Spending of Middle-Income Families [Reprint 2020 ed.] 9780520311909

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Spending OF MIDDLE-INCOME

FAMILIES

Issued under the Auspices of the Heller Committee for Research in Social University of California

Economics

Spending OF MIDDLE-INCOME Incomes and Expenditures

FAMILIES

of Salaried

Workers

in the San Francisco Bay Area in 1950

EMILY H. HUNTINGTON With the assistance of Mary H. Hawes and Esther Oswalt

1957 University of California Press

•

Berkeley

•

Los Angeles

University of C a l i f o r n i a P r e s s B e r k e l e y and L o s Angeles,

California

Cambridge University P r e s s London, England © 1957 B y The Regents of the University of C a l i f o r n i a L i b r a r y of C o n g r e s s Catalog Card Number: 5 7 - 7 5 9 2 Manufactured in the United States of A m e r i c a

THE H E L L E R COMMITTEE

F o r R e s e a r c h in Social Economics of the University of California 1956

Emily H. Huntington, Chairman B a r b a r a N. Armstrong Sidney S. Hoos Harvey Leibenstein Davis M c E n t i r e Ruth Okey

PREFACE T h i s s t u d y , p u b l i s h e d u n d e r the a u s p i c e s of t h e H e l l e r C o m m i t t e e f o r R e s e a r c h in Social E c o n o m i c s , i s t h e m o s t r e c e n t of a s e r i e s of H e l l e r C o m m i t t e e s t u d i e s of i n c o m e s and e x p e n d i t u r e s . I t s s p e c i a l c o n t r i b u t i o n i s that it p r o v i d e s d e t a i l e d e v i d e n c e a s to t h e p a t t e r n s of c o n s u m p t i o n of s a l a r i e d w o r k e r s in o c c u p a t i o n s above r o u t i n e c l e r i c a l w o r k e r s but below t h e e x e c u t i v e c l a s s . Many o t h e r i n c o m e and e x p e n d i t u r e s t u d i e s h a v e b e e n m a d e , but none h a v e s e g r e g a t e d t h i s s o c i o e c o n o m i c g r o u p f o r s p e c i a l s t u d y . As i s a l w a y s t r u e of s t a t i s t i c a l s t u d i e s , t h e r e s u l t s a r e b a s e d on t h e w o r k of m a n y p e o p l e . S p e c i a l g r a t i t u d e i s due two p e r s o n s on t h e H e l l e r C o m m i t t e e s t a f f — M a r y H . H a w e s and E s t h e r O s w a l t , who w e r e r e s p o n s i b l e not only f o r t h e p r e p a r a t i o n of the o r i g i n a l d r a f t s of m a n y s e c t i o n s , but w e r e l a r g e l y r e s p o n s i b l e f o r s o m e of t h e c h a p t e r s which a p p e a r in t h e f i n a l m a n u s c r i p t . M i s s H a w e s and M r s . O s w a l t a l s o c o n t r i b u t e d s u g g e s t i o n s a s to the m e t h o d s of a n a l y s i s to be u s e d . I should like to thank a l s o V e r a H o p k i n s , w h o s e c a r e f u l s u p e r v i s i o n of the f i e l d w o r k r e s u l t e d in a high d e g r e e of a c c u r a c y of t h e r a w m a t e r i a l s . T h a n k s a r e a l s o e x p r e s s e d to L u c i l l e B o n s a c k , s e c r e t a r y of t h e H e l l e r C o m m i t t e e f o r t h e l a b o r i o u s t a s k of typing the m a n u s c r i p t , and to M a r i a D r a e g e r , who w o r k e d long and c a r e f u l l y in c h e c k i n g c o m p u t a t i o n s . O t h e r s who c o n t r i b u t e d a r e too n u m e r o u s to n a m e , but a p p r e c i a t i o n i s due t h o s e who a s s i s t e d in s e c u r i n g the n a m e s of f i r m s to b e v i s i t e d , to t h e f i r m s who c o o p e r a t e d , to t h e f i e l d w o r k e r s w h o s e long h o u r s of c a r e f u l w o r k m a d e t h e r a w m a t e r i a l s a v a i l a b l e , and f i n a l l y , of c o u r s e , to t h e 159 f a m i l i e s who gave t h e n e c e s s a r y d e t a i l e d i n f o r m a t i o n about t h e i r i n c o m e s and e x p e n d i t u r e s . As s t a t e d in c h a p t e r 1, P r o f e s s o r J e r z y N e y m a n , h e a d of t h e D e p a r t m e n t of S t a t i s t i c s , U n i v e r s i t y of C a l i f o r n i a , B e r k e l e y , s u g g e s t e d a m e t h o d which t e s t e d t h e e x t e n t to which t h e s a m p l e of 159 f a m i l i e s m a y be r e p r e s e n t a t i v e of other families.

I a m g r a t e f u l to P r o f e s s o r N e y m a n f o r h i s a d v i c e a s to

Preface

viii

the techniques and procedures to be used and also to m e m b e r s of his staff who made the laborious calculations which were required. This study was financed in the main by the regular annual donation f r o m M r s . E . S. Heller and by funds granted by the University to the H e l l e r Committee. Some additional funds were made available by the Bureau of B u s i n e s s and Economic R e s e a r c h and by the Institute of Social S c i e n c e s of the University of California. The question always a r i s e s whether to place a summary chapter at the beginning or end of such a study as this. Since the body of this manuscript includes details in which some r e a d e r s may not be interested, the decision was made to follow the chapter on "Scope and Method" with the summary. The r e a d e r who p r e f e r s to examine the detail f i r s t may wish at once to read through the l a t e r chapters. Emily H. Huntington

CONTENTS I

Scope and Method

II

Summary

12

1

III

F a m i l y C h a r a c t e r i s t i c s and I n c o m e

26

IV

E x p e n d i t u r e s f o r F o o d and A l c o h o l i c B e v e r a g e s

43

V

Expenditures for Housing

52

VI

Expenditures f o r Household Operation

65

VII

Expenditures for Housefurnishings

71

VIII

E x p e n d i t u r e s f o r Clothing

78

IX

Expenditures for Transportation

91

X

E x p e n d i t u r e s f o r M e d i c a l and D e n t a l C a r e

105

XI

Expenditures for Personal Care

134

XII

Expenditures for Recreation

141

XIII

Expenditures for Education, Reading, Tobacco, and M i s c e l l a n e o u s I t e m s

146

XIV

Nonconsumption Expenditures

150

XV

Installment Buying

159

XVI

C h a n g e s in A s s e t s and L i a b i l i t i e s

166

Chapter I

SCOPE AND METHOD This study of family income and expenditures of middle-income ^ salaried workers in occupations above routine clerical work but who are below the executive class^ was undertaken for two reasons. First, the Heller Committee decided to price a budget for the family of a salaried worker in this socioeconomic group, and thus data were required from an income and expenditure study in order to determine the items and quantities of goods to be included o in this budget. The second and broader purpose was to provide information about the spending patterns of an important but often neglected segment of the population. This Heller Committee study, as well as detailed tabulations of the Bureau of Labor Statistics 1950 expenditure study, to be published shortly by the Wharton School of the University of Pennsylvania, will provide empirical data which will be useful in further analytical studies of consumers' economic behavior and in the development of income and expenditure theory. Many income and expenditure studies have been made during the past several decades, and since the latter part of the nineteenth century several have been published by the Bureau of Labor Statistics of the United States Department of Labor. The earliest B . L . S . studies were limited to wage-earning 4 families, whereas those made in 1918-1919 and 1934-1936 also included 1 Although the income of the group studied is well above the statistical middle of the general income distribution, it is probable that the incomes of the families studied represent a middle group between wage earners and the executive class, if retired persons, beginning workers, and broken families could be eliminated from the distribution. 2See p. 3 for description of eligibility requirements. ^Included in the annual Quantity and Cost Budgets for Two Income Levels, prices for the San Francisco Bay area. The new budget was first priced in September, 1953. 4 U.S. Department of Labor, Bureau of Labor Statistics, Cost of Living in the United States, Bulletin 357, Washington D. C . , 1924, p. 1, f n . l .

[ 1]

Scope and Method

2

families of c l e r i c a l workers, but with s t r i c t eligibility requirements as to their incomes; both excluded s a l a r i e d workers with incomes above $2,000.® More recent Bureau of Labor S t a t i s t i c s studies, covering the y e a r s 19411942 and 1945 through 1950, included all occupational and income groups. ® The 1941-1942 and 1945-1949 studies c l a s s i f i e d expenditures by income levels but not by occupational groups. In contrast, the 1950 survey presented expenditure data for wage-earning families as well as for all families c o m bined, but did not classify the information by income level. ^ Since none of these studies provided data on the incomes and expenditures of the occupational group surveyed by the Heller Committee,

it i s believed that the

present inquiry will be a useful addition to what is known about consumption habits. This Heller Committee study was designed to collect information on the consumption patterns of a group fairly homogeneous both as to occupations and income. The definition of the salaried workers to be included in t e r m s of occupations presented difficulties. The types of occupations to be r e p r e sented were found within four of the U. S. Census classifications: professional, technical, and kindred workers; managers, officials, and proprietors; c l e r i c a l and kindred workers; and s a l e s w o r k e r s . One difficulty which a r i s e s in connection with the use of job titles is that of varying job responsibilities: the t e r m "bookkeeper," for example,

may be the title given to a person

who m e r e l y operates a bookkeeping machine or makes routine bookkeeping e n t r i e s , but it also applies to someone highly trained in bookkeeping theory and practice; the t e r m "manager" may designate the head of a s m a l l department or section, o r it may r e f e r to a person responsible for the general management of a large establishment. Moreover, a study which included everyone within these four Census c l a s s i f i c a t i o n s would cover persons at widely varying economic l e v e l s . F o r example, the classification " p r o f e s sional, technical and kindred w o r k e r s " includes blueprint t r a c e r s ,

archi-

t e c t s , internes, and surgeons; "managers, officials, and p r o p r i e t o r s " includes section heads and floor walkers in r e t a i l establishments, as well a s ®U.S. Department of Labor, Bureau of Labor Statistics: schedule used in the 1918-1919 study, p. 1; and Money Disbursements of Wage E a r n e r s and C l e r i c a l W o r k e r s , 1934-36, Bulletin 638, Washington, D . C . , 1941, p. 1. 6 u . S . Department of Labor, Bureau of Labor S t a t i s t i c s , F a m i l y Spending and Saving in Wartime, Bulletin 822, Washington, D . C . , 1945; Family Income, Expenditures and Savings in 1945, Bulletin 956, Washington, D . C . , 1949; F a m i l y Income, Expenditures, and Savings in 10 Cities (1946-1949), Bulletin 1065, Washington, D . C . , 1952; F a m i l y Income> Expenditures and Savings in 1950, Bulletin 1097 (revised), Washington, D . C . , 1953. ^Further analyses of the 1950 data have been since made by the Wharton School of Finance and C o m m e r c e , University of Pennsylvania, but were not available at the time the Heller Committee study went to p r e s s .

