data require attention to the survey
design. What is the population and how is
sampling done? What are the definitions of
variables? How are weights applied? Are
imputations and editing changes marked? Can
waves be linked together to provide longi­tudinal
data? A description of how these
factors differ among surveys follows,
including examples taken from surveys that
are important to family economists-­particularly,
SIPP, CES, and CPS.
Units Included
Population and sample. CES, SIPP, and
CPS have large samples (5,000 in the CES
diary and 5, 000 in the CES interview, 20,000
in each SIPP panel, and 60,000 in the CPS)
and are collected on a continual basis. They
are representative of the civilian, noninsti­tutional
U.S. population. However, CES data
represent only the urban population in
1981-84. Rural units were eliminated from
the sample in October 1981, then reinstated
in 1984. The populations are about 70
2 family Economics Review 1986 No.1
million consumer units for the 1980'-81 CES
surveys and 8 5 million households for the
1983 SIPP and CPS surveys.
Metro-nonmetro, farm-nonfarm, urban-rural.
New definitions for metropolitan areas were
established by the Office of Management and
Budget in 1983. New statistical areas were
established, many area titles were changed,
and geographic boundaries were redefined,
primarily on the basis of the 1980 Census.
Previously, Standard Metropolitan Statistical
Areas (SMSA) and Standard Consolidated
Statistical Areas (SCSA) had been the
categories. The new definition has three
categories: Metropolitan Statistical Area
(MSA), Primary Metropolitan Statistical Area
(PMSA), and Consolidated Metropolitan
Statistical Area ( CMSA) • An MSA is an urban
area that meets specified size criteria; a
PMSA is an urban area within a very large
metropolitan area; a CMSA is a combination
of contiguous metropolitan areas.
SIPP designations of metropolitan­nonmetropolitan
are based on the 1980 Census
definition of Metropolitan Statistical
Areas. Each MSA has one or more central
counties containing the area's main popula­tion
concentration, an urban area of at
least 50,000 inhabitants. Farm population
refers to residents living on farms where
sale of crops, livestock, and other agricul­tural
products amounted to $1,000 or more
during the previous 12 months.
CPS uses Standard Metropolitan Statistical
Areas as defined by the 197 0 Census, which
defines an SMSA as a county or group of
contiguous counties that contain at least
one city (or twin cities) of 50,000 inhabit­ants
or more. Contiguous counties are
included if they are metropolitan in charac­ter
and socially and economically integrated
with the central city. In New England,
SMSA's consist of towns and cities, rather
than counties.
In CES, the urban population, as defined
by B LS, comprises all persons living in
SMSA's and in urbanized areas and urban
places of 2, 500 or more persons outside of
SMSA's. Thus, households in the survey are
classified as inside an SMSA or outside an
SMSA.
Geographic regions. SIPP, CPS, and CES
define geographic regions in the same way. 2
SIPP microdata tapes include codes for
individual States and for MSA's and CMSA's.
The State codes are included so that users
can tabulate data by user-defined groupings
of States. However, because estimates for
individual States are subject to very high
variance, analysis at this level is not
recommended. The 1968-83 CPS microdata
tape has (for all years since 1977) regions,
all States and the District of Columbia, and
44 SMSA's.
Consumer unit, household, family. The
microdata files of SIPP and CPS have three
levels: Household, family, and person. A
household consists of all persons who occupy
a housing unit. Thus, a household could be
a person living alone or a group of unrelated
persons sharing a housing unit as partners,
but not persons living in group quarters
such as college dormitories or rooming and
boarding houses. A family is a type of
household consisting of two or more persons
related by blood, marriage, or adoption, and
residing together.
The basic reporting unit for CES is a con­sumer
unit (CU). A CU consists of a family;
or two or more persons living together who
pool their income to make joint expenditure
decisions; or a person living alone, sharing
a household with others, or living as a
roomer in a private home or lodging house
or in permanent living quarters in a hotel or
motel, but who is independent financially.
To be considere~ financially independent, a
respondent must provide two of three major
2 Northeast includes Connecticut, Maine,
Massachusetts, New Hampshire, New Jersey,
New York, Pennsylvania, Rhode Island, and
Vermont. Midwest (called North Central in
the CES) is composed of Illinois, Indiana,
Iowa, Kansas, Michigan, Minnesota, Missouri,
Nebraska, North Dakota, Ohio, South Dakota,
and Wisconsin. South is Alabama, Arkansas,
Delaware, District of Columbia, Florida,
Georgia, Louisiana, Kentucky, Maryland,
Mississippi, North Carolina, Oklahoma, South
Carolina, Tennessee, Texas, Virginia, and
West Virginia. !est includes Alaska,
Arizona, California, Colorado, Hawaii,
Idaho, Montana, Nevada, New Mexico,
Oregon, Utah, Washington, and Wyoming.
expense categories--housing, food, and other
living expenses. There are more CU's than
households because a CU counts unrelated
people who live together as separate units
if they are financially independent.
Householder, reference person. SIPP,
CES, and CPS follow the 1980 Census defini­tion
of householder or reference person,
that is, the first person in whose name the
home is owned or rented. If the home is
owned jointly by a married couple, the first
person listed by the respondent becomes the
reference person. The term "head of house­hold"
no longer is used.
Variable Definitions
Race and origin. In SIPP and CPS, race
may be white, black, or other. Origin, as
identified by the respondent, is considered
Spanish if the origin indicated is Mexican,
Puerto Rican, Cuban, Central or South
American, or other Spanish origin, regard­less
of race. The CES asked for self­identification
of race, and classified the
responses into white; black; American
Indian, Aleut, Eskimo; Asian or Pacific
Islander; or other.
Employment. The CPS is the official
source of labor force statistics, producing
monthly statistics on unemployment and the
labor force which are published by BLS as
the household data section of its monthly
bulletin, Em..£!9yment and Earnings. The
SIPP file also has labor force data. The SIPP
data, however, can be analyzed with house­hold
characteristics, income, and program
participation information; and the respon­dent's
labor force activities can be
followed over time.
Employment terms differ among SIPP, CPS,
and CES. In SIPP. "with a job" includes
those who were temporarily absent from a job
because of layoff and those waiting to begin
a new job in 30 days; whereas in CPS, those
persons would be considered "unemployed".
Also, CPS statistics cover both farm and
nonfarm households, but the reported SIPP
data are nonfarm only. CPS data are from
the week that contains the 12th of the month,
but SIPP data are from questions referring
to individual weeks during the prior
4 months. The CES reports for each consumer
unit member the number of weeks worked
and the number of hours per week.
1986 No.1 Family Economics Review 3
Occupation. SIPP occupation classifi­cations
are: Managerial and professional
specialities; technical, sales, and adminis­trative
support; service; precision produc­tion,
craft, and repair; and operators,
fabricators, and laborers. These are the
categories used in the 1980 Census and in
the CPS household survey since 1983. They
are sufficiently different from the 1970
Census classification system that incorpora­tion
of the new system into the CPS series
containing occupational data was considered
a break in the historical data series. Only
about 35 percent of the occupational cate­gories
are directly or nearly comparable
between the two systems. The diary CES
uses the 1970 categories: Professional and
technical; managers; clerical and sales;
craftsmen and foremen, operative, laborers
and service workers; and retirees. The SIPP
microdata tape includes about 500 occupation
codes based on the 1980 Census codes and
classifications.
Income. CPS had been the primary
source of household income data, but now
the SIPP data provide comprehensive data on
income. The CPS asks respondents in March
to recall their income from the previous year,
but people may forget some income, espe­cially
that which is not wage or salary.
SIPP inquires about 50 or more types of
income, transfer payments, and noncash
benefits during each interview (every
4 months). Both SIPP and CPS exclude rebates,
refunds, loans, capital gains, interest on
IRA's, Keogh plans, and U.S. ·saving bonds.
CPS excludes lump sum payments such as
inheritence or insurance settlements that
are included in SIPP.
The SIPP nonresponse rates for income
questions are lower than CPS rates. Nonre­sponse
in SIPP ranged from 3 percent for
food stamp allotments to 13 percent for
self-employment income. CPS nonresponses
range from 9 percent for food stamp allot­ments
to 24 percent for self-employment and
income. Income reporting in CES is not as
complete as SIPP and CPS. In CES,
16 percent of CU's in the interview survey
and 23 percent in the diary survey are
designated incomplete income reporters; that
is, they did not report wages, salaries,
self-employment income, or Social Security
~ Family Economics Review 1986 No.1
income. Even those who were considered com­plete
income reporters may not have given a
full accounting of income from all sources.
In published reports of the CPS and SIPP,
both median and average income are pre­sented.
CES publications usually report
average annual income before tax. Median
income is lower than mean income because
even though income seldom is less than zero,
there is no similar upper limit to income.
CES reports consumer unit income; CPS and
SIPP provide income information for house­holds,
families, and persons. Median income
for households is lower than median income
for families.
Aggregate income data are published by
the Bureau of Economic Analysis (BEA) in
the personal income series of the National
Income and Product Accounts (NIPA) and
repeated in the Federal Reserve Board's Flow
of Fund Accounts. The BEA average income
figures represent income per capita (total
income divided by total population including
men, women, and children).
Expenditures. SIPP and CPS do not con­tain
expenditure data. Both portions of CES
provide detailed data on expenditures. The
interview survey of CES provides data on
expenditures that respondents can be
expected to recall for as long as 3 months.
Included are food, housing, apparel, trans­portation,
health care, entertainment,
personal care, reading, education, miscel­laneous,
cash contributions, personal
insurance, and pensions. The CES diary
survey obtains data on food at home and
away, housekeeping supplies, nonprescription
drugs, personal care, fuels, and utilities.
Another major source of expenditure data
is the Personal Consumption Expenditures
(PCE) component of NIPA. These estimates
represent the market value of goods and
services purchased by the entire personal
sector in the United States. Because the PCE
data are collected from establishments, they
cannot be analyzed by characteristics of
households. Comparisons between CES data
and PCE data show the CES estimates to be
lower than the PCE series for most consump­tion
categories.
Data Processing
Weighting. Weights are calculated for each
household in a sample to provide estimates
for the U.S. population. Each survey has its
own procedures for selecting and weighting
the sample. Weighting in the CES surveys
begins with the probability of selection of
the consumer unit. Other factors are: A
factor to adjust for subsampling in the
field; a noninterview adjustment; and a
national ratio-estimate adjustment for age,
sex, and race to urban, civilian, noninsti­tutional
population controls. The SIPP
weights also begin with a base weight equal
to the inverse of the household's proba­bility
of selection and has similiar adjust­ments.
Factors include: A nonin~erview
adjustment for persons who were eligible for
the sample but not interviewed, adjustments
so sample estimates agree with CPS estimates
by type of householder, and an adjustment
so that the husband and wife of a household
receive the same weight. The SIPP weight
estimation procedure resulted in persons'
weights varying from about 500 to 50,000.
Imputations, allocations, and edits. When
data are missing or responses are inconsis­tent,
values may be imputed. CES diary tapes
have imputed values for demographic charac­teristics
and weeks worked when nonresponse
is encountered, and imputation routines are
used when there is clear evidence of invalid
nonresponse, such as food expenditure with­out
a description. CES interview tapes have
data imputation routines for missing or
invalid entries that affect all fields in
the data base except income and assets.
Missing or invalid attributes, as well as
expenditures, are imputed. SIPP imputations
replace missing data with a corresponding
value from a housing unit or person having
certain other characteristics in common with
the unit or person. Both CES and SIPP files
include flags for many variables to mark
whether the data are reported or imputed for
that household or person.
Allocations are made when responses are
not specific. For example, when CES respon­dents
report expenditures for fuel and
utilities, rather than a specific type such
as gasoline, the expenditures are allocated
into components of the group. Editing is
done to provide consistency with other in­formation
from the household. In the SIPP
files, edits are not flagged but a code is
provided so that the preedited or unedited
value may be used.
Cross-sectional, longitudinal. Cross­sectional
surveys provide data from one
point in time, whereas longitudinal studies
follow households or individuals across
time. The CPS has been treated as cross­sectional
data, consisting of a new set of
data each month; however, it has a longi­tudinal
dimension. The rotation pattern is
for a household to be in the sample for 4
consecutive months, out for 8, and then
back in for 4 more months, so that the labor
market experience of individuals may be
followed over a period of 16 months. Coding
and processing improvements to take advan­tage
of the longitudinal character of the
CPS data base have been proposed.
CES interview data can be analyzed as
cross-sectional or longitudinal data. The
microdata tapes provide quarterly files so
the expenditures and characteristics of
consumer units can be followed over four
quarters.
SIPP also provides both cross-sectional
and longitudinal data. A core of demo­graphic,
income, and labor force questions
are asked in each interview. These charac­teristics
of individuals may be followed
over 2-1/2 years by using a unique identifi­cation
number that allows linking of infor­mation
about an individual across files.
