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INTRODUCTION

MANUAL

S-300

I PURPOSE OF SURVEY

A.

What is the Consumer's Price Index? This survey is being made as part of the work on the Consumers Price Index which used to be known as the Cost of Living Index. This index measures changes from month to month in prices paid by moderate-income families in large cities. You probably have heard of the index before: it is commonly reported in newspapers to show the changes in the purchasing power of the city-consumers' dollar; and it is often used in collective bargaining to adjust wages up or down as living costs rise or fall.

The index is based on a "market-basket" of goods and services usually
bought by moderate-income city families. The "market-basket" holds
a collection of food, apparel, housefurnishings, fuels and other
things. Changes in the index are based on changes in the prices of
the goods and services in the "market-basket".

B. Why are We Making a Survey of Consumer Expenditures? The immediate
reason for this survey is the need to check the market basket of
goods and services now used in the Consumers' Price Index. The
market basket priced for the present index is based on records of
the purchases of families of wage earners and lower-salaried clerical
workers in 1934-36. Thus, the goods and services priced and their
importance in the index are representative of what people were buying
in the mid-1930's.

Because of the great changes in prices and people's income and buying
habits, city families are spending more money than they did in 1935
and spending it differently. They may be buying more meat, poultry
and eggs,
and less flour and bread; more green vegetables and fewer
potatoes; more margarine and less butter. They buy less ice and
rely more on mechanical refrigeration. They buy frozen foods,
chemical washing powders, television sets and other things which were
practically unknown in 1935.

This survey was authorized by Congress. It will provide the informa-
tion needed to bring the market basket up to date and to make the index
more useful as a measure of present-day change in consumers' prices
in cities in the United States.

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The Bureau of Labor Statistics has been making surveys of consumers' expenditures for more than 60 years. Since the first such surveys in 1888, these have been the most important source of information on how American families spend their money. This information has become important to the Government, to business men, to labor unions, and to people generally.

The last survey of the same general size took place in 1934-36. During the early part of World War II a smaller survey was made. Since the war, the Bureau has made a few studies each year in cities now included in the Consumers' Price Index.

Issued January 1951

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Last year, a Survey of Consumer Expenditures was made in Memphis,
Tennessee to provide up-to-date information for that city and to
serve as a pilot study for the present major nationwide survey.

III NATURE OF THE SURVEY

By observing differences in spending habits between families of
different sizes, in different cities, with different incomes, and
at different times, we learn about people's wants and how people go
about satisfying them. We learn about the markets for various goods
and services. We learn about the effect of income on what people
can afford to buy of various goods and services--food, housing,
clothing, medical care, etc.--and what incomes are required for
various kinds of families to support what we Americans consider a
suitable standard of living.

From such studies we learn, for example, that as family incomes rise
from low to middle income levels, about the first thing families do
as they get more money is buy more and better food. They may move
to a better place to live, or buy more and better clothing, house-
furnishings, etc. This gives us a clue to the prospective markets
for food, clothing, housing, etc. and tells us what changes in incomes,
prices and production are necessary before all Americans can be
adequately fed, housed, and clothed. At the same time, these studies
indicate to those who produce and sell these goods, in what income
classes they are likely to find their best customers. It is for these
reasons that various agencies of the Government and various groups of
business men and labor organizations are interested in these surveys.

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A.

Selection of Families. The sample of families to be included in this survey has been carefully chosen to be a true cross-section of all families in each city. By modern sampling methods it is possible to estimate rather accurately how all families spend their money by interviewing a comparatively small number of them. The sampling method we used is called probability sampling. Each family in a city had a chance of being selected.

First, we classified each block in the city according to whether it contained a small or large number of living quarters, its location, and several other characteristics, and grouped blocks of the same type together. Then we numbered each block, proceeding from one group to the next and chose a random number. Starting with the city block of the same number, we picked every 10th or 100th, etc. block, depending on how many we wanted in our sample. Next, we listed the address of each living quarter in these sample blocks, starting at one corner and walking clockwise around the block.

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IV (Continued)

B.

MANUAL

After all addresses were listed and arranged by section of the city and a few other things (such as rent) that we knew about, we started with another random number and picked every 3rd or 10th, etc. address, depending on how many we wanted in our sample. In very large cities, we chose as many as five or six hundred addresses; in very small towns we picked about 65.

Selection of Cities. In selecting the cities and towns in which these
surveys are being made, we first classified all U.S. urban places
(over 3,000 of them) by certain characteristics that we know have some
effect on how people live. We arranged them by population size, by
density of population (number of persons per square mile), by climate,
by the income level of the community, and by the distance of the place
to large marketing centers. Then we selected a relatively small number
of urban places that were representative of all combinations of these
characteristics; for example, we selected a large city, densely
populated, in a cold climate where the community income was high; we
selected a medium sized city, densely populated, in a warm climate,
with high community income close to a large marketing center; and so
on. We included all of the largest metropolitan areas with population
over 1,000,000 New York, Chicago, etc.

V SCOPE OF THE SURVEY

This study is being made in 91 communities during January, February,
March and April of this year.

You and about 1,000 other Interviewers are visiting more than 17,000 families to obtain the valuable information Congress has directed be gathered for the benefit of business and labor groups, of Congress and of your Government.

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Each family living at a sample address represents perhaps 500 other
families in the city and about 2,000 families in the U.S., who are
much like it in size, income and other characteristics. One or more
of these characteristics of the occupants may differ from house to
house, or even from one apartment to the next. It is extremely
important therefore that we interview the selected families and obtain
from them as accurate information as possible. One mistake quickly
multiplies up to 2,000 when the results of this survey are used to
arrive at estimates for the country as a whole.

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Introduction. This survey deals with the income, savings and spending
of people; we are studying the relationship between the amount of
money people receive, and the amount they spend for various things;
the difference between these amounts is the money they save or dissave.
In each of your interviews, you are going to get a lot of detailed
information about the money people received and how they used it. То
be meaningful, this information should give us a complete account
$5,000 received; $4,500 spent; $500 saved.

If you tried to get this information for each person separately, you
would run into problems immediately - because most people live in
families and use their money jointly. Your record for the husband
alone might show $5,000 received, only $2,000 spent, and in debt for
another thousand; your record for the wife alone might show no income
and $4,000 spent for everything from butter to shirts for her husband.
Taken separately these records do not tell a complete story. Put them
together and we have $5,000 received, $6,000 spent and $1,000 in debt --
a complete picture of income, expenditures and the difference between
them.

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Basic Definition. So, to make our figures meaningful, we take information about groups of people who live together and are related financially who pool their income and draw from this common fund for the things they buy. Only when we find someone who is financially independent of others, do we take a record for an individual. The consumer unit is the term we use when we talk about these groups of people or individuals, and we define this term as:

Consumer family - A group of persons who live together in one household and draw from a common or pooled fund for all their major items of expense; we call such a group a consumer family.

Single consumer. One person who lives alone or in a household with other persons, who is financially independent of any family group; we call such a person a single consumer.

1/ This is the same concept as the term "Economic Family" which has been used in previous surveys and will be used in official publications of the data obtained in this survey.

Survey of Consumer

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