Scope and Method

3

p r e s i d e n t s of banks and i n d u s t r i a l e s t a b l i s h m e n t s ; " c l e r i c a l and kindred w o r k e r s " includes m e s s e n g e r s and t y p i s t s in addition to bookkeepers; and " s a l e s w o r k e r s " includes not only s a l e s m e n in r e t a i l e s t a b l i s h m e n t s , but also i n s u r a n c e , r e a l e s t a t e , and stock and bond s a l e s m e n . B e c a u s e of the difficulties in using job t i t l e s a s the b a s i s f o r selecting a homogeneous economic group, it was n e c e s s a r y also to u s e some other c r i t e r i o n if p e r s o n s v e r y high and v e r y low in the economic s c a l e w e r e to be omitted. An income qualification appeared to be the only p r a c t i c a l method of accomplishing this job. At the t i m e the study was being planned, t h e r e was v e r y little c u r r e n t information which analyzed incomes by any occupational c l a s s i f i c a t i o n s above those of wage e a r n e r s . However, some data f o r the United States a s a whole w e r e available in the Survey of C o n s u m e r F i n a n c e s published annually in the F e d e r a l R e s e r v e Bulletin. These data c l a s s i f i e d s a l a r i e d w o r k e r s a s p r o f e s s i o n a l and s e m i p r o f e s s i o n a l , m a n a g e r i a l and s e l f - e m p l o y e d , and c l e r i c a l and s a l e s personnel. This study showed that in 1949, in the p r o f e s sional and m a n a g e r i a l c l a s s e s , which probably contained a l a r g e part of the occupations to be studied by the Heller Committee, the m a j o r i t y of spending o u n i t s had i n c o m e s b e f o r e t a x e s of $4,000 o r m o r e . This group of spending units was distributed in t h r e e income c l a s s e s ($4,000-$4,999, $5,000-$7,499, $7,500 and over), with the l a r g e s t number of c a s e s in the $5,000-$7,499 c l a s s . As would be expected, among the c l e r i c a l and s a l e s personnel the m a j o r i t y of spending units had i n c o m e s of l e s s than $4,000. Of the 30 per cent with inc o m e s above that figure, 14 per cent w e r e between $4,000 and $5,000, 13 per cent f r o m $5,000 to $7,500, and only 3 per cent w e r e in the highest income c l a s s . In the light of t h e s e F e d e r a l R e s e r v e f i g u r e s , it was decided to limit the H e l l e r C o m m i t t e e study to f a m i l i e s in which the chief b r e a d w i n n e r s had 1950 s a l a r i e s between $4,800 and $7,500, and to put a ceiling of $10,000 on total family income in 1950.® Although t h e s e limitations gave some flexibility to the qualifications f o r inclusion in the study, they also i n s u r e d c o n s i d e r able s i m i l a r i t y of family i n c o m e s . The study was f u r t h e r limited to f a m i l i e s in which (1) both the husband and wife had been in the household all y e a r ; (2) t h e r e was at l e a s t 1 child u n d e r twenty-one who had been a m e m b e r of the family f o r not l e s s than ^ F e d e r a l R e s e r v e Bulletin, August 1950, p. 950. ^Originally the lower limit f o r s a l a r i e s was set at $5,000. This was r e duced to $4,800 when e m p l o y e r s indicated that s t a n d a r d r a t e s f o r employees in some of the c l a s s i f i c a t i o n s to be included w e r e m o r e frequently $4,800 than $5,000. Since s a l a r y was the only available guide to income in selecting the s a m p l e , and many f a m i l i e s have some income in addition to the b r e a d w i n n e r ' s s a l a r y , an upper limit f o r total family income was a r b i t r a r i l y set at $10,000.

Scope and Method

4

eight m o n t h s in 1950; and (3) at l e a s t 1 child w a s dependent upon f a m i l y f u n d s f o r m o r e t h a n half of h i s living e x p e n s e s . T h e s a m p l e . — O n the b a s i s of a v a i l a b l e f u n d s it w a s d e c i d e d that about 200 f a m i l i e s could b e s t u d i e d . T h e m o s t d e s i r a b l e m e t h o d of s e l e c t i n g t h i s g r o u p would h a v e b e e n to d r a w a r a n d o m s a m p l e f r o m a m o n g a l l e l i g i b l e f a m i l i e s living in the g e o g r a p h i c a r e a c o v e r e d by t h e s t u d y . H o w e v e r , t h i s would h a v e r e q u i r e d l o c a t i n g and l i s t i n g a l l s u c h f a m i l y u n i t s — a n i m p o s s i b l e t a s k f o r t h e H e l l e r C o m m i t t e e . T h e r e f o r e it w a s n e c e s s a r y to u s e an a l t e r n a t i v e and f a r l e s s s a t i s f a c t o r y m e t h o d of s e l e c t i n g t h e f a m i l i e s t o ' b e i n t e r v i e w e d . A l i s t of San F r a n c i s c o Bay area^® f i r m s w a s o b t a i n e d f r o m a l a r g e e m p l o y e r s ' o r g a n i z a t i o n whose m e m b e r s h i p i n c l u d e d c o m p a n i e s in m o s t of t h e m a j o r i n d u s t r i e s found in t h e a r e a . F r o m t h i s l i s t a 10 p e r cent r a n d o m s a m p l e w a s d r a w n . A few f i r m s in t h i s s a m p l e w e r e d r o p p e d b e c a u s e t h e y w e r e v e r y s m a l l a n d would h a v e y i e l d e d f e w p e r s o n s e l i g i b l e f o r t h e s t u d y ;

substitutions

w e r e m a d e f r o m a m o n g f i r m s which had not f a l l e n into t h e o r i g i n a l s a m p l e . T h e n a m e s of s i x t y - n i n e c o m p a n i e s w e r e o b t a i n e d f r o m t h i s s o u r c e , f o r t y s e v e n in San F r a n c i s c o and t w e n t y - t w o in the E a s t B a y a r e a ,

representing

m a n u f a c t u r i n g , w h o l e s a l e and r e t a i l t r a d e , f i n a n c e and i n s u r a n c e ,

and

s e r v i c e i n d u s t r i e s . O r i g i n a l l y it had b e e n planned to a s k a l l s i x t y - n i n e c o m p a n i e s f o r l i s t s of e m p l o y e e s who a p p e a r e d to be e l i g i b l e f o r t h e s t u d y . H o w e v e r , it soon b e c a m e evident t h a t it would be i m p o s s i b l e f o r t h e c h a i r m a n to v i s i t e v e r y f i r m , and t h e r e f o r e s e v e n t e e n c o m p a n i e s , c h o s e n to i n c l u d e d i v e r s e i n d u s t r i e s , w e r e v i s i t e d . Nine of t h e s e c o o p e r a t e d by p r o v i d i n g l i s t s of 165 p r e s u m a b l y e l i g i b l e p e r s o n s . T h e f i r m s t h a t did not a s s i s t gave no s p e c i f i c r e a s o n s f o r t h e i r a c t i o n s , and t e l e p h o n e c a l l s and l e t t e r s b r o u g h t no r e s u l t s . Since it w a s n e c e s s a r y to find s o m e o t h e r m e t h o d of adding to t h e l i s t s of eligible persons,

eleven additional f i r m s were chosen a f t e r consultation

with v a r i o u s m e m b e r s of t h e b u s i n e s s c o m m u n i t y . In m o s t i n s t a n c e s t h e f i r m s s e l e c t e d i n t h i s s e c o n d g r o u p w e r e s u b s t i t u t i o n s f o r f i r m s of t h e s a m e t y p e in t h e o r i g i n a l s a m p l e . H o w e v e r , though no public u t i l i t y w a s d r a w n in t h e o r i g i n a l s a m p l e , one s u c h e s t a b l i s h m e n t w a s a d d e d s i n c e u t i l i t i e s e m p l o y l a r g e n u m b e r s of s a l a r i e d w o r k e r s , and it w a s hoped t h a t a c o n s i d e r a b l e n u m b e r of e l i g i b l e p e r s o n s could b e found in t h i s w a y .

Eight

of the s e c o n d g r o u p of f i r m s c o o p e r a t e d , p r o v i d i n g t h e n a m e s of 150 p e r s o n s p r e s u m a b l y m e e t i n g t h e e l i g i b i l i t y r e q u i r e m e n t s . T h u s a t o t a l of 315 n a m e s was obtained f r o m seventeen Bay a r e a companies. l ^ T h e "Bay a r e a " f o r t h i s l i s t i n g of f i r m s w a s l i m i t e d to San F r a n c i s c o , San M a t e o County south to and i n c l u d i n g South San F r a n c i s c o , O a k l a n d , A l a m e d a , E m e r y v i l l e , P i e d m o n t , B e r k e l e y , Albany, E l C e r r i t o , and R i c h m o n d . T h e f i r m s in t h e f i n a l s a m p l e w e r e all s i t u a t e d in San F r a n c i s c o , Oakland, Emeryville, or Berkeley.

Scope and Method

5

Since p r o f e s s i o n a l s e r v i c e s and public a d m i n i s t r a t i o n did not h a v e m e m b e r s h i p in t h e e m p l o y e r s ' o r g a n i z a t i o n , it w a s n e c e s s a r y to s e c u r e l i s t s f r o m o t h e r s o u r c e s of p e r s o n s e m p l o y e d in t h e s e f i e l d s . It would, of c o u r s e , h a v e b e e n d e s i r a b l e to i n c l u d e a l l t y p e s of p r o f e s s i o n a l s e r v i c e s ;

however,

l i s t s w e r e m o s t e a s i l y a v a i l a b l e f r o m t h e e d u c a t i o n a l s e r v i c e s , and t h e r e f o r e t h i s c l a s s i f i c a t i o n w a s s e l e c t e d a s t h e chief s o u r c e f o r s u p p l e m e n t i n g the o r i g i n a l g r o u p of i n d u s t r i e s . A 12 p e r cent s a m p l e of all f a c u l t y m e m b e r s who w e r e thought to be e l i g i b l e at the U n i v e r s i t y of C a l i f o r n i a , B e r k e ley, p l u s a s a m p l e of t e a c h e r s and a d m i n i s t r a t o r s in t h e San F r a n c i s c o and O a k l a n d s c h o o l s y s t e m s , y i e l d e d a t o t a l of 51 p e r s o n s . ( P r o f e s s i o n a l s e r v i c e s w e r e a l s o r e p r e s e n t e d by t h e 6 e l i g i b l e e m p l o y e e s of one law f i r m and one a r c h i t e c t ' s o f f i c e . ) P u b l i c a d m i n i s t r a t i o n w a s r e p r e s e n t e d by a l i s t of 5 p e r s o n s who w e r e p r e s u m a b l y e l i g i b l e , a l l of w h o m w o r k e d f o r one d e p a r t m e n t of t h e f e d e r a l g o v e r n m e n t . Of t h e o r i g i n a l s a m p l e of 371 p r e s u m a b l y e l i g i b l e f a m i l i e s , only 222 w e r e found to be a c t u a l l y e l i g i b l e . T h i s g r o u p of 222 y i e l d e d 159 u s a b l e s c h e d u l e s ; 2 f a m i l i e s could not give s u f f i c i e n t l y a c c u r a t e i n f o r m a t i o n , and 61 r e f u s e d to c o o p e r a t e , r e s u l t i n g in a r e f u s a l r a t e of 27. 5 p e r cent of the e l i g i b l e f a m i l i e s . T h i s i s a high r a t e c o m p a r e d to t h e e x p e r i e n c e of o t h e r i n c o m e s u r v e y s , in which 15 p e r cent a p p e a r s n o r m a l f o r a l l f a m i l i e s r e g a r d l e s s of income.^

