The Impact of High Rent Expenditures on other Consumer Expenditures

Abstract

Housing and other expenditures of renter households in the 1973 U.S. Bureau of Labor Statistics Survey of Consumer Expenditures were analyzed to ascertain the impact of high rent expenditures on other consumer expenditures. The impact of high health care and transportation expenditures on spending was also examined. Multiple regressions of expenditures on income, family size, age, education and occupation were run. The “predicted” expenditure levels obtained show little evidence of household tradeoffs among expenditure categories when analyzed by variations in income, family size and age. Regressions of expenditures on predicted expenditures, and on residuals of housing, health care and transportation expenditures also reveal little tradeoff among expenditure categories in response to high levels of housing, health care or transportation expenditures. Households seem to deal with high levels of spending in these areas by dissaving rather than cutting back in other spending areas.