SIPP longitudinal reports and public-use
data files are planned but will require
considerable preparation.
Longitudinal analysis requires new defini­tions,
concepts, weighting, and imputation
procedures. The definitions of household and
family are more complicated in longitudinal
studies because individuals enter and exit
households or families. The universe is not
fixed over time, so it must be defined as
some particular point or a union or inter­section
of some set of cross-sectional
universes. Weights are difficult to calcu-late
since a slightly different set of
people are interviewed each month. These
and other issues are being addressed by
SIPP reseachers as they prepare SIPP files
for longitudinal analysis.
FORMS OF DATA
Availability of data in more mediums is
increasing. Microdata are available on
computer tapes or diskettes for personal
1986 No.1 Family Economics Review 5
computers (pc). Summary data are in the
familiar published form but also are avail­able
in microfiche, on-line, tape, or
pc diskettes. The following Directory
of Data Files notes a few of these
options. However, the full offerings are
reported in the publications listed in the
Directory of Catalogs (p. 11). Most agencies
publish two catalogs: One for microdata
tapes and diskettes and one for printed
materials. The National Technical Informa­tion
Service (NTIS), the Federal Govern­ment's
primary depository for research and
technical information, offers catalogs of
database services and products in paper,
film, and machine-readable formats.
A review of these Federal agency data cat­alogs
suggests that microfiche and diskettes
often are alternatives to printed tables.
Microfiche may be less expensive to purchase
than books and is less expensive to mail and
to store. Depending on the reduction ratio,
98 to 420 images of 8-1/2" x 11" source
material can be arranged on one 4" x 6"
sheet. For example, the 1970 Census in print
uses five file cabinets. The 1980 Census in
microfiche takes only 5 linear feet of shelf
space. As a result, researchers wishing to
move toward a paper-free office are ordering
summary data and reports in microfiche form
and are putting their own computer outputs
onto microfiche instead of paper.
So~e persons with personal computers are
moving directly from paper to diskettes.
Diskette storage offers the additional
advantages of mathmatical or other process­ing
of data without reentering the values.
For example, Consumer Price Index (CPI) data
are available on diskettes or can be down­loaded
to a diskette from the on-line
Cendata or from the Department of Commerce
bulletin board. It then can be merged with
other data on a diskette or uploaded to a
mainframe for use in analysis. The Bureau
of Census offers the popular County and City
Data Book, the 1982 Census of Agriculture,
and other data on diskette. NTIS offers food
composition and other types of data on dis­kettes
and is willing to put any of 1, 000
microdata files they have onto diskette.
Researchers using mainframes are holding the
output, then downloading to a pc diskette,
where the results can be printed, edited
6 Family Economics Review 1986 No.1
into tables or graphs for manuscripts, and
stored more conveniently than computer
printouts.
Other data bases that are rapidly becoming
available in electronic rather than printed
mediums are bibliographic data bases. These
search systems have implications. for family
economists because developments in a field
depend upon efficient review of work in the
area. Since family economics incorporates
concepts from many fields, reports are
splintered among data bases and use a wide
variety of keywords. To facilitate the
search by others, research writers may wish
to consider the data bases in which the
publication is likely to be listed, then
select keywords of titles with those
particular data bases in mind.
DIRECTORY OF DATA FILES
Annual Housing Survey: 1983 (AHS) 3
Census, $140/each tape4
The AHS is a survey of housing units,
conducted by Census for the Department of
Housing and Urban Development. Microdata
from the national survey are on 1 to 3
tapes, depending on tape density (1600 bpi
or 6250 bpi). Data from a separate survey
of 44 selected standard metropolitan statis­tical
areas (SMSA's) are on 3 to 8 reels,
one tape per SMSA. A national longitudinal
file for 1974 through 1981 is available. The
1985 survey will be called the American
Housing Survey since data will be collected
every other year instead of annually.
Information includes characteristics of
general housing, housing and neighborhood
quality, recent mover households, urban and
rural housing units, energy-related housing,
and financial characteristics. Publications
of summary statistics are Current Housing
Reports Series H-150-83, Parts A-F.
Census of Population and Housing (1980)
Economic and Agriculture Censuses (1982)
Census, $12-$60/diskette; $140/each tape
Census data are available in many forms
including 5-1/4 inch flexible diskettes for
3 See Directory of Catalogs (p. 11) for
address and telephone information.
4 Tapes are 6250 bpi or 1600 bpi. Prices
listed in the directory are for 6250 bpi tapes.
an IBM/PC. The diskettes, corresponding to
the 1983 County and City Data, provide data
from the 1980 Census of Population and
Housing, 1977 Economic Censuses, 1978
Census of Agriculture, and other sources.
Prices are $60 for the first diskette and
$12 for each additional diskette. The
complete package for all county, city, and
place data costs $444. Subjects on the
county disks include population character­istics,
vital statistics, housing units,
journey to work, education, employment,
and income. City disks have similar data.
Summary data files from the 198~ Economic
and Agriculture Censuses are available on
tape at $140 per reel. Population and
housing data are available on-line to
subscribers.
Consumer Expenditure Survey. 1980-81:
Diary and Interview (CES)
BLS, $105/diary tape. $130/interview
There are two separate consumer expendi­ture
surveys--an interview panel survey and
a diary survey. Each has its own questions
and own sample of about 5, 000 urban con­sumer
units. The interview survey obtains
information in five interviews conducted
every 3 months, whereas the diary survey
has record keeping for two consecutive
1-week periods. The interview provides data
on large expenditures such as automobiles
and major appliances or recurring expenses
such as rent and insurance premiums,
estimated to be 95 percent of a household's
expenditures. The diary survey records data
on food, nonprescription drugs, household
supplies, and personal care items. Both
surveys collect income data and demographic
characteristics.
Expenditure data have been collected since
1888 for various purposes, including con­struction
of market baskets used in the
Consumer Price Index. Previous surveys
have been conducted about every 10 years
(including 1960-61, 1972-7 3) but surveys now
are continual. The 1980-81 microdata tapes
are available, and subsequent years will be
forthcoming. Published reports include BLS
Bulletin 2173 on the diary data and BLS 2225
on the interview data.
Current Population Survey (CPS)
Census. $140/each tape
The CPS is a continuous, monthly survey
of 60,000 households. Data are published in
BLS Employment and Earnings and Bureau of
Census Current~ulation Reports-­Population
Characteristics (P-20), Income of
Families and Persons (P-60), Farm Population
(P-27), Estimates of U.S. Population (P-25),
and Special Reports (P-23). Microdata tapes
have data for the Nation, regions, census
divisions, States, and 44 SMSA's. Files con­taining
basic and supplemental data are
available for each month, and there are
files on special topics (for example, non­cash
benefits, child support payments, and
migration).
Flow of Funds
FRB. free if blank tape provided
The complete set of accounts are available
on tape, from 1952 for quarterly tables and
1946 for annual tables. Published summary
statistics are available monthly. Flow of
Fund accounts include the household sector
with data for personal income, saving,
investment, liabilities, and consumer dur­ables.
The household sector estimates are
almost entirely residual, derived from data
for other sectors (corporate business,
government, and financial institutions).
That is, the data are provided from reports
by other parties to the transactions, not by
the households.
High School and Beyond (HSlB)
NCES, 7 files, $180/each tape (raw),
$200/each tape (SAS)
The HS&B study is a nationally representa­tive
sample of sophomores and seniors in
public and private high schools in 1980 with
followups in 1982 and 1984. Its primary
purpose is to obtain information on the
educational and occupational plans of young
people. The student file contains over 600
variables on 58,000 student respondents.
The school file has over 200 variables on
the 988 sample respondents. Student
variables include background, education,
work experience, postsecondary plans,
aspirations, and cognitive test scores.
School variables include enrollment,
instructional programs, funding sources,
1986 No.1 Family Economics Review 7
discipline problems, and grading systems.
Also available are a parents file, twin and
sibling file, friends file, language file,
and teacher comments file.
The HS&B is similiar to the National
Longitudinal Study of the High School Class
of 1972 (NLS) (see p. 9) in many aspects of
the questionnaires and cognitive tests,
which allows interstudy comparisons. The two
studies differ in that the HS &B study
surveys parents and teachers and it includes
sophomores as well as seniors.
Household Transportation Panel
EIA, $140/each tape
This transportation panel study records
gasoline purchases by month by a national
sample of households for June 1979 to
September 1981. It is part of a series on
household vehicle fuel consumption. Data
include number and type of vehicles,
quantity and cost of fuel purchases, and
miles driven each month.
Labstat
BLS, $85-$200/each tape
This is a data base composed of several
separate files that consists primarily of
time series data. A series refers to a
discrete variable for which observations are
available over regular time intervals
(usually monthly). The Labstat data base
includes over 100,000 series, distributed
among almost 20 data files including:
Consumer Price Index; labor force; unemploy­ment;
employment, hours, and earnings;
imports by tariff and industrial commodity
classes; and indexes of employer compensa­tion
costs. For example, the CPI file has
U.S. average CPI-W and CPI-U for 357 con­sumer
items and group of items. The indexes
are monthly, with some beginning in 1913.
CPI indexes are available for areas,
regions, and city sizes. The labor force
file has macrodata on employment and unem­ployment
since 1948. Individual records on
labor force participation are available
since 1976. BLS monthly publications of such
data include: CPI Detailed Report,
Employment and Earnings, and Monthly Labor
Review.
8 Family Economics Review 1986 No.1
National Food Consumption Survey 1977-78
(NFCS)
HNIS, $140-$465/each tape
The NFCS provides data on the kind,
quantity, and money value of food consumed
by households and individuals. Information
was collected from about 15,000 households
and 34,000 individuals from these households
in 48 States. Five supplemental surveys
were: Households in which at least one
member was older than 64 years of age;
households with members eligible for the
Food Stamp Program; and households in
Puerto Rico, Alaska, and Hawaii, respec­tively.
Published reports are available for
food or nutrient intakes of individuals and
food consumption of households by region.
Microdata tapes are available for household
or individual by season of the year, and for
low-income households and elderly house­holds.
This is the sixth food consumption
survey conducted on a nationwide scale
(1936' 1942 J 1948 J 1955 J 1965-66 J 1977-78).
A new survey, the Continuing Survey of
Food Intakes by Individuals, is being con­ducted.
It has the basic features of the
individual intake component of the NFCS and
will complement it, but the new survey will
be conducted annually so it will provide
continuous, up-to-date information of food
consumption practices and dietary adequacy
of the population. The 1985 survey has a
nationally representative sample of women
who are 19 through 50 years of age, of all
children of those women who are 1 through
5 years of age, and a sample of low-income
women and their preschool children. New
samples will be selected each year. Data are
from six 24-hour recalls of food intake for
each respondent over a 1-year period. Data
include kind and quantity of food, source
(home, school, and so forth), eating occa­sion,
and general questions about diet and
health. Nutrient data will be available for
14 nutrients and dietary constituents.
National Health and Nutrition Examination
Survey (HANES)
NCHS, $125-$305/each tape
HANES is a continuing national study
based on physical examinations (including
laboratory procedures), medical history, and
standardized tests from a sample of 30, 000
people ages 1 to 74. These are conducted in
2- to 4-year cycles in mobile examination
centers. The survey began in 1959 and ex­panded
in 1970 when nutrition questions
were added. Data include prevalence of
chronic diseases; blood pressure, choles­terol,
and visual acuity; and nutritional
status and deficiencies. Findings are
published in Series 11 of the Vital and
Health Statistics series.
National Health Interview Survey (HIS)
NCHS, $425/each annual tape
HIS is a continuing national household
interview survey of the civilian .noninstitu­tionalized
U.S. population. The survey has
been conducted since 1957, and tapes are
available for each year since 1977. Inter­views
are conducted in about 42,000 house­holds.
Data include incidence of illness
and injury, disability, physician and
dental visits, hospitalizations, and demo­graphic
and socioeconomic characteristics.
Reports are published in Series 10 of Vital
and Health Statistics.
National Income and Product Accounts
(NIPA)
Personal Consumption Expenditures,
1959-present (PCE)
BEA, $150/each tape
Component series of the NIPA include the
Gross National Product (personal consumption
expenditures, investments, inventories,
exports, and government purchases), national
income, and personal income. The NIPA tape,
updated monthly, has the latest estimates
for the series published monthly in the
Survey of Current Business. The PCE tape
has monthly estimates of personal consump­tion
expenditures by type of expenditure.
Estimates are in current and 1972 dollars.
These data are obtained from a census of
manufacturers and a variety of other
sources, not including households or
individuals.