The r e f u s a l r a t e in t h e H e l l e r C o m m i t t e e study w a s p r o b a b l y

high b e c a u s e of the e c o n o m i c g r o u p being s t u d i e d . F a m i l i e s h i g h e r in t h e e c o n o m i c s c a l e a r e g e n e r a l l y l e s s w i l l i n g to give i n c o m e and e x p e n d i t u r e 1? i n f o r m a t i o n t h a n a r e t h o s e with l o w e r i n c o m e s . It i s not e n t i r e l y c l e a r what e f f e c t the r e f u s a l s m a y h a v e had on t h e r e s u l t s of t h i s s t u d y . In o r d e r to t h r o w s o m e light on t h i s p r o b l e m , t h o s e who r e f u s e d w e r e a s k e d to give c e r t a i n i n f o r m a t i o n c o n c e r n i n g i n c o m e , t h e e m p l o y m e n t s t a t u s of f a m i l y m e m b e r s , h o m e t e n u r e , s i z e of f a m i l y , and t h e age and o c c u p a t i o n of t h e h e a d . In m o s t c a s e s t h i s i n f o r m a t i o n w a s s e c u r e d , but a few f a m i l i e s r e f u s e d to r e v e a l a n y t h i n g . Although t h e i n c o m e s r e p o r t e d b y f a m i l i e s t h a t r e f u s e d w e r e c o n s i d e r ably l o w e r t h a n t h o s e of t h e f a m i l i e s s t u d i e d , t h i s cannot be given too m u c h weight in a n a l y z i n g t h e e f f e c t of t h e r e f u s a l s . E x p e r i e n c e s h o w s t h a t a l l f a m i l i e s t e n d to u n d e r e s t i m a t e t h e i r i n c o m e in s t u d i e s of t h i s kind, but it i s b e l i e v e d t h a t t h e r e w a s p r o b a b l y a g r e a t e r d e g r e e of u n d e r e s t i m a t i o n of i n c o m e a m o n g f a m i l i e s who r e f u s e d t h a n a m o n g t h o s e who c o o p e r a t e d in ^ U . S . D e p a r t m e n t of L a b o r , B u r e a u of L a b o r S t a t i s t i c s , F a m i l y Spending and Saving in W a r t i m e , B u l l e t i n 822, W a s h i n g t o n D. C. , 1945, p. 22. 12

I n i t s 1941-1942 s t u d y the B . L . S . found t h a t " T h e r e f u s a l r a t e s r i s e f r o m 1 p e r cent at the u n d e r $500 l e v e l to 17 p e r cent at the $5,000 to $10,000 l e v e l , and to 35 p e r cent at t h e o v e r $10,000 level." I b i d . , pp. 2 3 - 2 4 .

Scope and Method

6

this s u r v e y . F a m i l i e s unwilling to cooperate could be asked only to give total income, and could not be asked f o r details of the amounts and s o u r c e s of such income—a p r o c e d u r e e s s e n t i a l f o r obtaining r e a s o n a b l y a c c u r a t e total income f i g u r e s . It is also possible that, although income b e f o r e t a x e s was r e q u e s t e d , some may have e s t i m a t e d t h e i r i n c o m e s on the b a s i s of monthly s a l a r i e s a f t e r tax deductions. However, t h e r e i s one piece of evidence which does suggest that the income data in this study may have been affected by the r e f u s a l s . Of the 56 r e f u s a l s f o r which employment i n f o r m a tion was available, t h e r e w e r e 7 f a m i l i e s in which 2 p e r s o n s w e r e employed full t i m e , in contrast to only 1 such family in the group f r o m whom schedules w e r e obtained. It i s possible that f a m i l i e s with 2 f u l l - t i m e w o r k e r s may have been u n d e r r e p r e s e n t e d in the final s a m p l e , and the 7 f a m i l i e s of this type who r e f u s e d may have exerted some downward b i a s on the s t u d y ' s income data. The r e f u s a l r a t e was 19 per cent among f a m i l i e s in which the heads w e r e employed in professional o r technical occupations, and between 30 and 40 per cent in the m a n a g e r i a l , c l e r i c a l , and s a l e s groups. Since the i n c o m e s of the occupational groups included in this study did not differ greatly, the v a r i a t i o n s in their r e f u s a l r a t e s probably did not significantly b i a s the sample. The remaining information s e c u r e d f r o m t h o s e who r e f u s e d indicated no significant d i f f e r e n c e s between this group and the f a m i l i e s interviewed. About t h r e e - q u a r t e r s of both the r e f u s a l s and those who cooperated w e r e home o w n e r s . Since home ownership i s an indication of the economic s t a t u s of f a m i l i e s , the fact'that the r e f u s a l s contained about the s a m e proportions of r e n t e r s and owners a s w e r e found in the final s a m p l e i s at l e a s t s o m e indication that the economic s t a t u s of the two groups was s i m i l a r . The o t h e r i t e m s obtained f r o m those who r e f u s e d which might have affected income and expenditure p a t t e r n s in the study w e r e family size and the age of the head of the f a m i l y . With r e s p e c t to t h e s e two c h a r a c t e r i s t i c s t h e r e w e r e no significant d i f f e r e n c e s between the r e f u s a l s and the final s a m p l e . In both, the a v e r a g e size of the family was 4; the average age of the husbands was forty-two among the r e f u s a l s , and forty in the group which cooperated. As stated e a r l i e r , the f a m i l i e s whose i n c o m e s and expenditures w e r e analyzed in this study w e r e not a r a n d o m s a m p l e of all f a m i l i e s within the specified income and occupational groups in the Bay a r e a . It t h e r e f o r e cannot be safely a s s u m e d that the f a m i l i e s studied r e p r e s e n t e d the u n i v e r s e of f a m i l i e s with s i m i l a r i n c o m e s and occupations. It may, however, be possible to a r r i v e at some rough e s t i m a t e s a s to whether o r not the f a m i l i e s studied may be r e p r e s e n t a t i v e of other f a m i l i e s with s i m i l a r i n c o m e s and occupations.

Scope and Method

7

Although the i n d u s t r i e s included in this study did not r e p r e s e n t all indust r i e s in the community, it does not s e e m probable that this would have a s e r i o u s biasing effect on the r e s u l t s . It i s not likely that the spending habits of a chief clerk o r bookkeeper would be affected by whether he is employed by an i n s u r a n c e company o r by a manufacturing concern making s t e e l o r s h o e s . It is, of c o u r s e , possible that the fact that 27. 5 per cent of the eligible f a m i l i e s r e f u s e d to cooperate may have biased the r e s u l t s a s shown by the r e s p o n s e s of the 7 2 . 5 per cent f r o m whom income and expenditure data w e r e obtained. The available evidence f r o m the n o n r e s p o n d e r s did not, howe v e r , indicate any m a r k e d d i f f e r e n c e s between those who r e f u s e d and those who cooperated. In this, a s in other studies where cooperation is not c o m pulsory, it i s i m p o s s i b l e to m e a s u r e the d e g r e e to which nonresponse may have affected the r e s u l t s . In the analysis which follows, generalizations a r e limited to i n f e r e n c e about a hypothetical population of f a m i l i e s which might have b e e n expected to respond in a l a r g e r population f r o m which we may have a r a n d o m s a m p l e . The method used to e s t i m a t e the d e g r e e to which the s a m p l e of f a m i l i e s studied may r e p r e s e n t other f a m i l i e s in the s a m e income and occupational groups in this a r e a was suggested by J e r z y Neyman, and the following analysis i s b a s e d on a m e m o r a n d u m f r o m P r o f e s s o r Neyman. In g e n e r a l , this analysis s e e m s to suggest that the expenditure patterns of the f a m i l i e s studied may quite closely r e p r e s e n t the expenditure patterns of other f a m i l i e s of s a l a r i e d w o r k e r s in the Bay a r e a with i n c o m e s in the neighborhood of $6,000 who might have responded in a l a r g e r study. These specific p r o c e d u r e s and r e s u l t s will be described in the following p a r a g r a p h s . In o r d e r to d e t e r m i n e whether t h e r e w e r e l a r g e d i f f e r e n c e s in the expenditure p a t t e r n s within the group of 159 f a m i l i e s , the sample was divided into five groups according to the i n d u s t r i e s in which the b r e a d w i n n e r s w e r e 1^ employed. The size of t h e s e groups v a r i e d f r o m 26 to 39 f a m i l i e s . The expenditures of each of t h e s e five groups f o r four m a j o r i t e m s w e r e analyzed—food, clothing, t r a n s p o r t a t i o n , and housing, which together accounted f o r n e a r l y t w o - t h i r d s of all consumption expenditures. A p r i o r i it might be expected that within any group of f a m i l i e s t h e r e will be a considerable v a r i a t i o n in patterns of expenditure, and that the two most l^Many b a s e s f o r choosing the groups w e r e possible. The grouping in a c c o r d a n c e with industry was used to d e t e r m i n e whether o r not employment in a p a r t i c u l a r industry affected s e r i o u s l y the pattern of expenditure. If l a r g e d i f f e r e n c e s in the patterns of expenditure had been found, this would have been an indication against generalizing f r o m the f i g u r e s obtained f r o m a few nonrandomly s e l e c t e d i n d u s t r i e s to the population of employees at l a r g e . The actual findings appear to be favorable to such g e n e r a l i z a t i o n s . The industry groups a r e G i Food; G2 Insurance; G3 Educational and P r o f e s s i o n a l ; G4 Manufacturing, G 5 T r a n s p o r t a t i o n , Utilities, and M i s c e l l a neous.

Scope and Method

9

i m p o r t a n t i n f l u e n c e s upon e x p e n d i t u r e s would be i n c o m e and s i z e of f a m i l y . T h e a n a l y s i s which f o l l o w s will a t t e m p t to a n s w e r t h e q u e s t i o n : Given a f a m i l y with an i n c o m e equal to t h e a v e r a g e of a l l g r o u p s c o m b i n e d , and of a f a m i l y s i z e e q u a l to t h e a v e r a g e of t h e t o t a l s a m p l e , what i s the e s t i m a t e d a v e r a g e f a m i l y e x p e n d i t u r e in each g r o u p f o r e a c h of t h e i t e m s studied—food, clothing, h o u s i n g , t r a n s p o r t a t i o n . (See t a b l e 1.) T h e f i r s t s t e p in t h i s a n a l y s i s w a s to c o m p u t e p a r t i a l r e g r e s s i o n c o e f f i c i e n t s of e a c h i t e m of e x p e n d i t u r e on t o t a l i n c o m e and on t o t a l m e m b e r s of t h e f a m i l y , l a b e l e d " F a m i l y S i z e " ( t a b l e 2). T h e next s t e p w a s to c o m p u t e e s t i m a t e s of e x p e n d i t u r e s f o r food, c l o t h ing, h o u s i n g , and t r a n s p o r t a t i o n f o r e a c h of t h e f i v e g r o u p s u s i n g t h e r e g r e s s i o n c o e f f i c i e n t s f r o m t a b l e 2 to c o r r e c t t h e d i f f e r e n c e s in i n c o m e and f a m i l y s i z e . The e s t i m a t e d e x p e n d i t u r e s shown on t a b l e 2 a r e t h e r e f o r e b a s e d on an a s s u m e d i n c o m e of $6,077, t h e a v e r a g e i n c o m e of a l l f i v e g r o u p s c o m b i n e d , and on a f i x e d f a m i l y s i z e of 3 . 9 7 . T a b l e 1 s h o w s t h a t t h e e s t i m a t e d e x p e n d i t u r e s f o r e a c h c a t e g o r y of e x p e n d i t u r e by the f i v e g r o u p s , holding i n c o m e and f a m i l y s i z e c o n s t a n t , v a r i e d s u b s t a n t i a l l y and s o m e t i m e s quite s u b s t a n t i a l l y . T h i s s u g g e s t s t h e p o s s i b i l i t y t h a t t h e p a t t e r n of e x p e n d i t u r e in d i f f e r e n t i n d u s t r y g r o u p s w a s not t h e s a m e . U n f o r t u n a t e l y , t h e l a c k of n o r m a l i t y in t h e d i s t r i b u t i o n of e x p e n d i t u r e s d o e s not p e r m i t too m u c h f a i t h to b e placed in t h e a p p l i c a t i o n of c l a s s i c a l t e s t s . N e v e r t h e l e s s , s u c h t e s t s w e r e p e r f o r m e d . ^

