All Journals > Journal of Political Economy > October 2005 > Consumption versus Expenditure

Article Tools

Search for Related Articles

Announcements

MILTON FRIEDMAN ON ECONOMICS BOOK NOW AVAILABLE

Upon his death in the autumn of 2006, Milton Friedman was lauded as “the grandmaster of free-market economic theory in the postwar era” by The New York Times and “the most influential economist of the second half of the twentieth century” by The Economist. Winner of the Nobel Prize in Economics in 1976, Friedman was both a highly respected economist and a prominent public intellectual, the leader of a revolution in economic and political thought that argued robustly in favor of the virtues of free markets and laissez-faire policies.

Press Release

Study Separates Russian Flat Tax Myth and Fact

A study published in the Journal of Political Economy finds that flat tax reform in Russia decreased tax evasion, but did little to increase real income for households

In the News

Featured in Guardian
"From Russia with Laffer, a tax cut tale" June 23, 2009

Myth and Reality of Flat Tax Reform: Micro Estimates of Tax Evasion Response and Welfare Effects in Russia


"The study on Russia, published in this month's Journal of Political Economy, found that although the tax cut did increase tax compliance, it did nothing to boost the work ethic." --Christopher Swann, columnist for Reuters

October 2005

Volume 113, Number 5
[Journal of Political Economy, 2005, vol. 113, no. 5]
© 2005 by The University of Chicago. All rights reserved.
0022-3808/2005/11305-0001$10.00
DOI: 10.1086/491590

Consumption versus Expenditure

Mark Aguiar

Federal Reserve Bank of Boston

Erik Hurst

University of Chicago and National Bureau of Economic Research

Previous authors have documented a dramatic decline in food expenditures at the time of retirement. We show that this is matched by an equally dramatic rise in time spent shopping for and preparing meals. Using a novel data set that collects detailed food diaries for a large cross section of U.S. households, we show that neither the quality nor the quantity of food intake deteriorates with retirement status. We also show that unemployed households experience a decline in food expenditure and food consumption commensurate with the impact of job displacement on permanent income. These results highlight how direct measures of consumption distinguish between anticipated and unanticipated shocks to income whereas measures of expenditures obscure the distinction.