National Longitudinal Study of the High
School Class of 1972 (NLS)
NCES, $180 (raw), $200 (SAS)
NLS studied the education and vocational
activities of young adults. A nationally
representative sample of over 23,000 high
school seniors were interviewed in 197 2, and
four followup surveys ensued in 1973, 1974,
1976, and 1979-80. The High School and
Beyond study, begun in 1980, had similar
objectives. The NLS provides detail on
education, employment, family-related out­comes,
and other aspects such as mill tary
service, political participation, and life
goals. Published reports are available from
NCES.
National Medical Care Utilization and
Expenditure Survey (NMCUES)
NCHS, $425/tape.
NMCUES provides estimates of the utiliza­tion
of and expenditures for medical care,
health insurance coverage, and amounts paid
by insurers for health care. About 6,000
persons were included in the national house­hold
sample and about 4, 000 persons were in
a four-state medicaid sample (California,
Michigan, Texas, and New York). The same
questionnaire was used for the two samples.
Information for all family members was
collected from a single household respondent
through five interviews about 3 months
apart. Medicare and medicaid records were
obtained for persons in interviewed house­holds
reported to be covered. Data in the
national household sample complement data
collected in the National Health Interview
Survey and can be compared to the 1977
National Medical Care Expenditure Survey.
Data on the cost, source and amount of pay­ment,
and public and private insurance
coverage are available, as are person and
family characteristics. Information includes
expenditures on dental care, emergency room
visits, outpatient and inpatient hospital
stays, and prescription and nonprescription
medicine. Published reports are a series of
methodological reports, descriptive reports,
and preliminary data.
National Survey of Family Growth: 1982-83
NCHS, $125/each tape
This survey is third in a series on topics
related to childbearing and related aspects
of maternal and child health. A nationwide
probability sample of 8, 000 women 15 to 44
years of age were interviewed. Variables
include socioeconomic characteristics of
each woman, her husband (if married), and
parents; family planning practices; and
1986 No.1 Family Economics Review 9
marital history. Reports based on this data
and the 1973 and 1976 surveys are in Series
23 of Vital and Health Statistics.
New Beneficiary Survey: 1982
SSA
This is a national sample of people who
began receiving Social Security benefits
between mid-1980 and mid-1981. Interviews
of 18,600 persons provide data on employ­ment
history, health, marital history, and
income from earnings, pensions, and other
sources. Microdata tapes are available and
reports are published in the Social Security
Bulletin.
Residential Energy Consumption Survey
EIA, $140/each tape
The 1981-82 survey file (the fifth in a
series) has 6, 000 sample households repre­sentative
of the contiguous United States.
Variables include housing unit character­istics,
annualized fuel consumption and
expenditures, weather variables, and
marginal electricity rates. The tape has the
survey data, an SPSS file program, and a
Table Producing Language (TPL) file pro­gram.
A published report is available.
Retirement History Study
SSA
This longitudinal study, conducted in odd­numbered
years from 1969 to 1979, inter­viewed
11,000 people who were 58 to 63 years
old. Data include health, living arrange­ments,
financial resources and assets,
expenditures, leisure activities, retirement
plans, travel, life satisfaction, work
history of self and spouse, and family
composition. The responses to the series of
surveys have been merged onto one file. The
Social Security Bulletin includes published
reports.
Survey of Income and Program Participation
(SIPP)
Census, $140/each tape
The SIPP is a new continuing survey
designed to collect data on income, labor
force experience, and participation in major
government programs. In addition to these
10 family Economics Review 1986 No.1
core quarterly questions, there are annual
data on assets and liabilities, and one-time
data on marital history, migration, educa­tion,
disability, and work history. SIPP
data will be used to measure income distri­bution
and poverty, estimate future costs
and coverage of Federal and State aid
programs, and predict effects of proposed
changes in program eligibility rules or
benefit levels.
Each of the 20, 000 households in the
sample is interviewed at 4-month intervals
over a period of 2-1 I 2 years that began in
October 1983. Each 4-month cycle is a wave.
New panels of 20,000 will be introduced each
year; thus, SIPP's sample size will grow as
panels overlap. Data are available in three
forms: Quarterly statistical reports
(Current Population Re,eorts P-70 series),
microfiche of these reports, and microdata
tapes containing person, family, and house­hold
records for one wave. The tapes have
cross-sectional, quarterly files but may be
matched across waves to create longitudinal
files. A rectangular file for Wave 1 is
available on two reels at 6250 bpi.
The research and development phase of
SIPP was the Income Survey Development
Program (ISDP). It was a nationally repre­sentative
sample of 8, 200 households, inter­viewed
six times beginning in 1979, which
provided information on income and wealth.
Those data tapes are available from National
Technical Information Service. A data man­agement
system, custom reports, or tape
extracts are available from private firms.
Survey of Consumer Finances
NTIS, $140/tape
The Federal Reserve Board, U.s. Depart­ment
of Health and Human Services, and five
other agencies conducted the 1983 Survey of
Consumer Finances. That survey, consisting
of a sample of 3, 824 families, provides
information on the distribution of assets
and liabilities among families with various
characteristics, use of financial services,
reaction to consumer credit regulations, and
consumer pension rights and benefits. A
series of reports are published in the
Federal Reserve Bulletin, and a microdata
tape is available.
).
DIRECTORY OF CATALOGS 5
Bureau of the Census
U.S. Department of Commerce
Customer Services
Data User Services Division
Washington, DC 20233
301-763-4100
• Census Catalog and Guide: 1985
Description of publications, computer
tapes, and microfiche.
$13, GPO, Stock No. 003-024-06331-0
• Data User News
Monthly newsletter on new products, plans,
and services. $21/yr, GPO ·
• Directory of Data Files
Abstracts of data files (summary
statistics, microdata) and software issued
through 1983. $11, Census Customer
Services
• Fact finder for the Nation No. 5,
Reference Sources
List of guides, directories, catalogs, and
indexes to Census Bureau statistics.
• Monthly Product Announcement
Monthly list of new Census products.
Bureau of Economic Analysis (B EA)
U.S. Department of Commerce
1401 K Street NW.
Washington, DC 20230
202-523-0777
• B EA Catalog of Publications and Computer
Tapes
List of periodicals, working papers and
computer tapes (for example, National
Income and Product Accounts (NIPA).
Bureau of Labor Statistics (BLS)
U.S. Department of Labor
Office of Publications
Washington, DC 20212
202-523-1221
• BLS Machine-Readable Data and Tabulating
Routines (Report 620)
Abstracts of statistical series and
surveys (for example, <1fl, CES) available
in machine-readable form.
• Current BLS Publications
Description of selected publications.
5 Free unless a price is stated.
• Data Files on Tapes
Brief listing of major data series.
• How to get Information from the Bureau
of Labor Statistics
Summary of B LS information and where to
find it (publications, electronic news
service, mailgram, magnetic tapes, and
telephone summary).
Energy Information Administration (EIA)
U.S. Department of Energy
Forrestal Building, Room 1F-048
1000 Independence Avenue SW •
Washington, DC. 20585
202-252-8800
• EIA Publications Directory 1984: A Users
Guide
List of publications, microfiche, and data
files.
• Statistical Data Files from the Energy
Information Administration
Description of data files (for example,
Residential Energy Consumption and
Expenditures)
Economic Research Service (ERS)
u.s. Department of Agriculture
1301 New York Avenue NW., Room 208
Washington, DC 20005-4788
202-786-1515
• ERS Reports
Abstracts of periodicals and reports.
Federal Reserve Board (FRB)
Publications Services
Washington, DC 20551
202-452-3244
• Public Information Materials
Abstracts of publications on FRB statistics
(for example, Flow of Funds).
Food and Nutrition Service (FNS)
U.S. Department of Agriculture
3101 Park Center Drive
Ale.xandria, VA 22302
703-756-3284
• Publications of the Food and Nutrition
Service
List of publications on food assistance
programs.
1986 No.1 Family Economics Review 11
Human Nutrition Information Service
(HNIS)
U.S. Department of Agriculture
Federal Building, Room 368
Hyattsville, MD 20782
301-436-8617
• Machine Readable Data Sets on Composition
of Foods and Results From Food Consumption
Surveys
Description of tapes (food composition and
consumption) and diskettes (nutrient values).
• Publications List
List of publications (for example,
National Food Consumption Survey 1977-78
(NFCS) reports).
National Center for Education Statistics
(NCES)
U.S. Department of Education
Statistical Information Office
1200 19th Street NW., Room 418
Washington, DC 20208-1402
202-254-6057
• Selected Publications From NCES
Description of reports, bulletins on
education statistics.
National Center for Health Statistics
(NCHS)
U.s. Department of Health and Human Services
Scientific and Technical Information Branch
Division of Data Services
3700 East-West Highway, Room 157
Hyattsville, MD 20782
301-436-8500
• Catalog of Public Use Data Tapes From the
National Center for Health Statistics
Description of over 100 data tapes (for
example, National Medical Care and
Utilization Survey).
• Catalog of Publications of the National
Center for Health Statistics 1979-83
List of publications, reports, and an
index to selected health topics.
12 Family Economics Review 1986 No.1
National Technical Information Service
(NTIS)
U.S. Department of Commerce
5285 Port Royal Road
Springfield, VA 22161
703-487-4600
• Data Base Services and Federal Technology
in Machine-Readable Formats, PR-595
Explanation of NTIS machine-readable
information products and services.
• General Catalog of Information Services
No. 9, PR-154
Overview of NTIS services and products
(research and technical information available
in paper, film, and machine-readable formats) •
• NTIS Data Files, PR-700
List of computerized data files (for example,
Household Pension Survey).
Social Security Administration (SSA)
U.S. Department of Health and Human
Services
Office of Research, Statistics and
International Policy
187 5 Connecticut A venue NW.
Washington, DC 20009
202-673-5579
• ORSIP Publications Catalog--1986
List of publications of statistical
compilations and research studies;
microdata files (for example, Retirement
History Study).
Statistics of Income Division (SOl) D:R:S
Internal Revenue Service
U.S. Department of the Treasury
1111 Constitution A venue NW.
Washington, DC 20224
202-376-0102
• SOl Publications and Other Information
Available
List of publications (on statistics of
income, individual tax returns) and
public-use tape files (on estate tax
ret urns, migrations, and individual income
tax returns by State and county).
Superintendent of Documents
U.S. Government Printing Office
Washington, DC 20402
202-783-3238
1erms, Concepts, and Acronyms
in Family Financial Planning
By Joyce M. Pitts
Home economist
Recent laws and technologies have produced
additions to our financial language. New
terms (and new uses for old terms) have
originated from such events as deregulation
of financial institutions and development of
creative mortgages. This paper explains some
of these terms in brief, nontechnical defi­nitions.
It is divided into three subject
areas: (1) Economic issues, (2) financial
institutions and instruments, and
(3) mortgages and consumer credit.
ECONOMIC ISSUES
We are facing an era of growing economic
and financial complexity. Consumers need to
know how to interpret the signals that
economic indica tors give, how economic
trends and policies can affect financial
goals, and how to make financial decisions
based on economic conditions. Understanding
the following terms and concepts will aid
consumers in interpreting economic issues.
Indicators
Index of Leading Economic Indicators.
Economic indicators generally are divided
into three groups, depending on whether
their turning points lead, lag, or coincide
with the turning points in the business
cycle. 1 Leading indicators generally have
turning points that precede peaks and
troughs in general business activites. The
Index of Leading Economic Indicators is one
of three composite indexes computed monthly
by the U.S. Department of Commerce, Bureau
of Economic Analysis (B EA). It is a summary
1 The economy historically has exhibited
alternating and recurring phases of expan­sion
and contraction, also called peaks and
troughs. During the expansion phase there
is a rise in business activity; during the
contraction phase there is a decline. In
between the two is the turning point. This
whole process is known as the business
cycle.
of several time-series measurements
including: The average workweek of produc­tion
employees, the index of stock prices,
the index of new building permits, the
percent change in sensitive prices, and the
money supply (table 1). BEA uses data from
many sources to construct composite indica­tors.
For example, they receive data on the
average workweek from the U.S. Department
of Labor, stock prices from Standard and
Poor's Corporation, and the money supply
from the Board of Governors of the Federal
Reserve System (Federal Reserve). Initial
releases of the Index of Leading Economic
Indicators reflect a summary of 10 time
series with updates that include all 12 of
the series. This composite often is used as
an aid in the interpretation and prediction
of business activities. It generally is
thought that 3 consecutive months of
decreases in the index signals a recession.
However, such trends sometimes have only
reflected a temporary slowdown in the rate
of ex pans ion.
Index of Coincident Economic Indicators.
Coincident indicators, also called roughly
coincident indicators, have peaks and
troughs that roughly parallel those in
general business activities. Examples
include: Personal income, industrial produc­tion,
nonagricultural employment, and manu­facturing
and trade sales. The composite
Index of Coincident Economic Indicators
often is used as an indication of current
economic conditions (table 1).