There

a p p e a r e d to be no s i g n of a s i g n i f i c a n t d i f f e r e n t i a t i o n a m o n g the f i v e g r o u p s in the g e n e r a l l e v e l of t h e i r e x p e n d i t u r e s f o r t h e c a t e g o r i e s of food, c l o t h ing, h o u s i n g , and t r a n s p o r t a t i o n , with i n c o m e and f a m i l y s i z e h e l d c o n s t a n t . T a b l e 2 s h o w s t h e e f f e c t of i n c o m e and f a m i l y s i z e on e x p e n d i t u r e s f o r e a c h of t h e f i v e g r o u p s and f o r a l l g r o u p s c o m b i n e d . T h e l e v e l of i n c o m e i n f l u e n c e d in a p o s i t i v e d i r e c t i o n the e x p e n d i t u r e s f o r clothing, 11 p e r c e n t ; f o r food, 14 p e r cent; f o r h o u s i n g , 17 p e r cent; but f o r t h i s g r o u p of f a m i l i e s t h e l e v e l of i n c o m e did not i n f l u e n c e the e x p e n d i t u r e s f o r t r a n s p o r t a t i o n . F u r t h e r m o r e , t h e r e a p p e a r e d to be no s i g n i f i c a n t v a r i a t i o n a m o n g t h e f i v e g r o u p s with r e s p e c t to c h a n g e s in e x p e n d i t u r e f o r clothing, h o u s i n g , and t r a n s p o r t a t i o n with e a c h $100 addition t o i n c o m e , holding t h e f a m i l y s i z e c o n s t a n t . C o n t r a r y t o t h i s , t h e r e a p p e a r e d to b e a highly s i g n i f i c a n t d i f f e r e n t i a t i o n a m o n g t h e g r o u p s in e x p e n d i t u r e s f o r food with e a c h $100 addition to i n c o m e . T h i s s u g g e s t e d a c l o s e r a n a l y s i s of t h e e f f e c t on e x p e n d i t u r e s of a unit i n c r e a s e in f a m i l y s i z e . With t h e p o s s i b l e e x c e p t i o n of h o u s i n g , an a d d i t i o n a l m e m b e r of the f a n j i l y h a d no a p p a r e n t e f f e c t on any of t h e i t e m s of e x p e n d i t u r e e x c e p t food in G r o u p s III and V. It i s p o s s i b l e t h a t G r o u p s III and V and G r o u p s I, II, and IV had s o m e t h i n g in t h e i r p a t t e r n s of l i f e which ^ S t a n d a r d r e g r e s s i o n a n a l y s i s with t h e a p p l i c a t i o n of t h e F . t e s t .

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F o o d and Alcoholic B e v e r a g e s

49

w a s a p p o r t i o n e d a m o n g f a m i l y m e m b e r s , it w a s found t h a t t h e p e r cent s p e n t f o r food p e r f a m i l y m e m b e r w a s 7. 3 f o r t h e l o w e r i n c o m e g r o u p and 6. 5 f o r t h e u p p e r g r o u p . If both g r o u p s of f a m i l i e s had c o n t a i n e d 4 p e r s o n s , t h o s e with l o w e r i n c o m e s p r o b a b l y would have s p e n t an a v e r a g e of about 29 p e r cent f o r food, and t h e u p p e r g r o u p about 26 p e r c e n t . F o o d at h o m e . —The a v e r a g e f a m i l y e x p e n d i t u r e f o r food at h o m e w a s $1,288, and 64 p e r cent of t h e s a m p l e s p e n t s u m s b e t w e e n $1,000 and $1,500. T h e a m o u n t s p e n t f o r food a t h o m e did not v a r y s i g n i f i c a n t l y with s i z e of i n c o m e . T h e a v e r a g e e x p e n d i t u r e of f a m i l i e s with i n c o m e s l e s s t h a n $6,000 w a s $1,241, and t h o s e with h i g h e r i n c o m e s s p e n t 7 p e r cent m o r e , o r $1,332. M o r e i m p o r t a n t , h o w e v e r , i s t h e f a c t t h a t the p e r c a p i t a e x p e n d i t u r e s by t h e two i n c o m e g r o u p s w e r e a l m o s t i d e n t i c a l — $ 3 2 5 f o r t h o s e with i n c o m e s below $6,000, -and $328 f o r t h o s e with t h e h i g h e r i n c o m e s . T h u s m o s t of t h e a d d i t i o n a l m o n e y s p e n t b y t h e h i g h e r i n c o m e g r o u p f o r food at h o m e w a s t h e r e s u l t of l a r g e r f a m i l i e s . A s w a s t r u e f o r t o t a l food e x p e n d i t u r e s , the s u m s s p e n t f o r food a t h o m e v a r i e d with f a m i l y s i z e , and t h e l a r g e r f a m i l i e s s p e n t l e s s p e r c a p i t a . T h e s m a l l e s t f a m i l i e s s p e n t $1,182 ($394 p e r c a p i t a ) ;

4-

p e r s o n f a m i l i e s s p e n t $1,261 ($318 p e r c a p i t a ) ; and t h e l a r g e s t f a m i l i e s s p e n t $1,472 ($288 p e r c a p i t a ) . F o o d away f r o m h o m e . — A l l but 1 f a m i l y r e p o r t e d s o m e e x p e n d i t u r e f o r food p u r c h a s e d away f r o m h o m e . N i n e t y - o n e p e r cent of t h e a v e r a g e e x p e n d i t u r e of $334 went f o r m e a l s , and t h e r e m a i n d e r w a s s p e n t on m i s c e l l a n e o u s s n a c k s . Half t h e c o s t of m e a l s w a s f o r l u n c h e s p u r c h a s e d by t h e h u s b a n d s , and t h e a v e r a g e e x p e n d i t u r e s of t h o s e who bought l u n c h e s w a s $209.

How-

e v e r , o n e - f o u r t h of t h e f a m i l i e s r e p o r t e d no s u c h e x p e n s e s , e i t h e r b e c a u s e t h e h e a d of t h e f a m i l y went h o m e f o r l u n c h , c a r r i e d a p a c k e d lunch, o r r e c e i v e d f r e e lunch f r o m h i s e m p l o y e r . The r e m a i n d e r of t h e m o n e y s p e n t f o r m e a l s w a s about e q u a l l y divided b e t w e e n m e a l s f o r v a r i o u s m e m b e r s of the f a m i l y w h i l e s h o p p i n g o r out f o r t h e evening, and m e a l s on v a c a t i o n o r s c h o o l l u n c h e s . In addition to m e a l s , m o s t f a m i l i e s bought s o m e m i s c e l l a n e o u s s n a c k s , with an a v e r a g e e x p e n d i t u r e of $35. F a m i l i e s v a r i e d g r e a t l y in the s u m s s p e n t f o r food away f r o m h o m e , a l though t h e r e w a s c o n s i d e r a b l e c o n c e n t r a t i o n in t h e l o w e r e x p e n d i t u r e b r a c k e t s . E i g h t y - t h r e e p e r cent s p e n t l e s s t h a n $500, and 3 f a m i l i e s s p e n t m o r e t h a n $1,000. The 2 h i g h e s t s p e n d e r s w e r e f a m i l i e s in which t h e h u s b a n d w a s a w a y p a r t of t h e y e a r , and while he w a s away h e a t e a l l h i s m e a l s in r e s t a u 3 rants; 1 of t h e 2 a l s o h a d a d a u g h t e r a w a y at c o l l e g e , t h u s f u r t h e r i n c r e a s ing t h e c o s t of food a w a y f r o m h o m e . T h e r e w a s a s u b s t a n t i a l d i f f e r e n c e in t h e e x p e n d i t u r e s f o r food away f r o m h o m e by f a m i l i e s with i n c o m e s below and above $6,000. T h e l o w e r of 3Expenditures for these m e a l s w e r e r e i m b u r s e d . This amount is added both to i n c o m e and to e x p e n d i t u r e s f o r food f o r e a c h f a m i l y c o n c e r n e d .

Food and Alcoholic B e v e r a g e s

50

t h e s e g r o u p s s p e n t an a v e r a g e of $266 and the u p p e r g r o u p s p e n t $396, o r 49 p e r cent m o r e . Although t h i s d i f f e r e n c e i s n a r r o w e d when p e r c a p i t a e x p e n d i t u r e s a r e c o n s i d e r e d , the h i g h e r i n c o m e g r o u p s t i l l s p e n t 40 p e r cent m o r e t h a n t h o s e with l o w e r i n c o m e s :

$97 in c o n t r a s t with $70.

Although e x p e n d i t u r e s f o r food at h o m e v a r i e d d i r e c t l y with s i z e of f a m i l y , t h e r e v e r s e w a s t r u e in the c a s e of e x p e n d i t u r e s f o r food away f r o m h o m e . T h r e e - p e r s o n f a m i l i e s spent an a v e r a g e of $393 p e r f a m i l y ; 4 - p e r s o n f a m i l i e s spent $332; and t h e l a r g e s t f a m i l i e s s p e n t $263. E x p e n d i t u r e s f o r food away f r o m h o m e had c o n s i d e r a b l e e f f e c t on t o t a l food c o s t s . E x p e n d i t u r e s p e r p e r s o n f o r food at h o m e did not d i f f e r g r e a t l y b e t w e e n t h e two i n c o m e g r o u p s . S i n c e t h e g r o u p with i n c o m e s above $6,000 spent m o r e f o r food away f r o m h o m e than the f a m i l i e s in t h e l o w e r i n c o m e b r a c k e t , t h e y had r e l a t i v e l y l a r g e r t o t a l food e x p e n d i t u r e s . T h u s t h e r e a l d i f f e r e n c e in t h e i r s p e n d i n g h a b i t s w a s t h e m u c h g r e a t e r a m o u n t s p e n t f o r food a w a y f r o m h o r n e d ALCOHOLIC B E V E R A G E S Although a l c o h o l i c b e v e r a g e s a r e not c l a s s i f i e d a s food, they a r e i n c l u d e d in t h i s c h a p t e r b e c a u s e t h e y a r e m o r e c l o s e l y r e l a t e d to food t h a n to any o t h e r e x p e n d i t u r e i t e m . E i g h t y - n i n e p e r cent of t h e f a m i l i e s r e p o r t e d s o m e e x p e n d i t u r e f o r b e e r , wine, o r l i q u o r . T h e t o t a l g r o u p of 159 f a m i l i e s s p e n t an a v e r a g e of $91 o r 1. 5 p e r cent of all c o n s u m p t i o n e x p e n d i t u r e s ; f o r t h e 142 who r e p o r t e d buying a l c o h o l i c b e v e r a g e s , t h e a v e r a g e a m o u n t s p e n t w a s $102. F a m i l y e x p e n d i t u r e s v a r i e d g r e a t l y , but j u s t o v e r t w o - t h i r d s w e r e l e s s t h a n $100, and 41 p e r cent w e r e l e s s t h a n $50. N e a r l y o n e - q u a r t e r of the f a m i l i e s s p e n t b e t w e e n $100 and $300, and t h e r e m a i n i n g 8 p e r cent s p e n t l a r g e r s u m s , t h e h i g h e s t of which w a s $500. On t h e whole, a l c o h o l i c b e v e r a g e s w e r e a s m a l l p a r t of t h e t o t a l e x p e n s e s of t h e s e f a m i l i e s , but a few s p e n t r e l a t i v e l y l a r g e a m o u n t s . T h e 142 f a m i l i e s who bought b e e r , wine, o r l i q u o r s p e n t an a v e r a g e of 1. 7 p e r cent of t h e i r t o t a l c o n s u m p t i o n e x p e n d i t u r e s f o r t h i s p u r p o s e ; f o r 61 p e r cent of t h o s e ^One c o m p a n y in the s a m p l e p r o v i d e d f r e e m e a l s to a l l i t s e m p l o y e e s with an e s t i m a t e d a v e r a g e v a l u e of $208 p e r y e a r . Since the f a m i l i e s w h o s e b r e a d w i n n e r s w e r e e m p l o y e e s of t h i s c o m p a n y m a d e up o n e - f i f t h of the l o w e r i n c o m e g r o u p , and only s l i g h t l y m o r e t h a n o n e - e i g h t h of t h e h i g h e r i n c o m e b r a c k e t , t h e u n d e r s p e n d i n g f o r food away f r o m h o m e by t h e s e e m p l o y e e s m i g h t h a v e b i a s e d the r e s u l t s . When t h e s e f a m i l i e s w e r e o m i t t e d f r o m both i n c o m e g r o u p s , it w a s found t h a t t h e p e r c a p i t a e x p e n d i t u r e s f o r t o t a l food r e m a i n e d 8 p e r cent h i g h e r f o r t h o s e with i n c o m e s of $6,000 and m o r e , and t h e p r o p o r t i o n s s p e n t f o r food at h o m e and food away f r o m h o m e c h a n g e d v e r y l i t t l e . T h e r e f o r e , the i n c l u s i o n of t h i s p a r t i c u l a r g r o u p of f a m i l i e s d o e s not i n v a l i d a t e t h e point that although t h e l o w e r i n c o m e g r o u p spent s i m i l a r a m o u n t s f o r food at h o m e , t h e y s p e n t l e s s f o r food away f r o m home than the upper income group.

