Measuring Household Spending and Payment Habits: The Role of “Typical” and “Specific” Time Frames in Survey Questions

We designed and fielded an experimental module in the American Life Panel (ALP) where we ask individuals to report the number of their purchases and the amount paid by debit cards, cash, credit cards, and personal checks. The design of the experiment features several stages of randomization. First, three different groups of sample participants are randomly assigned to an entry month (July, August, or September, 2011) and are to be interviewed four times during a year, once every quarter. Second, for each method of payment a sequence of questions elicits spending behavior during a day, week, month, and year. At the time of the first interview, this sequence is randomly assigned to refer to “specific” time spans or to “typical” time spans. In all subsequent interviews, a “specific” sequence becomes a “typical” sequence and vice versa. In this paper, we analyze the data from the first wave of the survey. We show that the type— specific or typical—and length of recall periods greatly influence household reporting behavior. JEL Classifications: D12, D14, E41 Marco Angrisani is an associate economist at the RAND Corporation and a professor at the Pardee RAND Graduate School. Arie Kapteyn is a senior economist at RAND, director of RAND’s Labor and Population Program, and a professor at the Pardee RAND Graduate School. Scott Schuh is the director of Consumer Payments Research Center and a senior economist and policy advisor in the research department at the Federal Reserve Bank of Boston. Their email addresses are [email protected], [email protected], and [email protected], respectively. This paper, which may be revised, is available on the web site of the Federal Reserve Bank of Boston at http://www.bostonfed.org/economic/wp/index.htm. We are especially grateful to Angus Deaton, Martha Starr, and Tom Crossley for helpful comments and discussions. We also thank Barry Bosworth, Jennifer Edgar, and participants in the 2011 CRIW/NBER Conference on Improving the Measurement of Consumer Expenditures. The views expressed in this paper are those of the authors only and do not necessarily represent the views of the Federal Reserve Bank of Boston or the Federal Reserve System. This version: June 2012