Index of Lagging Economic Indicators.
Lagging indicators generally have peaks and
troughs that follow turning points in
general business activities. Examples
include: Business loans outstanding, prime
rates, and the length of unemployment. The
composite index of lagging economic indica­tors
is a summary measure that includes six
of these indicators (table 1). This index
usually moves in the opposite direction from
the index of leading economic indicators.
Level of employment. The U.S. Department
of Labor, Bureau of Labor Statistics (8 LS),
has two methods of measuring employment.
The Current Population Survey (CPS) gathers
1986 No.1 Family Economics Review 13
household data, whereas the Current Employ­ment
Statistics Survey (CESS) gathers pay­roll
data through State agencies. The CPS,
referred to as the household survey, pro­vides
information on the number in the labor
force, total employment, and unemployment
rates. The CESS, referred to as the estab­lishment
survey, gives information on
employment, hours, and earnings of workers
on nonagricultural payrolls (table 2).
Unemployment rate. Unemployment rates
are released monthly by B LS and reflect the
percentage of unemployed persons in the the
labor force, based on the CPS. Persons are
considered unemployed if they had no employ­ment
during the survey week, were laid off,
or had made no attempt to find employment
during the 4 weeks prior to the survey
(table 2).
Consumer Price Index (CPI). The CPI, also
released monthly by B LS, is a measure of the
average change in prices of a fixed market
basket of goods and services and often is
used as a measure of inflation. Prices are
included for food, clothing, shelter, fuels,
transportation costs, doctors' and dentists'
charges, drugs, and other goods and services
required for day-to-day living. The CPI-U is
determined by expenditure patterns of urban
households and the CPI-W looks at those for
urban wage-earner and clerical-worker house­holds.
The CPI often is used to make cost­of-
living adjustments (COLA) to wages and
retirement benefits. 2
2For additional information on the CPI,
see "Two measures of inflation: The Consumer
Price Index and the Personal Consumption
Expenditure Implicit Price Deflator," by
Frankie N. Schwenk, Family Economics Review,
Winter 1981, pp. 13-18. Also see "Revision
of the Consumer Price Index in 1987" on
p. 22 of this issue.
Table 1. Components of the composite indexes of economic indicators
Index of Leading
Economic Indicators
Average workweek, production workers,
manufacturing.
Average weekly initial claims for State
unemployment insurance.
Manufacturers' new orders, consumer goods
and materials in 1972 dollars.
Index of net business formation.
Index of stock prices, 500 common stocks.
Contracts and orders for plant and equip-ment
in 1972 dollars.
Index of new housing authorized by local
building permits.
Vender performance, percent of companies
reporting slower deliveries.
Net change in manufacturing and trade
inventories on hand and on order in 1972
dollars.
Percent change in sensitive materials prices.
Money supply, M2 in 1972 dollars.
Change in business and consumer credit
outstanding.
Index of Coincident
Economic Indicators
Employees on non­agricultural
payroll.
Index of industrial
production.
Personal income less
transfer payments in
1972 dollars.
Manufacturing and trade
sales in 1972 dollars.
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
14 family Economics Review 1986 No.1
Index of Lagging
Economic Indicators
Index of labor costs
per unit output,
manufacturing.
Ratio, manufacturing
and trade inventories
to sales in 1972
dollars.
Average duration of
unemployment in weeks.
Ratio, consumer
installment credit
outstanding to
personal income.
Commercial and
industrial loans
outstanding in 1972
dollars.
Average prime rate
charged by banks.
Producer Price Index (PPI). The PPI is a
measure of price levels and price changes
for goods at various stages of production-­crude,
intermediate, and finished. Included
are all commodities produced in the manu­facturing,
agricultural, forestry, fishing,
mining, and public utilities sectors.
Commodities such as farm products, textiles,
chemicals, lumber, machinery, food, automo­biles,
jewelry, furniture, and other goods
are included. Movement in the PPI may be
reflected later in consumer prices.
Policies 3
Fiscal policy. Fiscal policies are various
activities used by the Administration and
Congress to alter Government revenue and
expenditures, thus influencing total spend­ing
in the economy. Total spending can be
3 Certain policy actions implemented by the
Government sometimes are referred to as
stabilization policies. The purpose of
stabilization is to reduce disturbances such
as inflation and unemployment in economic
activity. Fiscal and monetary policies are
stabilization techniques. For additional
information on Government policies, see
Federal Tax Policy, 4th edition, by
Joseph A. Pechman, 1983, The Brookings
Institution, Washington, DC.
Table 2. Major indicators of employment and unemployment, seasonally adjusted 1
Category
Household data (thousands of persons) :2
Labor force ................................ .
Total employment ••••••••••••••••••••••••••
Not in labor force .......................... .
Discouraged workers ••••••••••••••••••••••
Unemployment rates (percent of the
labor force) --all workers ••••••••••••••••••
Establishment data (thousands of jobs):
Nonfarm payroll employment •••••••••••••••••
Average weekly hours (hours of work)-­total
private nonfarm ••••••••••••••••••••••
Quarterly averages
1984
4th quarter
115,885
107,652
62,948
1,303
7.1
95,849
35.2
1985
1st quarter
116,858
108,432
62,364
1,253
7.2
96,640
35.1
1 Seasonal adjustment is a statistical method used to remove the affects of changes in the
calendar from time series. When looking at general trends, seasonally adjusted numbers
usually are used because they eliminate the effects of weather patterns, regular production
and marketing cycles, seasonal discounts, and holidays from the data, thus more clearly
revealing underlying trends.
2 Includes the resident Armed Forces.
Source: U.S. Department of Labor, Bureau of Labor Statistics, 1985, The employment
situation: May 1985, News, USDL No. 85-235.
1986 No.1 Family Economics Review 15
adjusted directly by increasing or decreas­ing
Government spending and indirectly by
increasing or decreasing taxes. For example,
taxes sometimes are cut so that more money
in the marketplace will rejuvenate sluggish
business activities.
Tax base broadening. A tax base is an
object that is subject to taxation, such as
income, property, or inheritance. Tax base
broadening is a fiscal policy technique that
finds new sources to tax or increases the
proportion of taxation on certain objects.
Methods of broadening the tax base include
eliminating specific deductions or allowing
fewer exemptions.
Monetary policy. Monetary policies are
activities used by the Administration and
the Federal Reserve to adjust the avail­ability
and cost of money and credit. By
controlling the amount of money in circula­tion,
the Government can indirectly increase
or decrease the level of economic activity.
Techniques of monetary control include:
Open-market operations (purchases and sale
of Government securities in the open
market) , discount policy (extending credit
directly to depository institutions), and
reserve requirements (the amount institu­tions
must hold against customer deposits).
Money supply. Money supply, or money
stock, represents a summary measure of the
amount of money held by the public and is
used as a monetary policy guide. Ml is the
sum of all currency and coin outside
Treasury, Reserve, and commercial banks,
plus travelers checks, demand deposits, and
other checkable deposits, such as NOW
(negotiable order of withdrawal) and ATS
(automatic transfer service) accounts and
credit union share drafts. M2 equals Ml,
plus savings accounts, small-denomination
time deposits, money market mutual fund
shares, overnight Eurodollars (U.S. dollars
at banks outside of the United States), and
repurchase agreements. M3 equals M2, plus
large-denomination time deposits and other
investments. If the money stock increases
too rapidly, the Federal Reserve can use one
of its monetary policy techniques (such as
increasing reserves to slow growth) in an
effort to control inflation.
16 family Economics Review 1986 No.1
Industrial policy. Indus trial policy
involves certain activities aimed at adjust­ing
industrial output. A government might
encourage new high -technology industries,
assist old industries to regain strength, or
attempt to prevent a decline in selected
industries. The United States does not have
a formal industrial policy. However, certain
fiscal and trade policies--such as subsidies
for exports, import quotas, and embargos-­do
have a direct affect on industrial output.
International trade policy. International
trade policy involves activities by the
Government to control exports and imports.
Trade policies attempt to balance the
advantages of free trade (such as increased
competition, resulting in lower prices) with
those of trade restrictions (such as in­creased
demand for American-made products).
There has been growing debate lately on
adoption of a "protectionism" trade policy
that would impose strict quotas on foreign
shipments, thus protecting domestic
companies.
Balance of payments. The balance of pay­ments
represents all payments between trad­ing
nations. This includes payments for
foreign investments, foreign aid, and
imports and exports. The balance of trade is
the import/export portion of the balance of
payments. Countries aim for a certain
balance between what they pay out for
imports and what they take in for exports.
The United States has a trade deficit,
importing in excess of $100 billion more per
year than exporting.
Exchange rate. The exchange rate repre­sents
the value of one nation's currency in
relation to that of other countries. Recently
the U.S. dollar has had a high exchange rate
relative to the currencies of its trading
partners. This has had both good and bad
results. For example, the strong dollar
assisted in the economic recovery by
reducing import prices, thus requiring U.S.
firms to keep prices low in order to
compete; however, it also reduced the
competitive position of U.S. companies in
the international marketplace, contributing
to the Nation's trade deficit.
FINANCIAL INSTITUTIONS AND
INSTRUMENTS
The Electronic Funds Transfer (EFT) Act
and the Depository Institutions Deregulation
and Monetary Control Act of 1980 (MCA) make
important changes in the banking system and
include some new financial terms, concepts,
and acronyms. The EFT Act'+ regulates com­puter
banking. It authorzies the use of
automated teller machines (A TM), point-of­sale
(POS) terminals, preauthorized pay­ments,
and telephone transfer service (TTS);
and sets limits to customers' liability for
unauthorized use of debit cards. 5 Title II
of MCA called for a phasing out" of interest
rate ceilings to promote greater competi-tion,
less regulation, and greater effi-ciency
in banking and related financial
services. It also reduced regulatory
barriers that prevented competition among
various types of financial institutions, by
expanding the lending options of thrift
instutitions and by permitting wider use of
interest-earning checking accounts.
Financial Institutions .
Banks. Commercial banks engage in a
variety of financial activities and services
involving receiving, transferring, lending,
and investing money. They accept deposits
from individuals and businesses for saving,
checking, and investment accounts; are owned
by stockholders; and operate for a profit.
'+For additional information of EFT, see
"EFTS--Electronic funds transfer systems,"
by Cynthia L. Jennings, Family Economics
Review, Winter 1980, pp. 9-13; "Electronic
funds transfer," Family Economics Review,
1984(1): 6; and "Costs and benefits of the
Electronic Fund Transfer Act," Family
Economics Review 1985(4):22.
5 A debit card resembles a credit· card and
is sometimes referred to as an access card.
It is electronically read and immediately
deducts the amount of a purchase or with­drawal
from the customer's account. This
process eliminates much of the paperwork
associated with the traditional check­writing
process and also allows various
other banking functions (such as deposits
and balance verifications) to be performed
by computer.
Thrift institutions. Thrift institutions,
sometimes referred to as noncommercial
banks, include savings and loan associations
and mutual savings banks. In the past,
thrifts primarily handled savings from
individuals and invested in mortgages.
Historically, they have been sensitive to
changes in interest rates, and suffered
widespread losses when rates reached high
levels. However, steps have been taken
recently to allow these institutions to
attract more business through new instru­ments
and deregulation.6
Financial supermarket. Financial super­markets
allow one-stop shopping for
financial services. Certain banks, brokerage
houses, insurance companies, and stores will
manage a customer's total finances. Services
typically offered include: Free checking,
low-interest-rate loans, credit and debit
cards, discounts on security transactions,
income tax preparation, real estate assis­tance,
and a single statement detailing all
monthly activities. 7
Financial Instruments 8
Bonds. A bond is a fixed-income security
that represents a loan to the bond issuer.
The bondholder usually receives semi-annual
6 Credit unions also are a segment of the
thrift industry.
7 For additional information on financial
supermarkets, see "A buyers guide to the
financial supermarkets," by William G.
Flanagan and Janet Bamford, Fordes,
August 1, 1983, pp. 144-149; "Best buys in
the financial supermarket," by Martin Baron,
50 Plus, June 1983, pp. 42-45; and "Checking
out the financial supermarkets," Money
12(5):141-147.
8 Before selecting any particular invest­ment
instrument, individuals may want to get
a copy of the prospectus for that invest­ment.
A prospectus is an official document
required by law to be distributed by a
company planning to issue securities to the
general public. It provides information on
the company's investment objectives, the
amount of sales charges, procedures for
redeeming shares, and risks involved in
investing in that particular company.
1986 No.1 Family Economics Rev i ew 17
interest at a predetermined yield and repay­ment
of principal on a given date. Corporate
bonds are issued by private companies and
may be backed by collateral. Municipal bonds
are backed by specific revenues and are
exempt from Federal income taxes and from
State taxes in the State in which they were
issued.