Food and Alcoholic B e v e r a g e s

51

T A B L E 20 Expenditures for Alcoholic B e v e r a g e s F a m i l i e s reporting expenditures Expenditure c l a s s F a m i l i e s reporting, total Under $100, total Under $25 $25 to $49 $50 to $74 $75 to $99 $100 to $199 $200 to $299 $300 to $399 $400 to $499 $500 to $599

P e r c ent

Number

100 67 19 21 15 11 15 8 5 2

142 96 28 30 22 16 22 12 8 3 1

0 6 7 1 5 3 5 5 6 1 7

Average expenditures, r a n g e s , and per cent reporting expenditures All f a m i l i e s Mean Median F a m i l i e s reporting Mean Median Range P e r cent reporting

$90.66 56.08 101.51 65.68 $ 2 . 0 0 to 500. 34 89. 3

buying, the proportion was l e s s than 1. 5 per cent. Two families, however, reported spending 10. 7 and 7. 7 per cent respectively of all their consumption expenditures for alcoholic b e v e r a g e s . Apparently the amount families spent in this category depended on other f a c t o r s besides s i z e of their inc o m e s . T h e r e were both s m a l l and large expenditures at every level of income, and the average sums spent by families with expenditures, in both the income group under $6,000 and the higher bracket, were very s i m i l a r — $97 and $106, respectively.

Chapter V EXPENDITURES FOR HOUSING EXPENDITURES OF ALL FAMILIES Housing^ r a n k e d t h i r d in r e l a t i v e i m p o r t a n c e a m o n g t h e m o n e y e x p e n s e s f o r f a m i l y living. T h e a v e r a g e c a s h o u t l a y f o r a l l h o u s i n g w a s $711, a s u m e x c e e d e d only by food and t r a n s p o r t a t i o n . N i n e t y - f i v e p e r cent of t h e t o t a l h o u s i n g e x p e n s e , o r $676, went f o r t h e f a m i l y h o m e . T w o - t h i r d s of the f a m i l i e s a l s o s p e n t s o m e t h i n g f o r h o u s i n g a w a y f r o m h o m e , a v e r a g i n g $36 f o r a l l f a m i l i e s and $53 f o r t h o s e who r e p o r t e d s u c h e x p e n s e . E i g h t y - f o u r p e r cent of t h e s e a d d i t i o n a l e x p e n d i t u r e s w e r e l e s s t h a n $100, and a l l w e r e l e s s t h a n $300. V a c a t i o n h o u s i n g a c c o u n t e d f o r t h e l a r g e s t p a r t of s u c h c o s t s , but t h e r e w e r e a f e w c a s e s with h o u s i n g e x p e n s e s while f a m i l y m e m b e r s w e r e away e i t h e r at s c h o o l , at w o r k , o r on personal business. The p r o p o r t i o n of t o t a l c o n s u m p t i o n e x p e n d i t u r e s which went f o r a l l h o u s i n g a v e r a g e d 1 1 . 9 p e r c e n t . (See t a b l e 4, p. 13.) A l m o s t f o u r - f i f t h s of t h e f a m i l i e s s p e n t b e t w e e n 5 and 20 p e r c e n t , but h e r e , a s in d o l l a r e x p e n d i t u r e s , t h e r a n g e w a s w i d e . F i f t e e n f a m i l i e s s p e n t l e s s than 5 p e r c e n t , with a l l but 1 in t h i s g r o u p owning t h e i r h o m e s o u t r i g h t and c o n s e q u e n t l y f r e e of i n t e r e s t p a y m e n t s on m o r t g a g e s . E i g h t e e n f a m i l i e s s p e n t 20 p e r cent o r m o r e , c h i e f l y b e c a u s e of high r e p a i r and r e p l a c e m e n t c o s t s o r l a r g e e x p e n s e s i n c o n n e c t i o n with s a l e s of h o m e s . F a m i l i e s with i n c o m e s o v e r $6,000 s p e n t an a v e r a g e of $829 f o r a l l t h e i r h o u s i n g r e q u i r e m e n t s , w h e r e a s t h o s e in t h e l o w e r i n c o m e b r a c k e t s p e n t ^ I n c l u d e s r e n t s , e x p e n s e s f o r h o u s i n g away f r o m h o m e , c u r r e n t m a i n t e n a n c e c o s t s f o r h o m e o w n e r s ( i n t e r e s t on m o r t a g e s , t a x e s , i n s u r a n c e , and e x p e n s e s f o r r e p a i r s and r e p l a c e m e n t s ) . E x c l u d e s down p a y m e n t s on h o m e s bought in 1950. [ 52 ]

Housing

53

$582. The higher group spent more both for family homes and for housing away from home. Although 42 per cent of the families reported expenditures between $500 and $1,000 for family homes, there was considerable variation above and below these s u m s . Thirteen families, or 8 per cent of the total, spent l e s s than $250, and one-third had c o s t s between $250 and $500. Eighty-three per cent of those with expenditures under $500 were full-year home owners, 45 per cent of whom had no mortgage on their homes. One-sixth of the sample spent $1,000 or more for family homes, up to a maximum of $2,491. full-year r e n t e r spent more than $1,470 for a family home, full-year owners had c o s t s above that figure.

No

and only 5

The relatively high ex-

penditures of the 13 families who were both r e n t e r s and owners in 1950 were the result of sale and acquisition c o s t s , r e p a i r s , or replacements in the homes which they purchased, or above-average rents while they were tenants.

T A B L E 21 Expenditures for Housing, by Type of Housing Type of housing All housing F a m i l y home Away f r o m home All f a m i l i e s F a m i l i e s reporting

Mean

Median

$711 21 675 58

$576 00 551 66

35 63 53 44

14 00 35 00

Range $ 1 2 8 . 2 5 to 2 , 6 4 0 15 47. 75 to 2, 490 65 . 50 to

270 00

The present study is primarily interested in the money expenditures of the families in the sample, but it would be unrealistic to discuss housing costs without giving some consideration to the imputed o r net value of occupancy of owned homes (N.V.O.) As the U . S . Bureau of Labor Statistics has pointed out, the money expenses of home owners for taxes, insurance, i n t e r est, r e p a i r s , and so on, do not tell the whole story of current housing c o s t s . If a family either owns its home outright or has a substantial equity in it, annual cash expenditures a r e often l e s s than the cost of renting an equally good house. N.V.O. is the difference between the estimated rental value of the owned home (during the months it was occupied) and the cash outlay for current housing expenses. N.V.O. is not only income in kind from the housing investment but also a consumption item, " s i n c e the family has chosen to o take the return on its investment in the form of housing." 2

U . S . Department of Labor, Bureau of Labor Statistics, Money D i s bursements of Wage E a r n e r s and C l e r i c a l W o r k e r s , 1934-36, Bulletin 638, Washington, D . C . , 1941, p. 86.

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Household Operation

70

spent for a diverse category containing such i t e m s as matches and moving c o s t s . Most family expenditures in this last group were small, but there were 10 who spent between $113 and $370 for moving expenses, r e p a i r and servicing of appliances, or reupholstering. Expenditures for these miscellaneous categories of household operation i n c r e a s e d as income went up: families with incomes l e s s than $6,000 spent an average of $262 but those with incomes of $6,000 or more spent $380. This situation was true not only for the total of such expenditures, but for each subsection as well, although in some c a s e s differences were negligible. The greatest variation between the two income groups appeared in their expenditures f o r wages:

all families with incomes of l e s s than $6,000 spent

an average of $33, but the cost for the higher income group was three t i m e s this amount. Sixty-three per cent of those with higher incomes had expenditures for wages, in contrast with 53 per cent of those in the lower income group. The average expenditure of the lower income families who paid wages was $63; the higher income group spent two and one-half times as much.

Chapter VII EXPENDITURES FOR HOUSEFURNISHINGS H o u s e f u r n i s h i n g s probably include the m o s t heterogeneous a s s o r t m e n t of p u r c h a s e s to be found in any of the main c a t e g o r i e s of family expenditures. Not only i s a l a r g e v a r i e t y of i t e m s included, but i t e m by i t e m there i s obviously great variation in quality a n d / o r s i z e , and consequently in the price paid. Nor a r e t h e s e the only r e a s o n s why it i s difficult—if not i m p o s sible—to d e s c r i b e the "typical" h o u s e f u r n i s h i n g s p u r c h a s e s of any group of f a m i l i e s . A report l i m i t e d to a given y e a r , as i s this one, shows t r e m e n dous v a r i a t i o n s between f a m i l i e s in the amounts spent for h o u s e f u r n i s h i n g s . One r e a s o n for this, as pointed out by the U . S . Bureau of Labor S t a t i s t i c s , i s that, "Since the majority of the i t e m s which c o m e under this heading are at l e a s t s e m i d u r a b l e in nature, f a m i l i e s a r e usually able to adjust the l e v e l of their spending to the current f a m i l y situation. . . .

A family . . . may

do without any new additions to its stock of goods in a y e a r when i t s i n c o m e i s reduced o r other demands are particularly urgent.

