Consumer Expenditure Survey

This paper uses data on a variety of different expenditures from the Consumer

Expenditure Survey (CEX). The dataset contains two parts: an interview survey (CEXI) for expenditures over the course of the past three months and a diary survey (CEXD) in which households record smaller, everyday purchases for one or two weeks (in particular,

groceries at a very disaggregated level). The former survey has a short panel component that I ignore. From both of these surveys, I select married couples with quality data on both spouse’s incomes and household-level expenditure.175 Further, each spouse is not disabled and ages 18 to 64 within the selected sample. The study only uses those households with expenditure data corresponding to the period between 1984 (early years of the CEX had different survey methodology) and the implementation of TANF (1996 or 1997, depending on the state). I also require that families in my sample include a male head of household usually working at least 30 hours per week and children under 18 that are biologically related to both spouses. These restrictions isolate the intact families ineligible for AFDC that contain a wife who could potentially receive funding if divorced.

Both the CEXD and CEXI contain data on state of residence for a limited number of consumer units. Five states are selected that include CEXI observations for at least 50 families with children for eight years before and two years after the government implemented a welfare waiver. See Appendix Table B.1.

The CEXD has far fewer observations but each of these states has at least 20 observations per each of the above years. Table B.1 also contains the precise number of

Table B.1: Dates of AFDC Waiver Implementation and Sample Size

Observations in Observations in

State Date Treated? Control? CEXI CEXD

Alabama Alaska Arizona Nov-95 Arkansas Jul-94 California Dec-92 X 4596 1350 Colorado X 1110 360 Connecticut Jan-96 D.C. Oct-95 Delaware Florida X 2051 619 Georgia Jan-94 X 1205 315 Hawaii Feb-97 Idaho Nov-93 Illinois May-95 X 1777 547 Indiana Oct-93 X* 845 247 Iowa Kansas Kentucky Louisiana Maine Nov-95 Maryland Mar-96 X 917 345 Massachusetts Michigan Oct-92 X 844 220 Minnesota X* 1130 315 Mississippi Jun-95 Missouri Oct-95 X 1346 381 Montana Feb-96 Nebraska Nevada Jul-96

New Hampshire Oct-92

Table B.1, Continued: Dates of AFDC Waiver Implementation and Sample Size Observations Observations

State Date Treated? Control? in CEXI in CEXD

New Jersey X 1148 368

New Mexico

New York X 2549 712

North Carolina Oct-95 North Dakota Ohio Jul-96 X 1883 550 Oklahoma Oregon Feb-93 Pennsylvania X 2894 854 Rhode Island South Carolina

South Dakota Jun-94

Tennessee Sep-96 Texas Jun-96 X 2691 832 Utah Jan-93 Vermont Jul-95 Virginia Jul-94 X** 827 228 Washington Jan-96 X 1058 327

West Virginia Jan-96

Wisconsin X** 1015 269

Wyoming

Notes and sources: Treated and control states selected as described in Appendix B.1.2. Sample size listed is for all pre-TANF years.

Waiver dates taken from Schoeni and Blank (2000).

observations from both surveys. The control states listed in the table must have the same data available with respect to the date that a waiver was implemented in one of the treated states. These states include those that implemented a reform but did so late enough so that I can extract two years of data in which the treated state had a waiver in place but the control state did not.

Using the data selected by this procedure, I chose 12 expenditure categories

encompassing 149 goods listed in the CEXI and all grocery listings (111 items) from the CEXD, as well as two residual categories accounting for the balance of income and expenditure:

Food for Home Consumption: The CEXI measure of food expenditure includes all food and non-alcoholic beverages purchased at grocery stores, convenience stores, and specialty stores. The CEXD contains more detailed data, and I delineate three categories based on how much time is likely needed to produce a final meal using the good as an input: high (flour), intermediate (cake mix), and low (cake). Instead of a quarterly expenditure share, for the CEXD I calculate weekly expenditures as a proportion of all spending on groceries.

Food Away from Home or Prepared by Others: expenditure on any food or non-alcoholic beverages that are, for certain, made by someone outside of the consumer unit.

Child Care: day-care, care in one’s home, and care in a preschool.

(Luxury) Home Maintenance Services: housekeeping and gardening services.

Men’s (Women’s) Clothing, Accessories, and Personal Care: all expenditures that could be associated with dress or appearance and are explicitly consumed by males (females).

Children’s Clothing and Accessories: These expenditures are analogous to those above but exclude personal care due to lack of identification in the CEXI. Goods within this category are explicitly purchased for girls, boys, or infants.

Education: books, supplies, and tuition for kindergarten and higher grades.

Alcohol and Tobacco: products consumed both inside and outside the home.

Residual Expenditure: all remaining goods in the CEXI.

Residual Income: the difference between one fourth of annual income and total reported quarterly expenditure.

A full characterization of the contents of each category is available upon request. Further, I list the categories in Appendix Tables B.2A and B.2B along with each one’s expenditure share (as a fraction of BLS-measured total expenditure for the CEXI and total expenditure on groceries for the CEXD) before the first waiver was implemented (1992:4) for treated states and control states. The table also contains the fraction of families in these two types of states making any purchases within each category.