Certificate of Deposit (CD). A CD is a
time deposit that cannot be withdrawn with­out
penalty before a specified maturity
date. On January 1, 1985, the minimum
deposit for 7- to 31-day accounts was
reduced from $2, 500 to $1, 000. There is no
minimum deposit required by law in accounts
with maturities more than 31 days. However,
individual financial institutions may have
their own minimum deposit requirements.
Limited partnership. A limited partnership
is group ownership of a variety of proper­ties.
Income is earned through dividends and
appreciation. Tax-benefits from interest,
property taxes, and capital losses are
passed on to investors. Money, however, is
usually tied up until the properties are
sold and the partnership is liquidated.
Money Market Deposit Account (MMDA).
MMDA's were authorized to enable banks and
thrift institutions to compete with money
market mutual funds. These interest-bearing
instruments are insured and offer limited
transaction privileges, such as check
writing.
Mutual fund. Mutual funds are pooled
investments that are professionally managed.
A money market fund (MMF) is a mutual
fund that typically invests in short-term
securities, such as Treasury bills, and
large denomination certificates of deposits.
Mutual funds are not insured.
Real estate investment trusts (REITS).
REITS are professionally managed invest­ment
accounts similar to mutual funds.
Dividends are from rental incomes received
from various real estate properties. These
trusts are bought, sold, and traded daily
on the open market.
Receivables-backed securities. There
is a growing trend on Wall Street to offer
securities that are backed by a range of
consumer and commerical loans. Certificates
of automobile receivables (CAR), for
example, offer ownership in a pool of car
18 Family Economics Review 1986 No.1
loans. Cash flow from the loans is collected
by the investment firm and goes to
investors. Theoretically, loans could be
backed by any collateralized loan. 9
Stock. Stock is ownership interest in
a corporation, entitling the stockholder to
a part of the corporation's earnings
(dividends). The value of common stock
increases or decreases primarily according
to the performance level of the company.
Perferred stock pays fixed dividends that
often are higher than for common stock in
the same company. However, perf erred stock
does not usually increase in value.
Treasury securities. The U.S. Treasury
issues bills, bonds, and notes. Each is sold
at a discounted face amount, cashed in for
full face value at maturity, and traded on
the open market. Bills, whose minimum denom­ination
is $10,000, mature in a year or
less. Bonds are available in denominations
of $1,000 with maturities from 10 to 30
years. Notes can be puchased in denomina­tions
of $1,000 with maturities from 1 to 10
years. Teasury bill interest rates are a
basic indica tor of the price the U.S.
Government must pay to obtain money. Costs
of other instruments tend to be scaled
upward from this rate. Lenders often use
Treasury bill rates to decide when to raise
or lower interest rates on adjustable-rate
loans.
Unit investment trusts. Unit invest-ment
trusts are professionally managed
investments in a variety of instruments,
such as tax-exempt or corporate bonds and
stock. They offer a fixed-interest income
and can be redeemed through the trust or
sold through a broker. Trusts disband and
pay off investors after the majority of the
investments have been redeemed. This could
be in 6 months if investments were in certi­ficates
of deposit, or in 20 to 30 years if
investments were in corporate or municipal
bonds.
9 For additional information on CAR's, see
"Security backed by car loans is part of
trend that may lead to lower consumer loan
rates," by Ann Monroe, The Wall Street
Journal, February 11, 1985, p. 4.
Universal life insurance. Universal life
is an insurance/investment policy that has
several built-in flexibilities. The policy
holder can pay the premium at almost any time
in virtually any amount and, also, can change
the death benefit. The cash value of the policy
increases to reflect interest earned on
short-term investments purchased with part of
the premium.
Variable-annuity insurance. Variable
annuities use premiums to purchase a port­folio
of securities. At retirement the
assets are converted into annuity payments
that vary with the yield on the portfolio.
Z era-coupon bonds. Z era-coupon bonds
are corporate or government issued, sold at
deep discounts from face value, and pay no
interest until maturity. These bonds are
taxed, however, as if interest had been
received, unless they are protected in a
tax-sheltered retirement plan.
MORTGAGES AND CONSUMER CREDIT
During the years of high rates of infla­tion,
many financial institutions were put
in an unfortunate position--paying out high
and varying amounts on customer's market­rate-
based savings accounts while taking in
fixed amounts from old, low-interest-rate
loans and mortgages. To correct the situa­tion,
banks and thrifts began offering loans
and mortgages that also were tied to market
conditions. These variable-rate loans
enabled the institutions to pass some of the
risk against high inflation on to consumers.
Inflation has eased, and interest rates on
loans and savings accounts are lower and
more stable. However, the past era has left
new credit options. The following terms and
concepts are related to mortgages and
consumer credit.
Mortgages
Alternative mortgage instruments (AMI) •
AMI's are various mortgage plans that
modify the basic characteristics of the
standard, fixed -rate, level-payment mortgage.
They require the borrower to share some of
the risk of increasing interest rates. 10
1° For additional information see "Alterna­tive
mortgage instruments," by Carolyn
Summers Edwards, Family Economics Review
1982(4):1-18.
Bridge loan. A bridge loan is a tempo­rary,
short-term loan, typically for about
6 months, that allows a purchaser to go to
closing on a new home before the old one is
sold. The bridge loan is made against the
equity in the purchaser's old house and
includes a balloon payment of principal and
interest that comes due at the end of the
term or at settlement on the sale of the old
house, whichever comes first.11
Creative financing. Creative financing
is a method of purchasing property,
usually including an assumable, low-rate
existing mortgage and some financial assis­tance
from the seller on a short-term or
long-term basis (such as acting as lender).
Each transaction is adjusted to meet the
specific needs of the particular seller and
purchaser. 12
Secondary mortgage markets. Federal
Home Loan Mortgage Corporation (Freddie
Mac) , Federal National Mortgage Association
(Fannie Mae), and Government National
Mortgage Association (Ginnie Mae) are
secondary mortgage markets. They buy resi­dential
mortgages from lenders, who continue
to handle the individual payments from
borrowers. This process enables the lenders
to make more loans and allows Freddie Mac,
Fannie Mae, and Ginnie Mae to sell debt- and
mortgage-backed securities to investors.
Freddie Mac and Fannie Mae pool conventional
mortgages, whereas Ginnie Mae pools FHA­insured
and VA-guaranteed mortgages. Ginnie
Mae's are sold in units of $25,000 or more,
with yields about 1 percent higher than
Treasury securities. Each month owners
receive both interest and partial return of
principal for each of these securities.
11 For additional information on bridge
loans, see "At home: Bridge loans, buy now,
pay later," Changing Times 39(7):17.
1 2 For additional information, see
"Creative residential finance," by Carolyn
Summers Edwards and Isabelle S. Payton,
Family Economics Review 1984(1): 7-16.
1986 No.1 Family Economics Review 19
Zero-rate mortgage. A zero-rate mortgage
requires a large downpayment and a one-time
finance charge. The loan then is repaid in
fixed monthly installments. Zero-rate mortgages
allow quick ownership but do not offer any
long-term tax deductions.
Consumer Credit
Amortization. Amortization is the
gradual repayment of a loan through regular
payments of principle and interest. When the
repayment schedule is insufficient to fully
amortize the loan, unpaid interest can be
added to the principal, thus increasing the
debt. This is negative amortization and
sometimes is found in various types of
adjustable rate plans.13
Creditworthiness. Creditworthiness is
an individual's past credit rating and pro­jected
future ability and willingness to
repay a loan, as determined by a creditor.
Credit scoring system. Statistical
models often are used to determine if an
individual with certain characteristics is a
good credit risk. Numerical scores are
assigned to various attributes, such as age,
homeownership, occupation, and past credit
history, to determine creditworthiness.
Judgmental system. The judgmental
system is a nonstatistical method of deter­mining
creditworthiness, based mainly on the
creditor's judgment of an applicant's
ability and willingness to repay the loan.
Prohibited factors. Prohibited factors
are characteristics concerning an applicant
that cannot legally be used by a creditor as
a basis for denying credit. They include
sex, race, age, marital status, religion,
color, national origin, receipt of public
assistance, and the exercise of rights given
under the Federal consumer credit protection
laws.
1 3 For information on adjustable rate
mortgages, see "Adjustable rate mortgages-­Consumer
information needs," by Carolyn E.
Summers, Family Economics Review
1985(4):4-9.
20 Family Economics Review 1986 No.1
Open-end credit. Open-end credit is a
loan used repeatedly up to a stated limit.
Bills are issued monthly for a portion of
the loan. Credit cards are examples of open­end
credit.
Closed-end credit. Closed-end credit
is a one-time loan, usually for the purchase
of a costly item. The payment period, number
of payments, and the payment amounts are
specified.
SELECTED REFERENCES
1. Angle, Elizabeth W. 1980. Keys for
Business Forecasting. Federal Reserve
Bank of Richmond.
2. Board of Governors of the Federal
Reserve System. 1982. Glossary.
3. Economic Report of the President.
Transmitted to the Congress together
with The Annual Report of the Council
of Economic Advisers. February 1984.
4. Federal Reserve Bank of Boston. [ 1980.1
Depository Institutions Deregulation and
Monetary Control Act of 1980.
5. Federal Reserve Bank of Dallas, Public
Affairs Department. 1984. United States
Treasury Securities--Basic Information.
6. Federal Reserve Bank of Minneapolis,
Office of Public Information. 1980. A New
Law, A New Era. Annual Report 1980.
7. Federal Reserve Bank of Minneapolis,
Office of Public Information. 1982.
Your Credit Rights--An Instructional
Unit on Consumer Credit Protection.
8. Federal Reserve Bank of Philadelphia,
Department of Consumer Affairs. 1984.
Options for Savers. [Pamphlet. 1
9. Federal Reserve Bank of San Francisco,
Research Department. 1985. Alternative
leading economic indicators. FRBSF
Weekly Letter. April 26, 1985 issue.
10. • 1985. Leading economic
indicators. FRB SF Weekly Letter.
March 29, 1985 issue.
11. Federal Trade Commission. 1982. The
Mortgage Money Guide--Creative
Financing for Home Buyers.
12. Mahoney, Patrick I. , and Alice P. 15. • 1985. Producer Price
White. 1985. The thrift industry in
transition. Federal Reserve Bulletin
71(3): 137-156.
Indexes--March 1985. News. USDL
No. 85-151.
16. • 1985. The employment situa-
13. U.S. Department of Housing and Urban
Development. 1980. Home Buyer's
Vocabulary. HUD 383-H(7).
tion--May 1985. News. USDL No. 85 235.
17. U.S. Securities and Exchange Commission .
Office of Public Affairs. 1982.
14. U.S. Department of Labor, Bureau of
Labor Statistics. 1985. The Consumer
Price Index--July 1985. News. USDL
No. 85-345.
What Every Investor Should Know--A
Handbook from the U.S. Securities and
Exchange Commission.
18. Zarnowitz, Victor, and Charlotte
Boschan. 1975. Cyclical Indicators--An
Evaluation and New Leading Indexes.
[Technical paper.] U.S. Department of
Commerce, Bureau of Economic Analysis.
ACRONYMS
This is a list of some additional acronyms that appear frequently in books,
newspapers, and
APR
CFP
DJIA
ERISA
ERTA
FDIC
FHLBB
FSLIC
IAFP
IMF
NCUA
NYSE
OTC
PIN
SlL
SEC
TEFRA
magazines.
Annual Percentage Rate
Certified Financial Planner
Dow Jones Industrial Average
Employee Retirement Income Security Act of 1974
Economic Recovery Tax Act of 1981
Federal Deposit Insurance Corporation
Federal Home Loan Bank Board
Federal Savings and Loan Insurance Corporation
International Association of Financial Planners
International Monetary Fund
National Credit Union Administration
New York Stock Exchange
Over-the-counter
Personal Identification Number
Saving and Loan Association
Securities and Exchange Commission
Tax Equity and Fiscal Responsibility Act of 1982
1986 No.1 Family Economics Review 21
Revision of the Consumer Price
Index in 1987
The Bureau of Labor Statistics (BLS),
U.S. Department of Labor, is updating and
improving the Consumer Price Index ( CPI).
The resulting changes will be introduced in
January 1987.
The CPI is a measure of price change for
a fixed market basket of constant quantity
and quality purchased for consumption.
Periodic revisions are needed so that the
CPI reflects price changes of items cur­rently
purchased by consumers. Consumers
change their purchasing patterns as a result
of changes in a number of factors, including
relative prices, real income, products,
tastes, and demographic characteristics. The
1987 revision will use the Consumer Expendi­ture
Survey data from 1982 to 1984 to update
the CPI market basket. The previous
revision, in 1978, was based on the 1972-73
Consumer Expenditure Survey.