On the other hand,

b e c a u s e the H e l l e r C o m m i t t e e study w a s made in 1950, it i s likely that s o m e f a m i l i e s made p u r c h a s e s of c o n s u m e r durables in advance of the t i m e they might o t h e r w i s e have made them, in o r d e r to avoid anticipated s h o r t a g e s a r i s i n g f r o m the Korean War. Considering all t h e s e potentials f o r variation in the s i z e and nature of housefurnishings expenditures, it i s evident that the present s a m p l e w a s far too s m a l l to allow any g e n e r a l i z a t i o n s f r o m the h o u s e f u r n i s h i n g s expenditure data. It i s only p o s s i b l e to report in broad t e r m s how 159 f a m i l i e s spent their h o u s e f u r n i s h i n g s d o l l a r s in 1950. Expenditures for housefurnishings r e p r e s e n t e d 7 . 5 per cent of all the money the a v e r a g e f a m i l y spent for current consumption. The a v e r a g e cash 1

U . S . Department of Labor, Bureau of Labor Statistics, Money D i s b u r s e m e n t s of Wage E a r n e r s and C l e r i c a l W o r k e r s , 1934-36, Bulletin No. 638, Washington, D . C . , 1941, p. 115. [ 71 ]

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TABLE 46 Number of Automobiles Owned, by Date of Manufacture and Income of Owners Number of automobiles owned J a n u a r y 1, 1950 December 31, 1950 Income of o w n e r s

Date of m a n u f a c t u r e

Total c a r s Postwar—1946 or l a t e r . . Prewar—1942 or e a r l i e r . Ratio of postwar to prewar cars

All incomes

Under $6,000

$6,000 All and over i n c o m e s

Under $6,000

$6,000 and o v e r

153 67 86

69 22 47

84 45 39

163 102 61

75 42 33

88 60 28

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.5

1.2

1.7

1.3

2. 1

A U T O M O B I L E PURCHASE AND U P K E E P T h e a v e r a g e e x p e n d i t u r e f o r t h e p u r c h a s e and u p k e e p of c a r s w a s $822. F a m i l i e s with i n c o m e s l e s s t h a n $6,000 s p e n t an a v e r a g e of $865, and t h e h i g h e r i n c o m e g r o u p $783. T h e l a r g e r c a r e x p e n s e f o r t h e l o w e r i n c o m e g r o u p w a s r e l a t e d to c a r p u r c h a s e r a t h e r t h a n o p e r a t i o n ; t h e g r o u p s p e n t an a v e r a g e of $337 f o r o p e r a t i o n and u p k e e p of an a u t o m o b i l e , w h e r e a s t h o s e with h i g h e r i n c o m e s s p e n t $390. On t h e o t h e r hand, t h o s e with i n c o m e s u n d e r $6,000 s p e n t an a v e r a g e of $528 f o r c a r p u r c h a s e , a s a g a i n s t $393 s p e n t by t h e h i g h e r i n c o m e g r o u p . T h e f a c t that f a m i l i e s with l o w e r i n c o m e s s p e n t m o r e f o r t h e p u r c h a s e of c a r s t h a n t h o s e in t h e h i g h e r i n c o m e b r a c k e t s w a s not t h e r e s u l t of b u y i n g m o r e e x p e n s i v e c a r s . A c t u a l l y t h o s e with i n c o m e s of $6,000 o r m o r e bought c a r s with an a v e r a g e net c o s t 12 p e r cent g r e a t e r t h a n the a v e r a g e c o s t of t h e c a r s bought by the l o w e r i n c o m e g r o u p . H o w e v e r , 42 p e r cent of t h e f a m i l i e s in t h e l o w e r g r o u p bought c a r s , but only 28 p e r cent of t h e u p p e r i n c o m e g r o u p m a d e s u c h p u r c h a s e s . T h i s w a s p r o b a b l y b e c a u s e the c a r s owned by t h e l o w e r i n c o m e g r o u p w e r e o l d e r and in g r e a t e r n e e d of r e p l a c e m e n t . At the b e g i n n i n g of 1950 m o r e t h a n t w o t h i r d s of t h e c a r s owned by the l o w e r i n c o m e f a m i l i e s h a d b e e n m a n u f a c t u r e d in 1942 o r e a r l i e r ; in c o n t r a s t , l e s s t h a n half t h e c a r s owned by t h e u p p e r i n c o m e g r o u p w e r e t h a t o l d . D u r i n g 1950 f a m i l i e s in the l o w e r i n c o m e b r a c k e t i n c r e a s e d t h e p r o p o r t i o n of p o s t w a r to p r e w a r c a r s which t h e y owned f r o m . 5 to 1.3, o r 120 p e r c e n t . In t h e s a m e p e r i o d f a m i l i e s with h i g h e r i n c o m e s r a i s e d t h e i r p r o p o r t i o n of p o s t w a r c a r s f r o m 1.2 to 2.1, o r only 75 p e r c e n t . C a r o w n e r s h i p . — N e a r l y a l l f a m i l i e s owned a c a r at s o m e t i m e in 1950. In the m a i n , t h e s e w e r e o n e - c a r f a m i l i e s , although at the end of 1950, 12 w e r e t w o - c a r f a m i l i e s . S i x t y - t h r e e p e r cent of t h e c a r s owned at t h e end of 1950 by a l l t h e f a m i l i e s w e r e m a n u f a c t u r e d in 1946 o r l a t e r y e a r s . E v e n with t h e l a r g e r a m o u n t s p e n t in 1950 f o r c a r p u r c h a s e s by t h e l o w e r i n c o m e g r o u p , and t h e r e s u l t i n g g r e a t e r r e l a t i v e d e c r e a s e in t h e a g e of t h e c a r s

Transportation

95

which t h e y owned, the c a r s owned by t h e h i g h e r i n c o m e g r o u p w e r e on t h e whole c o n s i d e r a b l y n e w e r t h a n t h o s e owned by f a m i l i e s in t h e l o w e r b r a c k e t . F i f t y - s i x p e r cent of the c a r s owned by t h e l o w e r i n c o m e f a m i l i e s and s l i g h t l y m o r e t h a n t w o - t h i r d s of t h o s e owned by t h e u p p e r b r a c k e t postwar

were

models.

F o r t y - s e v e n p e r cent of t h e one h u n d r e d and s i x t y - t h r e e c a r s owned at t h e end of 1950 w e r e 3in t h e l o w e s t p r i c e g r o u p , m a d e up of F o r d s , C h e v r o l e t s , and P l y m o u t h s . A l m o s t t h e s a m e n u m b e r of c a r s w e r e a m o n g the e l e v e n which m a d e u p t h e next two p r i c e g r o u p s . Only e l e v e n c a r s w e r e in a h i g h e r p r i c e b r a c k e t , and no f a m i l y owned a C a d i l l a c o r s i m i l a r e x p e n s i v e c a r . S i x t y - o n e p e r cent of a l l t h e c a r s w e r e p u r c h a s e d new, and t h e m a k e of the c a r owned showed a r e l a t i o n s h i p to w h e t h e r it w a s p u r c h a s e d new o r u s e d — t h e h i g h e r t h e p r i c e r a n g e of t h e c a r , t h e l e s s apt the f a m i l y w a s to h a v e bought it new. Only s l i g h t l y m o r e t h a n o n e - f o u r t h of t h e c a r s in t h e h i g h e s t p r i c e c l a s s , 56 p e r cent of the c a r s in t h e next l o w e r c l a s s ,

and

n e a r l y t w o - t h i r d s of t h e c a r s in t h e two l o w e s t p r i c e c l a s s e s , w e r e bought n e w . Both i n c o m e g r o u p s showed t h i s g e n e r a l p a t t e r n , although in a l l but one of t h e p r i c e f i e l d s t h o s e with h i g h e r i n c o m e s bought a h i g h e r p r o p o r t i o n of new c a r s t h a n did t h e l o w e r i n c o m e g r o u p . F i f t y - f i v e f a m i l i e s in the s a m p l e p u r c h a s e d f i f t y - s i x c a r s d u r i n g 1950, t w e n t y - n i n e of which w e r e new, and t w e n t y - s e v e n s e c o n d h a n d . H o w e v e r , 73 p e r cent of t h e t o t a l m o n e y spent f o r t h e p u r c h a s e of a u t o m o b i l e s went f o r the new c a r s . The a v e r a g e p r i c e of all c a r s p u r c h a s e d , i n c l u d i n g any f i n a n c i n g c h a r g e s and e x t r a s bought at t h e t i m e of p u r c h a s e , w a s $1,660, but a f t e r t r a d e - i n a l l o w a n c e s and a d j u s t m e n t s f o r t h e b u s i n e s s u s e of c a r s , ' * t h e a v e r a g e e x p e n d i t u r e w a s $1,299. T h e p r i c e of new c a r s a v e r a g e d $2,347, but with t h e t r a d e - i n a l l o w a n c e and the a d j u s t m e n t f o r b u s i n e s s u s e , t h e a v e r a g e c o s t w a s $1,839.

Although t h e p r i c e s of new c a r s v a r i e d f r o m

^ C a r s c u r r e n t l y b e i n g m a n u f a c t u r e d w e r e g r o u p e d by t h e p u r c h a s e p r i c e s of 4 - d o o r s e d a n s a s r e p o r t e d in C o n s u m e r R e p o r t s ( C o n s u m e r s Union), May, 1953. If v a r i o u s m o d e l s of t h e c a r a p p e a r e d in m o r e t h a n one g r o u p , t h e c a r w a s c l a s s i f i e d h e r e in t h e c h e a p e s t of t h e g r o u p s i n which it w a s l i s t e d . U s i n g t h i s a s a g e n e r a l guide, all c a r s owned by 1 o r m o r e f a m i l i e s w e r e c l a s s i f i e d i n t o t h e following g r o u p s : G r o u p 1. F o r d , C h e v r o l e t , P l y m o u t h G r o u p 2. Dodge, H u d s o n , H i l l m a n , N a s h , P o n t i a c , S t u d e b a k e r , W i l l y s G r o u p 3. Buick, DeSoto, M e r c u r y , O l d s m o b i l e G r o u p 4. C h r y s l e r , K a i s e r , L i n c o l n , L a S a l l e , P a c k a r d 4

A p e r c e n t a g e of t h e t o t a l p r i c e equal to the p r o p o r t i o n of m i l e s d r i v e n f o r b u s i n e s s w a s s u b t r a c t e d f r o m t h e t o t a l p r i c e paid in t h e c a s e of 4 f a m i l i e s who bought c a r s . T h e a v e r a g e a m o u n t s u b t r a c t e d w a s $ 2 9 . 1 0 f o r a l l c a r b u y e r s , and $ 4 0 7 . 4 0 f o r t h e 4 c a r - b u y i n g f a m i l i e s that r e p o r t e d b u s i ness use.

