Consumer Expenditures

Changing consumer choices have built microchip factories where cotton fields used to be and have doomed cities from New Bedford to Detroit, while the impact of these choices on jobs and tax revenues have stimulated the creation of models of consumer behaviour. Even finely tuned econometric models, however, have not served well as guides for policy choices, for they have relied chiefly on data for the Great Depression and the Cold War era, or on biased budget surveys. This text aims to provide the way to greater economic realism with new data for the 20th century, including the decades of peaceful prosperity. The new measures also permit moving from the level of the nation to the state. Analyzing our individual economic well-being, the book argues that consumer expenditure provides a better guide than the usual data on money income before tax. It also challenges continued reliance on a single consumption function in macro models.
In other essays, the author uses the new data to demonstrate that the supposed "flawed prosperity" of the 1920s was not responsible for the Great Depression; points out the limitations of the usual consumer budget surveys; and contrasts the role of age, nativity and other factors in creating interstate differences.