A new sample of geographic areas will be
selected for pricing the revised CPI based
on population distributions from the 1980
Census. The number of areas sampled will
increase from 85 to 91. Fifty-two of the
areas presently included will be retained,
although the definitions for some will be
affected by the use of the new Consolidated
Metropolitan Statistical Area definitions.l
The new sample will be "rolled in" over a
3-year period. Twenty new areas will be
surveyed prior to 1987 in order for the
January 1987 CPI to reflect the 1980 popula­tion
distribution. Nineteen other new areas
will be introduced in 1987 to 1989.
Allocating samples to produce the most
accurate U.S. CPI possible with the funds
available will affect the frequency of pub­lishing
CPI's for several local areas. The
index for Northeast Pennsylvania (Scranton)
will be discontinued. The index for Detroit
(now published monthly) will be published
bimonthly for even-numbered months. CPI's
1 A Consolidated Metropolitan Statistical
Area is an area which has more than
1 million population and is contiguous to
one or more primary metropolitan statistical
areas.
22 Family Economics Review 1986 No.1
for 12 areas now published bimonthly will be
compiled on a semi-annual average basis/
The classification structure of the CPI
includes seven major groups of expenditures
(food and beverages, housing, apparel and
upkeep, transportation, medical care, enter­tainment,
and other goods and services).
The major groups are subdivided into 68
expenditure classes. A new expenditure class
will be established in 1987--electronic
products, covering personal computers, com­puter
software, calculators, telephones, and
other information processing equipment.
That expenditure class will be part of the
major expenditure group, other goods and
services. Expenditure classes include 265
strata. The expenditure weights of the CPI
market basket are calculated at the stratum
level. Any change in the CPI from month to
month is the effect of price changes of the
strata comprising the market basket. CPI's
for the strata (as well as for the higher
levels in the classification structure) are
published in the CPI Detailed Report, issued
monthly. In the revision most of the strata
have been restructured, a major considera­tion
being to minimize variance in the "All
Items" CPl. The number of strata will drop
to 203, affecting the number of indexes
published. BLS will, however, continue to
publish indexes for some expenditure cate­gories
that formerly were strata where a
sufficient number of price quotations are
collected. A stratum usually is subdivided
into one or more entry-level items. Cur­rently
there are 382 such items. Although
the composition of some will be changed, the
overall number likely will remain about the
same.
Although the priced market basket will
remain fixed at the stratum level until the
next CPI revision, BLS will use data from
the ongoing Consumer Expenditure Survey to
update entry-level items priced to represent
the strata. Reselection of entry-level items
will reflect relative shifts in consumption
2 These areas are Buffalo-Niagara Falls,
NY; Cincinnati-Hamilton, OH-KY-IN; Kansas
City, MO-Kansas City, KS; Milwaukee, WI;
Minneapolis-St. Paul, MN-WI; Atlanta, GA;
Anchorage, AK; Denver-Boulder, CO;
Honolulu, HI; Portland-Vancouver, OR-WA;
San Diego, CA; and Seattle-Tacoma, WA.
within a stratum, or new products within a
stratum, and will result in gradual changes
in composition of the strata. Outlets where
items are priced also will be updated on a
continuing basis using the Continuing Point­of-
Purchase Survey of consumers that was
introduced in the 1978 revision of the CPI.
Improvements in sampling and other aspects
of methodology are a major part of the 1987
CPI revision. For the first time, estimates
of sampling error will be published for some
indexes. An improved housing survey is
being developed that will contribute to the
quality of the rental equivalence measure of
homeowner costs recently introduced in the
CPl.
The CPI that is published for January 1987
will reflect December to January price
changes in the new market basket. "Overlap
indexes" will be published for 6 months
following the introduction of the revised
CPl.
Source: Marcoot, John L., 1985, Revision
of Consumer Price Index is now under way,
Monthly Labor Review 108(4):27-38, U.S.
Department of Labor, Bureau of Labor
Statistics.
Women and Social Security­Findings
From the New
Beneficiary Survey
Women who were of child-bearing age during
the baby boom of the fifties have begun to
receive Social Security retirement benefits.
The New Beneficiary Survey (NBS) of the
Social Security Administration included the
first wave of these women. Others will enter
into retirement over the next decade.
Nearly all of the women surveyed in 1982
had married (only 1 in 10 had not), and 9 in
10 of ever-married women had raised at least
one child; 4 in 10 had raised 3 or more
children. Labor force participation rates
over the period used to compute Social
Security benefits reflect the fact that the
women were raising their families at a time
of high birthrates and low labor force
participation rates for mothers of young
children.
Although the vast majority of women had
married, 36 percent were not married at the
time of the survey. That figure includes 24
percent widowed, 7 percent divorced, and
5 percent never married.
The average monthly Social Security
benefit was related to current marital
status. Households in which married women
and their husbands both were entitled to
receive Social Security benefits averaged
nearly twice the monthly benefit level of
unmarried female beneficiaries. The average
monthly benefit for unmarried women was
highest for widows and lowest for divorced
women. That of divorced women was approxi­mately
equal to the poverty threshold for an
aged person living alone.
Other pensions are an important source of
income to many Social Security retiree
households. Comparison of 1970 and 1982 NBS
data shows that pension receipt by new­beneficiary
retired workers increased sub­stantially
over the period, with women
having greater gains than men. Pension
receipt by retired-worker married women
doubled (from 12 percent to 24 percent) and
that of widowed, divorced, and never-married
women increased substantially (from 25
percent to 43 percent). Married couples in
which the husband was a new Social Security
beneficiary were likely to receive a private
or public pension based on his previous
employment. Fifty-three percent of new­beneficiary
married men received such
pensions. As the likelihood of a married
woman becoming widowed in later years is
high, the potential availability of survivor
benefits from the husband's pension is
important to her long-term financial
security. Based on reports from new­beneficiary
married men who were receiving
or expecting a pension, about two-thirds of
wives would receive a survivor's pension. In
contrast, survivor's pensions were received
by only 13 percent of new-beneficiary women
who were widows at the time of the survey.
Source: U.S. Department of Health and
Human Services, Social Security Administra­tion,
1985, The 1982 New Beneficiary Survey,
No. 4 Women and Social Security. [Reprint of
article from Social Security Bulletin
48(2):17-26, 1985.]
1986 No.1 Family Economics Review 23
Economic Characteristics of U.S.
Households- 2d Quarter 1984
This report, issued by the Bureau of the
Census, is the fourth in a series of
quarterly reports based on data from the
Survey of Income and Program Participation
(SIPP). 1 The SIPP quarterly report series
was developed to make data from the survey
available as quickly as possible and to
supplement currently available information
from other statistical series that measure
changing economic conditions. Highlights of
findings from the second quarter of 1984 for
the Nation's 84 million nonfarm households
follow.
Average income for all U.S. households was
$2,261 per month in the second quarter of
1984. White households had an average
monthly income of $2,356, compared with
$1,480 for black households and $1,735 for
Spanish households/ In households with one
or more members working and no members
looking for work or on layoff, the monthly
average income was $2,7 40. In households
with one or more members looking for work
or on layoff, the average income was $1,7 39
per month. In households having no members
with labor force activity, monthly income
was $1,076.
Seventeen percent of U.S. households
included a member who participated in a
means-tested government program. Com­parable
rates for white, black, and Spanish
households were 14, 44, and 36 percent,
respectively. The major mean~-tested
programs included Aid to Families with
Dependent Children (AFDC), Supplemental
Security Income (SSI), food stamps,
medicaid, public or subsidized housing, free
or ~educed-price school meals, and energy
assistance. Thirty-five percent of house­holds
with one or more members looking
for work or on layoff received some kind of
means-tested benefit, compared with 30
percent of households in which no one was in
1 For information about SIPP, see "Federal
sources of family economic data," by
Frankie N. Schwenk, on p. 1 of this issue.
2Persons of Spanish origin may be of any
race.
24 Family Economics Review 1986 No.1
the labor market, and 10 percent of
households with one or more workers and no
one looking for work or on layoff.
Ten percent of all family households had a
female householder with no husband present
and with one or more children under 18 years
of age. These households had an average
monthly income of $1,126; if no member was
in the labor force, the average monthly
income was $472. These female family house­holds
were the population group most likely
to receive means-tested benefits, having a
participation rate of 57 percent.
Twenty-one percent of U.S. nonfarm house­holds
had a householder who was 65 years old
or over. These households had an average
income of $1,439 per month. Married couples
with a householder age 65 or over had an
average monthly income of $1,998, whereas
elderly households consisting of a person
living alone had an average monthly income
of $866. Seventy-nine percent of elderly
persons living alone were women. Twenty-one
percent of all elderly households received
assistance from means-tested benefit pro­grams.
Medicaid was the most frequent
benefit program of the elderly, followed by
public or subsidized rental housing and food
stamps.
The major source of income received by all
households was from earnings, which
accounted for 78 percent of income received.
Property income (interest, dividends, income
from rental property, and other asset
income) accounted for 8 percent, and Social
Security and railroad retirement income
accounted for 7 percent. The percentage of
households receiving income from these three
sources amounted to 7 3, 69, and 28 percent,
respectively (see table). The 23.5 million
households that contained a Social Security
or railroad retirement beneficiary received
an average monthly payment of $562--
35 percent of their total income.
Source: U.S. Department of Commerce,
Bureau of the Census, 1985, Economic
characteristics of households in the United
States, second quarter, 1984, Current
Population Reports, Household Economic
Studies, Series P-70, No. 4.
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Households and monthly income, by specified income source--2d quarter 1984
Households Monthly household income
Income source
All households ...•.........................
Households receiving--
E arnt. ngs 1 ................................
Property income 2 .........................
Social Security or railroad retirement ....
Company or union pensions •••••••••••••••
Federal Government employee pensions ••••
U • S. military pensions •••••••••••••••••••
State and local government employee
pensions ...............................
Veterans' compensation or pensions •••••••
Private support payments3
••••••••••••••••
Aid to families with dependent children
and other cash assistance •••••••••••••••
Supplemental Security Income •••••••••••••
Nurber
(thousands)
84,002
61,505
57,722
23,508
7,238
1,671
1,283
2,512
3,326
4,354
3,823
2,963
Percent
100
73
69
28
9
2
2
3
4
5
5
4
1 Earnings include wage or salary and self-employment income •
Mean nnnthly
income
(dollars)
2,261
2,720
2,670
1,590
1,902
2,643
3,555
2,211
1,900
1,994
864
1,033
Mean anount
of specified
source
(dollars)
NA
2,394
255
562
394
944
1,014
573
230
331
316
245
2 Property income includes interest, dividends, income from rental property, and other asset income.
Specified source
as a percentage
of total
NA
88.0
9.6
35.3
20.7
35.7
28.5
25.9
12.1
16.6
36.6
23.7
3 Private support payments include child support, alimony, and money from relatives, friends, and charitable groups •
NA = Not applicable.
Source: U.S. Department of Commerce, Bureau of the Census, 1985, Economic characteristics of households in the
United States, second quarter, 1984, Current Population Reports, Household Economic Studies, Series P-70, No. 4.
Convenience and the Cost of
the "Newer" Frozen Plate
Dinners and Entrees
By Dianne D. Odland, Ruth S. Vettel,
and Carole A. Davis
Home economists and Supervisory nutritionist
Nutrition Education Division
Human Nutrition Information Service
Each year an array of new convenience
products is introduced into the marketplace.
Many of these products are multi-ingredient
prepared mixtures that offer considerable
savings in preparation time and a high level
of built-in culinary expertise. Consumers in
the United States spend about one-fifth of
their home food dollars on multi-ingredient
prepared mixtures (!). Frozen prepared plate
dinners and entrees are examples of such
products. In 1984 consumers spent over
3. 3 billion dollars on frozen prepared plate
dinners and entrees, representing about
2 percent of each food dollar spent in
grocery stores (l)·
During the past few years there has been
a surge in the introduction of new and
improved lines of frozen plate dinners and
entrees. Unlike traditional products that
include very simple fare such as fried
chicken or meatloaf, the "newer" products
usually feature a "gourmet"-type entree in
sauce or gravy, plus a vegetable mixture
and/or a seasoned starchy side dish (either
potato, rice, or noodles). A wide variety of
such products now are available. Some are
"light" in calories and are specifically
designed for use by persons watching their
weight.
Many of the newer plate dinners and
entrees have fancy names, are attractively
packaged, and attempt to convey a luxury
image. These newer products also carry
premium prices. Consumers, especially those
with limited resources, may want to know how
much they are paying for the convenience
features of such products. USDA's Consumer
Use of Foods Laboratory of the Human
Nutrition Information Service conducted a
study in which the cost and preparation time
for eight frozen dinners/entrees were
compared to similar products made from home
26 Family Economics Review 1986 No.1
recipes. Three dinners and five entrees were
studied. Meat, poultry, fish, and shellfish
products representing five nationally
advertised brands were included.