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t h e f a m i l i e s who h a d s o m e e x p e n s e in addition to t h e c a r e r e c e i v e d without c o s t t h r o u g h a p r e p a i d plan r e p o r t e d s m a l l e x p e n d i t u r e s . Only 1 s u c h f a m ily had a bill o v e r $60, b e c a u s e the w i f e w a s h o s p i t a l i z e d f o r t w e n t y - e i g h t d a y s , and although s h e had h o s p i t a l i n s u r a n c e , s h e i n c u r r e d an a d d i t i o n a l b i l l of $260. T h e n u m b e r of i n s t a n c e s in which t h e f a m i l y paid a l l t h e i r own h o s p i t a l c o s t s i s too s m a l l to c o m p a r e t h e i r e x p e n d i t u r e s with t h e e x p e n d i t u r e s of t h o s e who r e c e i v e d h o s p i t a l c a r e t h r o u g h a p r e p a y m e n t plan. It i s , h o w e v e r , not s u r p r i s i n g to find t h a t 4 of t h e 7 f a m i l i e s who paid a l l t h e i r own h o s p i t a l c o s t s had b i l l s f r o m $90 to $192, but only 1 of t h e f a m i l i e s t h a t r e c e i v e d b e n e f i t s f r o m p r e p a y m e n t c o v e r a g e had a h o s p i t a l b i l l of m o r e t h a n $60. L a b o r a t o r y t e s t s , X r a y s , and a p p l i a n c e s . — E x p e n d i t u r e s f o r l a b o r a t o r y t e s t s , X r a y s , o r t h o p e d i c a p p l i a n c e s , and h e a r i n g a i d s w e r e r e p o r t e d by 58 p e r cent of t h e s e f a m i l i e s , and f o r t h o s e w h o s e e x p e n d i t u r e s w e r e known t h e a v e r a g e c o s t w a s $24. T h e r e w e r e 5 f a m i l i e s in which a l l t h e s e r v i c e s in t h i s c a t e g o r y w e r e f u r n i s h e d by a p r e p a y m e n t plan, and 1 in which t h e V e t e r a n s A d m i n i s t r a t i o n p r o v i d e d a h e a r i n g a i d . N e a r l y t w o - t h i r d s of t h e f a m i l i e s (including t h e s e 6) had e x p e n d i t u r e s of l e s s t h a n $25, and in only 2 w e r e t h e s u m s s p e n t m o r e t h a n $100. One of t h e s e spent $165, c h i e f l y f o r a h e a r i n g aid, and t h e s e c o n d s p e n t $208, a l m o s t e n t i r e l y f o r X - r a y t r e a t m e n t s f o r an e l d e r l y m o t h e r - i n - l a w who had c a n c e r . O c u l i s t and g l a s s e s . — F o r t y - t w o p e r cent of t h e f a m i l i e s u s e d t h e s e r v i c e s of an o c u l i s t o r p u r c h a s e d g l a s s e s . T h e a v e r a g e e x p e n d i t u r e w a s $26; 88 p e r cent s p e n t l e s s t h a n $50, and t h e two l a r g e s t b i l l s w e r e $90 and $98, paid by f a m i l i e s in which m o r e t h a n 1 p e r s o n p u r c h a s e d g l a s s e s . O t h e r s e r v i c e s . — T h e r e w e r e 13 f a m i l i e s , o r 8 p e r cent of t h e s a m p l e , t h a t r e p o r t e d e x p e n d i t u r e s f o r n u r s i n g s e r v i c e s . F i v e of t h e s e f a m i l i e s w e r e u n a b l e to s e p a r a t e t h e s u m spent f o r n u r s i n g f r o m o t h e r m e d i c a l e x p e n s e s . One of t h e r e m a i n i n g 8 f a m i l i e s r e c e i v e d f r e e n u r s i n g c a r e , ap p a r e n t l y by a f r i e n d o r r e l a t i v e , and of t h e o t h e r s only 2 s p e n t m o r e t h a n $75. T h e s e 2 h a d e x p e n d i t u r e s of $100 and $245 f o r n u r s i n g c a r e a f t e r t h e b i r t h of a c h i l d . F o u r t e e n f a m i l i e s u s e d t h e s e r v i c e s of o t h e r p r a c t i t i o n e r s , such a s o s t e o p a t h s , c h i r o p r a c t o r s , o r f a i t h h e a l e r s , and none of t h e i r e x p e n d i t u r e s w a s m o r e t h a n $45. Although f o r each c a t e g o r y of m e d i c a l e x p e n d i t u r e m a n y f a m i l i e s s p e n t s m a l l s u m s , t h e r e w e r e , a l m o s t without e x c e p t i o n , s o m e l a r g e b i l l s f o r e v e r y t y p e of s e r v i c e . F u r t h e r m o r e , it m u s t b e r e c o g n i z e d t h a t even r e l a t i v e l y s m a l l b i l l s f o r s e v e r a l k i n d s of m e d i c a l c a r e m a y r e s u l t in a l a r g e total medical bill.

M e d i c a l and D e n t a l C a r e

116

M E D I C A L CARE EXPENDITURES O F INDIVIDUALS N i n e t y - f o u r p e r cent of t h e i n d i v i d u a l s i n c l u d e d in t h i s s t u d y r e p o r t e d s o m e kind of m e d i c a l c a r e . In s o m e i n s t a n c e s t h i s c a r e w a s l i m i t e d to t h e p u r c h a s e of m e d i c i n e f o r s o m e m i n o r a i l m e n t , w h e r e a s in o t h e r s it involved v i s i t s to a p h y s i c i a n o r h o s p i t a l a t c o n s i d e r a b l e e x p e n s e . T h e r e w e r e m a n y c a s e s in which f a m i l y m e d i c a l e x p e n d i t u r e s could not be a l l o c a t e d a m o n g t h e i n d i v i d u a l m e m b e r s , and t h e r e f o r e , though s o m e c a r e w a s r e p o r t e d f o r 595 p e r s o n s , s p e c i f i c e x p e n d i t u r e s w e r e a v a i l a b l e f o r only 359 i n d i v i d u a l s . T h e a v e r a g e m e d i c a l e x p e n d i t u r e of t h e 359 p e r s o n s w h o s e e x p e n s e s could b e a l l o c a t e d to s p e c i f i c i n d i v i d u a l s w a s $ 6 6 — c o n s i d e r a b l y h i g h e r t h a n t h e a v e r a g e of $54 f o r a l l 595 p e r s o n s who r e c e i v e d c a r e . T h e a v e r a g e e x p e n s e of t h o s e p e r s o n s w h o s e e x p e n d i t u r e s could not be a l l o c a t e d to s p e c i f i c i n d i v i d u a l s w a s $34; t h i s l o w e r p e r c a p i t a e x p e n d i t u r e a p p e a r s to b e r e l a t e d to t h e f a c t t h a t 25 p e r cent of t h i s g r o u p r e p o r t e d t h a t t h e i r only m e d i c a l e x p e n s e w a s f o r d r u g s and s u p p l i e s . In s h a r p c o n t r a s t , only 12 p e r cent of t h o s e with a l l o c a t e d e x p e n d i t u r e s r e p o r t e d t h a t t h e i r only c o s t s w e r e f o r t h e s e i t e m s . T h i s i n d i c a t e s t h a t the a v e r a g e e x p e n d i t u r e of t h o s e with a l l o c a t e d e x p e n s e s i s b i a s e d u p w a r d , and t h e l o w e r p e r c a p i t a f i g u r e of $54 b a s e d on 595 p e r s o n s e x p r e s s e s t h e a v e r a g e l e v e l of e x p e n d i t u r e m o r e a c c u r a t e l y . H o w e v e r , t h e u p w a r d b i a s a m o n g t h o s e with a l l o c a t e d e x p e n s e s a p p e a r e d to be about t h e s a m e f o r t h e h u s b a n d s , w i v e s , and c h i l d r e n ,

al-

though s o m e w h a t l a r g e r f o r o t h e r f a m i l y m e m b e r s . T h u s , with t h e p o s s i b l e e x c e p t i o n of t h i s l a s t g r o u p , t h e r e i s no r e a s o n to s u p p o s e t h a t if it had b e e n p o s s i b l e to a l l o c a t e t h e c o s t s to all i n d i v i d u a l s , t h e r e would h a v e b e e n any d r a s t i c c h a n g e in the r e l a t i o n s h i p s b e t w e e n t h e e x p e n d i t u r e s of t h e v a r i o u s family m e m b e r s . T h e r e w e r e c o n s i d e r a b l e d i f f e r e n c e s in t h e a v e r a g e a l l o c a t a b l e s u m s s p e n t by the v a r i o u s m e m b e r s of t h e s e f a m i l i e s . T h e h u s b a n d s ' e x p e n d i t u r e s a v e r a g e d $46, but t h e i r w i v e s spent $124, and t h e c h i l d r e n u n d e r e i g h t e e n y e a r s , $45. T h e i n c i d e n c e of t h e c o s t s f o r e a c h f a m i l y m e m b e r w a s , a s m i g h t be e x p e c t e d , v e r y u n e q u a l . F i f t y - t w o p e r c e n t of t h e h u s b a n d s s p e n t l e s s t h a n $25, 41 p e r cent b e t w e e n $25 and $100, and 4 p e r cent had b i l l s of $200 o r m o r e , with a m a x i m u m of $590. T h e w i v e s ' e x p e n d i t u r e s w e r e a s a whole m u c h l a r g e r t h a n t h o s e of t h e i r h u s b a n d s , but n e v e r t h e l e s s , 40 p e r cent s p e n t l e s s t h a n $25, and 37 p e r c e n t b e t w e e n $25 a n d $100. T h i r t e e n p e r c e n t , h o w e v e r , s p e n t $200 o r m o r e , with 4 s p e n d i n g a m o u n t s v a r y ing f r o m $768 to $2,988. T h e b i r t h of a child i s o f t e n i m p o r t a n t in d e t e r m i n ing the s i z e of m e d i c a l e x p e n d i t u r e s , and in t h i s g r o u p of 90 w o m e n , w h o s e m e d i c a l b i l l s could b e s e p a r a t e d f r o m t h o s e of o t h e r f a m i l y m e m b e r s , t h e r e w e r e 8 to whom a child w a s b o r n d u r i n g t h e y e a r . When t h e c o s t s f o r t h e s e

Medical and Dental Care

117

TABLE 61 Number of F a m i l i e s and Individuals with M e m b e r s h i p s in P r e p a i d Medical C a r e P l a n s in 1950 No membership

F u l l - y e a r or part-year membership

Full-year membership

F a m i l i e s o r individuals All f a m i l i e s All individuals Husbands Wives Children under 18 All o t h e r

159 639 159 159 292 29

11 83 12 20 37 14

121 b 523 143 131 239 10

Hssse 147 139 255 15

P e r cent of all f a m i l i e s o r individuals All f a m i l i e s All individuals Husbands Wives Children under 18 All other

100.0 100.0 100.0 100.0 100.0 100.0

6.9 13.0 7.5 12.6 12.7 48. 3

93 87 92 87 87 51

1 0 5 4 3 7

76. 1 81.8 89.9 82.4 81.8 34. 5

a T h e c l a s s i f i c a t i o n by individuals i s not b a s e d on the family unit. F o r example, s o m e of the 82 individuals with no c o v e r a g e w e r e m e m b e r s of f a m i l i e s in which s o m e person was covered by a prepaid medical c a r e plan. ^ F a m i l i e s w e r e c l a s s i f i e d a s having f u l l - y e a r m e m b e r s h i p only if all m e m b e r s of the family w e r e covered for 12 months. However, since m o s t family policies excluded children under one month of age and p e r s o n s eighteen y e a r s of age and o v e r , if t h e s e p e r s o n s w e r e not covered it was a s s u m e d that they w e r e ineligible. F a m i l i e s in which such p e r s o n s w e r e not covered w e r e c l a s s i f i e d a s having f u l l - y e a r m e m b e r s h i p if all other p e r s o n s w e r e covered for twelve months (or l e s s , in the c a s e of babies under one y e a r old).

w o m e n w e r e excluded,® the a v e r a g e m e d i c a l e x p e n s e of the w i v e s w a s $99, c o n s i d e r a b l y l e s s than f o r the group of w o m e n a s a whdle, but s t i l l m o r e than t w i c e the s u m spent by their husbands. The expenditures for children v a r i e d within n a r r o w e r l i m i t s than did those of t h e i r parents. F o r t y - f i v e per cent w e r e l e s s than $25, and about the s a m e proportion between $25 and $100. The l a r g e s t s u m s spent for individual children w e r e $260 and $205. S i m i l a r l y , the two highest m e d i c a l b i l l s f o r r e l a t i v e s living with the f a m i l y w e r e $448 and $228. PREPAID MEDICAL CARE Prepaid m e d i c a l c a r e plans in this study included all i n s u r a n c e - t y p e a r r a n g e m e n t s for hospital, s u r g i c a l , and m e d i c a l c a r e which provided b e n e f i t s in the f o r m of s e r v i c e s or c a s h r e i m b u r s e m e n t f o r all or part of this c a r e . ®This procedure g i v e s only a rough approximation of expenditures without childbirth c o s t s . It would have been d e s i r a b l e to include the expendit u r e s of all w o m e n f o r i l l n e s s e s other than childbirth, but expenditures by type of i l l n e s s w e r e not available, and thus all the expenditures of w o m e n who had children in 1950 had to be omitted.