Cited by

George Alessandria. (2009) CONSUMER SEARCH, PRICE DISPERSION, AND INTERNATIONAL RELATIVE PRICE FLUCTUATIONS. International Economic Review 50:3, 803-829
Online publication date: 1-Sep-2009.
CrossRef
Melanie Lührmann. (2009) Consumer Expenditures and Home Production at Retirement - New Evidence from Germany. German Economic Review
Online publication date: 1-May-2009.
CrossRef
Raffaele Miniaci, Chiara Monfardini, Guglielmo Weber. (2009) How does consumption change upon retirement?. Empirical Economics
Online publication date: 5-Apr-2009.
CrossRef
Richard Rogerson, Lodewijk P. Visschers, Randall Wright. (2009) Labor market fluctuations in the small and in the large. International Journal of Economic Theory 5:1, 125-137
Online publication date: 1-Apr-2009.
CrossRef
Robert Shimer. (2009) Convergence in Macroeconomics: The Labor Wedge. American Economic Journal: Macroeconomics 1:1, 280-297
Online publication date: 1-Feb-2009.
CrossRef
Bruce D Meyer, James X Sullivan. (2009) Changes in the Consumption, Income, and Well-Being of Single Mother Headed Families. American Economic Review 98:5, 2221-2241
Online publication date: 1-Jan-2009.
CrossRef
Mark Duggan, Patrick Healy, Fiona Scott Morton. (2008) Providing Prescription Drug Coverage to the Elderly: America's Experiment with Medicare Part D. Journal of Economic Perspectives 22:4, 69-92
Online publication date: 1-Dec-2008.
CrossRef
Christopher House, John Laitner, Dmitriy Stolyarov. (2008) VALUING LOST HOME PRODUCTION OF DUAL EARNER COUPLES. International Economic Review 49:2, 701-736
Online publication date: 1-Jun-2008.
CrossRef
Yoo-Mi Chin. (2008) A household production model of demand for childcare and meals: theory and evidence from the Philippines. Review of Economics of the Household 6:1, 47-64
Online publication date: 1-Apr-2008.
CrossRef
David M. Blau. (2008) Retirement and Consumption in a Life Cycle Model. Journal of Labor Economics 26:1, 35-71
Online publication date: 1-Jan-2008.
Abstract-Full Text-PDF Version (678 kB)
Mark Aguiar, Erik Hurst. (2008) Life-Cycle Prices and Production. American Economic Review 97:5, 1533-1559
Online publication date: 1-Jan-2008.
CrossRef
Daniel S. Hamermesh. (2007) Time to Eat: Household Production under Increasing Income Inequality. American Journal of Agricultural Economics 89:4, 852-863
Online publication date: 1-Dec-2007.
CrossRef
Ann L. Owen, Stephen Wu. (2007) Financial shocks and worry about the future. Empirical Economics 33:3, 515-530
Online publication date: 23-Nov-2007.
CrossRef
Jonathan Skinner. (2007) Are You Sure You're Saving Enough for Retirement?. Journal of Economic Perspectives 21:3, 59-80
Online publication date: 1-Sep-2007.
CrossRef
David H Autor, Mark G Duggan. (2007) Distinguishing Income from Substitution Effects in Disability Insurance. American Economic Review 97:2, 119-124
Online publication date: 1-Jun-2007.
CrossRef
Steven J Haider, Melvin Stephens. (2007) Is There a Retirement-Consumption Puzzle? Evidence Using Subjective Retirement Expectations. Review of Economics and Statistics 89:2, 247-264
Online publication date: 1-Jun-2007.
CrossRef
John Ameriks, Andrew Caplin, John Leahy. (2007) Retirement Consumption: Insights from a Survey. Review of Economics and Statistics 89:2, 265-274
Online publication date: 1-Jun-2007.
CrossRef
Raj Chetty. (2007) A New Method of Estimating Risk Aversion. American Economic Review 96:5, 1821-1834
Online publication date: 1-Jan-2007.
CrossRef
John Karl Scholz, Ananth Seshadri, and Surachai Khitatrakun. (2006) Are Americans Saving “Optimally” for Retirement?. Journal of Political Economy 114:4, 607-643
Online publication date: 1-Aug-2006.
Abstract-Full Text with Enhancements-PDF Version (326 kB)
Sarah Smith. (2006) The Retirement-Consumption Puzzle and Involuntary Early Retirement: Evidence from the British Household Panel Survey*. The Economic Journal 116:510, C130-C148
Online publication date: 1-Apr-2006.
CrossRef

  • We would like to thank Daron Acemoglu, Fernando Alvarez, Susanto Basu, Marianne Bertrand, Mark Bils, Ricardo Caballero, Steve Davis, Lars Hansen, Jonathan Heathcote, Michael Hurd, Anil Kashyap, Helen Levy, Anna Lusardi, Chris Mayer, Amil Petrin, Karl Scholz, Rob Shimer, Jon Skinner, Mel Stephens, Alwyn Young, Steve Zeldes, and two anonymous referees, along with seminar participants at the Boston Fed, Brown, Chicago, Columbia, Fed Board of Governors, Michigan, Massachusetts Institute of Technology, the NBER program on Economic Fluctuations and Growth, New York Fed, New York University, RAND Corp., Williams, and Wisconsin for their helpful comments. We are extremely grateful to Bin Li for her exceptional research assistance. Both Aguiar and Hurst would like to acknowledge the financial support of the University of Chicago’s Graduate School of Business. The views expressed in this paper are the authors’ own and do not necessarily reflect those of the Federal Reserve Bank of Boston or the Federal Reserve System.

Back to Top
Close Popup