PROCEDURES AND RESULTS
Recipe Development
All frozen convenience dinners and entrees
were heated in the laboratory according to
package directions given for a conventional
range top or oven. Component parts of each
prepared product (for example, beef, sauce,
onions, mushrooms, and noodles in beef
stroganoff) were separated and weighed, and
proportions of separable components were
computed. The mean proportions of compo­nents,
each determined from two laboratory
tests, along with product ingredient labels,
were used as the basis of recipe development
for home-prepared counterparts. Insofar as
possible, the same types of recipe ingre­dients
found in the convenience products
were used in preparation of their home
counterparts. For example, the same or
similar cuts of meat were used, and fresh
rather than frozen or canned vegetables were
used if it appeared that fresh had been used
in the convenience dinner or entree. Not all
ingredients were duplicated. For example,
ingredients such as emulsifiers, modified
food starch, hydrolyzed plant protein, and
artificial coloring--which typically are not
used in home food preparation--were not used
in the recipes.
Although recipes for the home-prepared
items were not identical to product formu­lations
of the frozen dinners and entrees,
the resulting products were similar. The
proportion of major separable components in
the prepared home recipes closely approxi­mated
that in the heated frozen dinners or
entrees. For example, the proportion of meat
component was the same in both frozen and
home-prepared in four of the eight products
and in the remaining products it was within
1 to 2 percent. A serving of the dinners
contained 2.8 to 3.0 ounces of meat, poul­try,
or fish; the entrees contained consid­erably
less--1.1 to 2. 5 ounces.
Recipes for home-prepared counterparts
were developed to yield approximately four
servings. Each recipe was prepared twice and
the mean weight then divided by the weight
of the heated convenience item to determine
the exact number of servings for use in
cost-per-serving computations.
Food Cost Comparisons
Each convenience product and the ingredi­ents
for their home-prepared counterparts
were priced in three Washington, DC, area
supermarkets for 3 consecutive weeks in the
first quarter of 1985. Container sizes
selected for pricing ingredients for home­prepared
counterparts were typical of sizes
that might be purchased by smaller house­holds,
but were not necessarily · the smallest
available. Factors such as recipe require­ments,
versatility of the product for use in
other home recipes, and storage life of the
product were considered. All products
selected for use in cost comparisons were
high-quality name brand or store brand
items. Where several brands of a product
were available, the one having the lowest
unit price was used in costing.
When recipes specified ingredients in
which trimming or cooking losses must be
considered, USDA food yield data (~. 1) were
used' to determine quantities of food to be
costed--for example, how much fresh, ready­to-
cook whole chicken was necessary to
obtain 1 cup cooked, diced chicken for use
in a recipe. These data allow for differ-ences
due to variety, geographic location,
season, container size, variety, and so
forth, and therefore represent accurate mean
estimates of food yield.
Cost comparisons of each frozen dinner or
entree and of the ingredients used to obtain
a comparable weight of food prepared from
recipes are shown in table 1. The cost per
serving of frozen dinners and entrees ranged
from $1.99 to $3.99, whereas the ingredients
for a serving of their home-prepared coun­terparts
ranged from $0.62 to $1.29. The
frozen products were about 3 to 4 times as
costly as the same ·quantity of food prepared
from a recipe.
In each of the home-prepared dinners or
entrees, the meat, poultry, fish, or shell­fish
component was the most expensive recipe
ingredient. It ranged from 23 percent of the
total cost of chicken chow mein to 77 per­cent
of the total cost of shrimp creole.
Table 1. Cost of "newer" frozen plate dinners and entrees and their home-prepared
counterparts 1
.r
Food
Dinners: 2
Turkey breast ••••••••••••••••••
Beef tips ..............•........
Cod ••••••••••••••••••••••••••••
Entrees: 2
Beef teriyaki .................. .
Shrimp creole ........•........ ·
Chicken chow mein •••••••••••••
Sweet and sour chicken •••••••••
Beef stroganoff •••••••••••••••• •
Cost per serving
Hane-prepared Frozen
- - - - Dollars - - - -
0.91
1. 29
.84
.95
1.29
.62
.72
.89
3.25
3.99
3.29
2.93
3.99
1.99
2.45
2.49
Cost relative to cost
of hane-prepared
Hane-prepared Frozen
- - - - Percent - - - -
100
100
100
100
100
100
100
100
357
309
392
308
309
321
340
280
1 Prices from 3 Washington, DC, supermarkets, 1st quarter 1985.
2 Each dinner included a gravy or sauce, a rice or potato side dish, and a vegetable
mixture. Each entree included rice or noodles and/or a vegetable component.
1986 No.1 Family Economics Review 27
Preparation Time and Value
Next to "carry out" foods, which are
"ready-to-eat," frozen plate dinners and
entrees probably represent the ultimate in
convenience. From the standpoint of prepara­tion
time, it is hard to compete with such
products.
To assess the time-saving features of the
products included in this study, "active"
preparation time was estimated for each
frozen and home-prepared dinner and entree.
Active time included all steps that required
the full or partial attention of the
preparer, for example, measuring ingredi­ents,
peeling shrimp, or browning meat. Time
for preparation steps such as heating a
product in the oven was considered passive
rather than active time since the preparer
was free for other activities. Timing was
started after all ingredients, equipment,
and utensils were assembled at the work area
in order to eliminate differences due to
various kitchen arrangements. Time for
cleanup was not studied.
Preparation times for each dinner and
entree are shown in table 2. Active prepara­tion
time for frozen items ranged from 1 to
3 minutes and for home-prepared counterparts
from 23 minutes to 1 hour, 9 minutes.
The value of time spent in preparing each
frozen product and its home-prepared coun­terpart
was estimated at three wage rates-­$
7.00 per hour, $7.87 per hour, and $10.81
per hour.1 These three wage levels were used
to estimate the value of the household food
preparer's time, had it been used in paid
employment. They represent a clerical wage,
average wage, and a managerial-professional
wage for the first quarter of 1985.2
1 For information on estimating the value
of time used in household production, see
"New methods for studying household produc­tion,"
Family Economics Review 1982(3): 30-33,
by Colien Hefferan.
2 Derived from median weekly earnings of
full-time workers as published in Weekly
earnings of wage and salary workers: First
quarter 1985, News, U.S. Department of
Labor, 1985, USDL No. 85-178; and unpub­lished
U.S. Department of Labor data on
average weekly hours worked by full-time
employees in the first quarter of 1985.
28 Family Economics Review 1986 No.1
The value of labor for preparing the
frozen products ranged from $0.14 to $0.35
per serving at the clerical wage rate, from
$0.16 to $0.39 at the average wage rate, and
from $0.22 to $0.54 at the managerial­professional
wage rate. Labor values for a
serving of the home-prepared dinners and
entrees were about 2-1/2 times to 16 times
greater than values for their corresponding
frozen counterparts.
Although the value of active preparation
time is theoretical, it is of interest to
add this amount to the cost of the food to
arrive at estimates of "total" costs. At the
clerical and average wage rates, the "total"
cost of the home-prepared dinners and
entrees averaged about two-thirds the cost
of their corresponding frozen counterparts.
At the managerial-professional wage rate,
the home-prepared turkey breast and beef
tips dinners cost slightly more than their
respective frozen dinners, and the remaining
home-prepared dinner and entrees averaged
three-fourths as much as their frozen
counterparts.
NUTRITIONAL CONSIDERATIONS
Of the eight convenience products included
in this study, all but one was labeled with
information on nutrients furnished by the
food as it comes from the container. The
unlabeled item did specify, however, that
nutrition information was available from the
company. Three of the seven labeled products
included sodium information. Information
from the nutrition labels is discussed below.
Of the seven labeled products, Calories
per serving ranged from 350 to 460 for the
dinners and 200 to 360 for the entrees.
Three of the five entrees were advertised as
being "light" in Calories and, indeed, were
lower (200 to 250 Calories) than the other
two entrees.
The protein content of dinners ranged from
40 to 50 percent of the U.S. Recommended
Daily Allowance (U.S. RDA); protein in the
entrees represented 15 to 35 percent of the
U.S. RDA. Percentage of the U.S. RDA for
vitamin A, vitamin C, thiamin, riboflavin,
niacin, calcium, and iron varied with the
types of components in each dinner or entree.
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Table 2. Preparation time and value of preparation time for •newer• frozen plate dinners and entrees and their home-prepared
counterparts
Food
Dinners
Turkey breast:
Home-prepared •••.•.•.••••..••
Frozen ...................•....
Beef tips:
Home-prepared ••••••••••••••••
Frozen ....................... .
Cod:
Home-prepared .••••••...•••..•
Frozen ............•..........•
Entrees
Beef teriyaki:
Home-prepared •••••••.••••..••
Frozen ....................•...
Shrimp creole:
Home-prepared .•.•.•..•..••••.
Frozen ....................... .
Chicken chow mein:
Home-prepared •.••••......•••.
Frozen ....................... .
Sweet and sour chicken:
Home-prepared ...•..•••.......
Frozen ...•....................
Beef stroganoff:
Home-prepared ••••••••••••••••
Frozen ....................... .
Active
preparation
time
(minutes)1
59
1
69
1
23
2
36
3
35
3
34
3
32
3
41
2
Estimated value of
time per serving2
Clerical
wage
$1.75
.14
2.24
.14
.84
.21
1.05
.35
1.26
.35
1.05
.35
.91
.35
1.05
.35
Average
wage
$1.97
.16
2.52
.16
.94
.24
1.18
.39
1.42
.39
1.18
.39
1.02
.39
1. 18
• 39
Managerial­professional
wage
$2.70
.22
3.46
.22
1.30
.32
1.62
• 54
1.95
.54
1.62
• 54
1.41
.54
1.62
.54
Total cost per serving3
Clerical
wage
$2.66
. 3.39
3.53
4.13
1.68
3.50
2.00
3.28
2.55
4.34
1.67
2.34
1.63
2.80
1.94
2.84
Average
wage
$2.88
3.41
3.81
4.15
1.78
3.53
2.13
3.32
2.71
4.38
1.80
2.38
1.74
2.84
2.07
2.88
Managerial­professional
wage
$3.61
3.47
4.75
4.21 .
2.14
3.61
2. 57
3.47
3.24
4.53
2.24
2.53
2.13
2.99
2.51
3.03
1 Times for home-prepared dinners and entrees are based on recipes for approximately 4 servings.
2 Wage rates were derived from median weekly earnings of full-time workers as published in Weekly Earnings of Wage and Salary
Workers: 1st Quarter 1985, News, U.S. Department of Labor, 1985, USDL No. 85-178; and unpublished u.s. Department of
Labor data on average weekly hours worked by full-time employees in the 1st quarter of 1985. The rates are $7.00 per hour for
clerical wage, $7.87 per hour for average wage, and $10.81 for managerial-professional wage.
3 Cost of food plus value of active preparation time.
The Dietary Guidelines issued jointly by
the Department of Agriculture and the
Department of Health and Human Services (..!!_)
suggest (among other recommendations) that
Americans avoid too much fat and sodium in
their diet. In keeping with the guidelines'
recommendations, some researchers have
expressed concern about the high levels of
fat and/or sodium in frozen plate dinners
and entrees (!, _!, _l). Fat content of items
included in this study ranged from 14 to 24
grams per serving for the dinners and 2 to
16 grams per serving for the entrees. The
lighter entrees contained 2 to 5 grams of
fat per serving. Many authorities suggest
that daily fat intake provide no more than
30 or 35 percent of total Calories. This
allows for roughly 65 to 75 grams of fat in
the diets of persons consuming about 2000
Calories daily. Even the convenience dinner
with the highest fat of those studied, thus
supplied about one-third of the suggested
day's intake of fat. The entree with the
highest fat supplied a little over one-fifth
of the suggested intake for the 2000-
Calorie diet. Sodium content ranged from 900
to 1164 milligrams in the three products
that provided sodium information on their
label, representing a sizeable portion of
the 1100 to 3300 milligrams of sodium
estimated by the National Academy of
Sciences to be a "safe and adequate" daily
intake for adults. The fat and sodium con­tent
of recipes for home-prepared foods can,
of course, be modified to some extent by
reducing amounts of added fat and salt and
by wise selection of ingredients and prepa­ration
methods.
Assessing the nutritional adequacy of
plate dinners and entrees is no easy task
for consumers--even with the help of nutri­tion
labels. The following suggestions are
offered as a general guide:
In a general way, consider the nutrient
content of the convenience dinner or entree
compared to the foods you might . typically
eat. If the convenience product contains a
similar amount of meat, vegetable or fruit,
and rice or pasta, it probably will make a
similar nutritional contribution to the
day's intake.
30 Family Economics Review 1986 No.1
Use nutrition labels to make
comparisons among the dinners and entrees
available. Look for products that contain
higher percentages of the RDA for the most
nutrients. Also consider Calorie level.
Choose products that contain the most
nutrients for the least Calories. In keeping
with Dietary Guidelines' recommendations
that Americans avoid too much fat and
sodium, look for products that contain fewer
grams of fat (or a lower per,centage of total
Calories as fat) and fewer milligrams of
sodium.
If a convenience product that is low in
certain nutrients or higher in fat and/or
sodium is used at one meal, compensate by
the types of food selections made during the
rest of that day. It is the total daily diet
that counts--not just one food or meal.
No one food or meal supplies all
nutrients in the amounts needed. Eating a
variety of foods will help assure that all
nutrients are provided. On a daily basis,
foods should be included from the following
major groups: Fruits; vegetables; cereals
and other foods made from grains, such as
breads; milk and dairy products, such as
cheese and yogurt; and meat, poultry, fish,
eggs, and dry beans and peas.
CONCLUSIONS
Frozen convenience plate dinners and
entrees are quick and easy to prepare. Some
of the "newer" types reflect a high degree
of culinary skill and may, for some con­sumers,
represent a practical alternative to
preparing foods from sera tch, particularly
if time, equipment, and/or skills are
limited. These convenience products can,
however, be costly compared to home-prepared
products and may not be suitable for use by
consumers on a tight food budget. The frozen
products tested in this study cost about 3
to 4 times as much as similar foods made at
home from a recipe. Even when value of pre­paration
time was added to food costs, most
of the frozen products were considerably
more costly than their home-prepared coun­terparts.
In advising consumers, food and nutrition
professionals may want to emphasize that the
decision to use convenience products such as
frozen plate dinners and entrees often
becomes a tradeoff between time available
for food preparation, money available for
food purchase, nutritional considerations,
and, of course, eating quality. Consumers
must decide for themselves which of these
concerns are most important.
LITERATURE CITED
1. Russel, Norm. 1985. 38th Annual
Consumer Expenditures Study,
Supermarket Business 40(9) :89.
2. Consumers Union. 1984. Better than TV
dinners? Consumer Reports 50(3): 126-127,
170.
3. Havlicek, Joseph, ,Jr., Julein M.
Axelson, Oral Capps, Jr., Joanne M.
Pearson, and Suzanne Richardson. 1982.
Nutritional and economic aspects of
convenience and nonconvenience foods.
Proceedings of the 1983 Agricultural
Outlook Conference, November 29-
December 1, 1982, pp. FE-107-118,
U.S. Department of Agriculture.
4. Liebman, Bonnie. 1984. Nouveau rich-­trendy
new foods high in fat.
Nutrition Action 11(1): 12-14.
5. Tufts University. 1984. What's new in
fast foods and frozen dinners? Tufts
University Diet and Nutrition Letter.
December issue, p. 6. Medford, MA.
6. U.S. Department of Agriculture, Human
Nutrition Information Service. 1976-84.
Composition of foods ••• raw, processed,
prepared. Agriculture Handbook No. 8,
1 through 12.
7. U.S. Department of Agriculture,
Agricultural Research Service. 1975.
Food yields summarized by different
stages of preparation. Agriculture
Handbook No. 102.
8. U.S. Department of Agriculture and
Department of Health and Human Services.
1985. Nutrition and your health: Dietary
guidelines for Americans. Home and
Garden Bulletin No. 232, 2d edition.
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1986 No.1 Family Economics Review J1
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Cost of food at home estimated for food plans . at 4 cost levels, November 1985, U.s. average 1
Sex-age group
FAMILIES
Family of 2: 2
20-50 years •••••.••.•••••.•.•••••.•
51 years and over •••••..•••••••••.•
Family of 4:
Couple, 20-50 years and children--
1-2 and 3-5 years •..•............
6-8 and 9-11 years •••••••••••••••
INDIVIDUALS 3
Child:
1-2 years ..........................
\ 3-5 years .....................•....
6-8 years ..........................
9-11 years ..............•.........•
Male:
12-14 years ••••••••••••••••••••••••
15-19 years ........................
20-50 years •.......................
51 years and over ••••••••••••••••••
Female:
12-19 years ••••••••••••••••••••••••
20-50 years ••••••••••••••••••••••••
51 years and over •••••••••••••••••
Thrifty
plan
$37.00
34.90
53.80
61.80
9.70
10.50
12.90
15.30
16.00
16.60
17.70
16.00
15.90
15.90
15.70
Cost for 1 week
Low-cost
plan
$46.50
44.40
66.90
78.80
11.70
12.90
17.10
19.40
22.00
22.90
22.50
21.30
19.10
19.80
19.10
Mbderate­cost
plan
$57.40
54.80
81.80
98.40
13.70
15.90
21.30
24.90
27.40
28.20
28.20
26.20
23.10
24.00
23.60
Liberal
plan
$70.80
65.40
99.90
118.10
16.40
19.10
24.90
28.80
32.20
32.70
33.90
31.40
27.90
30.50
28.10
Thrifty
plan
$160.10
151.30
233.10
267.40
42.10
45.50
55.70
66.20
69.30
72.00
76.70
69.50
68.90
68.80
68.00
Cost for 1 month
Low-cost
plan
$201.90
192.80
290.40
341.50
50.90
56.00
73.90
84.10
95.50
99.10
97.70
92.50
82.60
85.80
82.80
Mbderate- Liberal
cost plan plan
$248.60 $307.10
237.20 283.40
354.10 432.90
426.30 512.00
59.20 71.10
68.90 82.60
92.50 107.90
107.80 124.90
118.90 139.50
122.40 141.80
122.20 147.00
113.50 135.90
100.00 120.70
103.80 132.20
102.10 121.70
1 Assumes that food for all meals and snacks is purchased at the store and prepared at home. Estimates for the thrifty food
plan were computed from quantities of foods published in Family Economics Review, 1984 No. 1. Estimates for the other plans
were computed from quantities of foods published in Family Economics Review, 1983 No. 2. The costs of the food plans are
estimated by updating prices paid by households surveyed in 1977-78 in USDA's Nationwide Food Consumption Survey. USDA
updates these survey prices using information from the Bureau of Labor Statistics ( CPI Detailed Report, table 3) to estimate
the costs for the food plans.
2 10 percent added for family size adjustment. See footnote 3.
3 The costs given are for individuals in 4-person families. For indiv:iduals 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 •
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i
Bulk Foods- Cost and Other
Considerations1
By Dianne D. Odland 2
Home economist
Nutrition Education Division
Human Nutrition Information Service
Introduced just a few years ago, large­scale
merchandising of foods in bulk is
spreading throughout the supermarket indus­try
and has become an accepted part of the
everyday food shopping scene in· many loca­tions.
Self-service bulk food merchandising
as practiced in today's supermarkets is not
totally new. It is a variation of an old
food marketing concept of providing cus-
' tamers with food products from bulk items on
display--as from the old-fashioned cracker
barrels found in general stores at the turn
of the century. The "self-service" feature
of bulk buying dates back to the sixties and
seventies at which time the practice was
introduced in food cooperatives and health
food stores. Large-scale bulk food merchan­dising
appears to be more than a supermarket
gimmick. "Although many operators feel that
the bulk foods concept is still in an
embryonic stage, ••• most are confident that,
when handled properly at the store, bulk
foods seem here to stay" (5).
Some chain supermarkets-now offer as many
as 400 items in bulk form ( 10). The selec­tion
of bulk food items varies from store to
store but generally includes basic baking
supplies such as flour, sugar, and baking
mixes; herbs and spices; dry beans, rice,
and pasta; nuts and dried fruits; and
numerous ready-to-eat snack foods -and
confectionary items. Items offered usually
have relatively long shelf lives. Health and
sanitation officials restrict bulk section
sales of "potentially hazardous foods," that .
is, those that may develop organisms that
cause food poisoning and spoilage (!Q).
1 "Bulk food" refers to unpackaged,
processed or unprocessed foods in large con­tainers
from which the consumer withdraws
the quantity desired.
2 Technical assistance provided by Cheryl
Vass.
Bulk food merchandising allows customers
to select quantities not limited by commer­cial
package sizes--as much or as little
food as needed may be purchased. In a 1983
University of California, Davis, survey of
more than 1, 300 northern California super­market
shoppers, "ability to select exact
quantities" was identified as the most
important motive for purchasing bulk foods
(~). While the "select only what you need"
feature of bulk buying may be of particular
advantage to one- and two-person households
wanting to purchase small quantities of food
items, some retailers claim that ~·a very
good percentage" of the total business at
their bulk food operation comes from larger
suburban households (10).
In the California supermarket survey, con­cern
about sanitation was the most prevalent
reason given by shoppers for deciding not to
buy bulk foods (~). Because customers may
have direct contact with the food, bulk food
merchandising does offer the potential for
person-to-person transfer of contaminants
via the food. To help prevent public health
problems, the Food and Drug Administration
(FDA) has developed guidelines for mini­mizing
direct contact between bulk foods and
the customer (l). These guidelines deal
primarily with equipment and utensil design
and operational procedures. FDA urges State
or local authorities that regulate super­markets
to use the Federal guidelines as a
model for developing their own standards.
Because they have no expensive packaging
and promotional costs associated with them,
bulk foods often are cheaper than packaged
food items. Prices of bulk foods are
reported to average 50 percent lower than
their packaged counterparts (!_). Such price
comparisons often have been made with small
package sizes of national brand products,
however. How does the cost of bulk foods
compare with store brands, generic products,
and items in large packages? Are bulk foods
less costly regardless of the brand and
package size compared? A study conducted
by the Human Nutrition Information Service
of USDA attempts to answer these questions
and to help shoppers evaluate the various
features offered by foods in bulk.
1986 No.1 family Economics Review :n
DATA COLLECTION
Thirty-six food items were studied. All
items were very basic products representing
the following categories: Baking supplies,
baking mixes, cereals, rice and pasta, dry
beans, nuts, dried fruit, herbs and spices,
and snacks. Confectionary items were not
included in this study.
Each food item was priced in both bulk and
packaged forms in three Washington, DC,
metropolitan area supermarkets in each of
3 consecutive weeks in spring 1985. Super­markets
included a national supermarket
chain, a local supermarket chain, and a
warehouse store operated by a local super­market
chain. Based on sales volume data
collected from May 1984 through April 1985,
these supermarkets represented the top three
food retailers in the Washington metro­politan
area (!). Each of the three super­markets
had a large selection of bulk foods
(150 to 250 items).
The unit price of packaged food forms was
recorded for all package sizes of items
available in either store brand and/or
national brand. Store brands represented
top-line "private labels" 3 sold under the
supermarket's name or symbol--either its own
trademark or that of a cooperative or buying
group (.!.!.). National brands (brand names)
included well-known nationally distributed
products. When more than one national brand
was available, price was recorded for the
brand having the lowest cost per unit. The
price also was recorded for the only two
items available in generic form. One of
these items (rice) was a "true generic,"
featuring a simple, unbranded black and
white package labeled with the generic name
of the product. The other (dried apricots)
was an "imitation generic" (a plainly
packaged product merchandised like generics
but carrying a private label) (_~_). Packaged
brands of biscuit, muffin, cake, and brownie
mixes were priced only if preparation
instructions specified a proportion of added
3 In the case of private-label products, a
retailer, wholesaler, or distributor limits
the sale and distribution of its own brands
to its own operation (2).
J4 Family Economics Rev i ew 1986 No.1
ingredients similar to the bulk mix, for
example, a similar proportion of egg, milk,
and so forth, to be added to the mix by the
consumer in preparation of the baked
product.
The assortment of brands and package sizes
available varied among the food items and
the supermarkets. For some foods, only one
brand and size was available; for others,
several brands and/or package sizes were
available. When items were on "special,"
those prices were recorded. As regular
prices were not posted for these food items,
special prices were used in cost compari­sons.
In two of the three supermarkets, none
of the items had a special sale price. In
the third store, about two dozen of the
total prices collected were specials on
either store brands or national brands.
Possible cost reduction through use of
coupons was not considered in this study.
PRICE COMPARISONS
Prices of packaged forms were compared
with the corresponding bulk item prices
within each supermarket in each data collec­tion
period. Cost per pound of each packaged
food form was expressed as a percentage of
the cost per pound of the comparable item
available in bulk. A total of 272 prices for
bulk foods and 77 4 prices for packaged food
forms was used in cost comparisons. Mean
percentages for each supermarket for the
3-week period were computed for each
package size and brand type. Mean values
were then weighted by each supermarket's
share of food sales (1) to reflect the
Washington, DC, area market. These weights
were 0.4203 for the local supermarket cha