TABLE 62 Family Expenditures for M e m b e r s h i p s in P r e p a y m e n t P l a n s All f a m i l i e s r e p o r t i n g expenditures Number P e r cent

Expenditure c l a s s F a m i l i e s reporting, total Size of expenditure unknown . . F a m i l i e s with known expendit u r e s , total Under $25 $25 to $49 $50 to $74 $75 to $99 $100 and o v e r

F a m i l i e s with full-year membershipsa Number P e r cent 121 0

148 lb 147 2 33 26 73 13

100.0 1.4 22.4 17.7 49.7 8.8

121 0 27 25 65 4

100.0 .0 23.2 20. 7 53.7 3.3

Average family expenditures and r a n g e s All f a m i l i e s 0 Mean Median Families reporting0 Mean Median

$73.54 76. 80 $77 08 76 80

79.05° 80.40d

42 60 to 180 00

6 . 2 5 to 180.00

Range

a A l l eligible family m e m b e r s covered all y e a r (or l e s s than a y e a r in the c a s e of b a b i e s under one y e a r old). b One family had 1 p e r s o n covered part of the y e a r in a student plan at an unavailable c o s t . No other m e m b e r of the family was c o v e r e d . c E x c l u d e s one c a s e with cost not r e p o r t e d . ^Includes eleven polio and four other policies covering special conditions. If these plans at a total cost of $213. 70 had been excluded, the m e a n and median for 147 c a s e s would be $77.59 and $77.84 r e s p e c t i v e l y .

TABLE 63 Number of M e m b e r s h i p s in P r e p a i d Medical C a r e P l a n s , by Type of I n s u r e r Type of i n s u r e r Total Nonprofit Blue C r o s s K a i s e r Foundation California Physicians' Service Health Service S y s t e m of San F r a n c i s c o . . . . Miscellaneous* 3 Commercial Group plans through e m p l o y e r Individual plans M i s c e l l a n e o u s (special conditions) 0

Number0 215 117 61 22 14 10 10 98 79 4 15

P e r cent 100.0 54.4 28.4 10. 2 6.2 4.7 4.7 45.6 36.7 1.9 7.0

a M e m b e r s h i p s covering 1 o r m o r e f a m i l y m e m b e r s for the whole, o r any part of the calendar y e a r . ^Seven of t h e s e plans w e r e in educational institutions which provided s o m e health c a r e f o r enrolled s t u d e n t s . ° T h e s e policies covered s p e c i a l conditions only (for example, eleven w e r e polio policies) in c o n t r a s t to the o t h e r c o m m e r c i a l policies which w e r e not r e s t r i c t e d to one specific condition.

Medical and Dental C a r e

119

Membership in some kind of prepaid medical c a r e plan was very common among this group of f a m i l i e s ; 148, or 93 per cent, reported that some family m e m b e r belonged to a prepayment plan at some time during the y e a r , and 82 per cent of the memberships covered the entire family for the full y e a r . This high proportion of membership i s probably related to the method of selecting the sample, which resulted in the inclusion of a large number of employees of large companies. T h e s e companies were perhaps more likely to offer group membership in prepayment plans than were s m a l l f i r m s . T h e r e were 639 individuals in the study; 87 per cent of these persons were m e m b e r s of prepayment plans at some time during the y e a r , and 94 per cent of their memberships were for the entire y e a r . There were not very great differences in the proportions of husbands, wives, and children who had prepaid coverage, although memberships were somewhat more f r e quent among the husbands. Twenty-nine other persons eighteen y e a r s of age and older were m e m b e r s of these f a m i l i e s , but only about half belonged to prepayment plans. The people in this last group who were not covered were in the main elderly parents of the husband or wife and not eligible to belong to the family plans; in addition, they were not employed and may have found it difficult to s e c u r e individual memberships in prepayment plans. Premiums.—Since premiums for prepayment plans a r e ordinarily on a family b a s i s , these expenditures must be analyzed in t e r m s of families rather than individuals. The average premium paid by the total group of 159 families was $74, or 27 per cent of their average medical c a r e expendit u r e s . The.average premium paid by families with some membership during the y e a r was $79; 22 per cent spent between $25 and $50, and half between $75 and $100. Only 2 families reported premiums under $25, 1 because of a meinbership of only one month, and the other because only 1 person was covered. Thirteen families, or 9 per cent of those who reported m e m b e r ships, spent sums f r o m $100 to $180. In some c a s e s these families were m e m b e r s of relatively high premium plans for the entire year; in others, the addition of polio policies raised the total premiums above $100. This group also included a few families that for some unspecified reason belonged to two plans with s i m i l a r coverage. Types of plans.—Several types of plans were represented by the m e m b e r ships reported by these f a m i l i e s . B e c a u s e in some families some persons were m e m b e r s of one plan and some of another, or a person was covered by more than one type of plan (e.g., polio and some other), memberships in two hundred and fifteen plans were reported by the 148 f a m i l i e s .

Fifty-

four per cent of the memberships were in nonprofit prepayment plans:

28

per cent in Blue C r o s s , 10 per cent in K a i s e r Foundation, 6 per cent in California P h y s i c i a n s ' S e r v i c e , 5 per cent in the Health Service System of San F r a n c i s c o , and 5 per cent in miscellaneous plans. Thirty-seven per

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Medical and Dental C a r e

123

c i a n s ' S e r v i c e . Sixty-two per cent of the plans of c o m m e r c i a l insurance companies provided hospital and surgical benefits, and the r e s t included medical benefits as well. In o r d e r to analyze the cost of f u l l - y e a r family coverage by the types of plans involved, it was n e c e s s a r y to omit those families that shifted their memberships from one plan to another during the y e a r , as well as those in which full-year family coverage was secured only through a combination of two or more plans. This discussion i s therefore limited to 89 families in which ninety-three full-year memberships were reported.

Forty-three

per cent of these memberships were in plans set up by the employer through c o m m e r c i a l insurance companies, and the average premium was $60. Most of the remaining memberships were in three nonprofit organizations, and the average premiums paid were $95 for California Physicians' S e r v i c e , $70 for Blue C r o s s , and $69 for K a i s e r Foundation. T h e r e were also differences in cost which were related to the types of coverage. The 4 families who had only hospital coverage paid an average premium of $48, whereas for those plans providing hospital and s u r g i c a l benefits, the average premium was $53. There were wide differences in the premiums for the latter coverage: most of the families with this type of protection were m e m b e r s of one c o m m e r c i a l plan offered by an i n s u r ance company to its employees at a cost of $47 per year; a few were m e m b e r s of a Blue C r o s s plan with a premium of $74; and 1 had a California Physicians' S e r v i c e policy which cost $113. The premiums paid f o r plans which covered hospital, surgical, and medical c a r e also varied considerably. The K a i s e r Foundation's premium averaged $69; Blue C r o s s a v e r aged $75; c o m m e r c i a l insurance plans were $83; and California Physicians' S e r v i c e was $93. These expenditures for prepayment premiums must be interpreted with caution. In the c a s e of at least 10 f a m i l i e s (belonging to a plan with hospital, surgical, and medical coverage) the employer paid part of the cost of m e m bership, and thus the full cost was higher than the amount spent by the famil i e s t h e m s e l v e s . Twenty-five families belonged to a plan with hospital and surgical coverage for which the premium was undoubtedly low because the insurance company for which the heads of these families worked made the plan available at an unusually low c o s t . T h e r e may have been a few other companies that paid part of the premiums, but in most other c a s e s the sums paid by the employee appeared to cover the full premium. Another important aspect of the expenditures for prepayment plans was the great differences in the amount of c a r e provided by policies in any one of the c l a s s i f i c a t i o n s . Although within the limits of this study it was not possible to make a detailed analysis of the exact provisions of each plan, enough evidence was available to indicate a wide degree of variability. F o r

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M e d i c a l and Dental C a r e

125

e x a m p l e , s o m e of t h e p l a n s c l a s s i f i e d a s p r o v i d i n g h o s p i t a l , s u r g i c a l , and m e d i c a l c a r e p r o v i d e d m e d i c a l c a r e only while h o s p i t a l i z e d , w h e r e a s o t h e r s provided s o m e c a r e for nonhospitalized i l l n e s s e s , either for the employee a l o n e o r f o r both the e m p l o y e e and h i s d e p e n d e n t s . F u r t h e r m o r e ,

some

p l a n s p r o v i d e d s e r v i c e b e n e f i t s ; o t h e r s o p e r a t e d on a r e i m b u r s e m e n t b a s i s , paying s p e c i f i e d s u m s f o r h o s p i t a l , s u r g i c a l , o r m e d i c a l c a r e — s u m s which m i g h t , o r m i g h t not, c o v e r t h e f u l l c o s t . INDIVIDUALS RECEIVING S E R V I C E S FROM PREPAID PLANS In a n a l y z i n g t h e e x t e n t to which i n d i v i d u a l s who w e r e m e m b e r s of p r e p a i d m e d i c a l p l a n s r e c e i v e d s e r v i c e s f r o m t h e p l a n s , and in c o m p a r i n g t h e e x p e n d i t u r e s of t h o s e who w e r e m e m b e r s of plans with t h e c o s t s of n o n m e m b e r s , c e r t a i n p e r s o n s h a v e b e e n o m i t t e d . The following i n d i v i d u a l s w e r e o m i t t e d : t h o s e who r e c e i v e d no c a r e , p e r s o n s who w e r e in the f a m i l y only p a r t of t h e y e a r , p a r t - y e a r plan m e m b e r s , and t h o s e who r e p o r t e d e x p e n d i t u r e s f o r d r u g s and s u p p l i e s and no o t h e r f o r m of m e d i c a l c a r e .

Prepayment

p l a n s s e l d o m c o v e r e d t h e c o s t s of d r u g s and s u p p l i e s , and t h e r e f o r e t h e i n c l u s i o n of p e r s o n s who r e p o r t e d t h e s e i t e m s a s t h e only t y p e of m e d i c a l c a r e r e c e i v e d would h a v e e x a g g e r a t e d t h e p r o p o r t i o n of i n d i v i d u a l s who r e c e i v e d no c a r e t h r o u g h t h e i r plan. F u r t h e r m o r e , it w a s i m p o s s i b l e to a l l o c a t e e x p e n d i t u r e s f o r t h e f a m i l y m e d i c i n e c a b i n e t to s p e c i f i c f a m i l y m e m bers. T h e f o l l o w i n g a n a l y s i s i s l i m i t e d to 475 p e r s o n s who r e c e i v e d s o m e m e d i c a l c a r e in addition to d r u g s and s u p p l i e s . E i g h t y - s e v e n p e r c e n t , o r 412 p e r s o n s w e r e f u l l - y e a r m e m b e r s of p r e p a y m e n t p l a n s . T h i r t y - n i n e p e r cent of t h e s e f u l l - y e a r m e m b e r s , o r 159 i n d i v i d u a l s , r e c e i v e d s o m e c a r e t h r o u g h t h e i r p r e p a y m e n t p l a n s , and a l l but 12, o r 7 p e r c e n t , had s o m e c o s t in a d dition to t h e p r e m i u m . T h i s s t u d y did not i n c l u d e d e t a i l e d q u e s t i o n s a s to why 253 f u l l - y e a r m e m b e r s r e c e i v e d no s e r v i c e s f r o m t h e i r p l a n s , but it i s p r o b a b l e t h a t m a n y of t h e s e people who h a d no h o s p i t a l i z e d i l l n e s s w e r e m e m b e r s of p l a n s which c o v e r e d only h o s p i t a l i z e d i l l n e s s e s . O t h e r s m a y h a v e r e q u i r e d only an o c c a s i o n a l v i s i t to a p h y s i c i a n and t h e i r p r e p a y m e n t p l a n s m a y not h a v e c o v e r e d t h e f i r s t few v i s i t s to a d o c t o r , o r t h e y m a y h a v e had i l l n e s s e s which w e r e e x c l u d e d f r o m c o v e r a g e .

For example, 1 person received

p e n s i v e m e d i c a l c a r e which w a s not c o v e r e d by t h e p r e p a y m e n t plan,

exand

5 p e r s o n s w e r e h o s p i t a l i z e d but h a d no p a r t of t h e i r c o s t s paid by t h e p l a n s to which t h e y b e l o n g e d . T h o s e 5 i n c l u d e d t h r e e c h i l d b i r t h c a s e s and one m i s c a r r i a g e which w e r e not c o v e r e d b y p r e p a y m e n t p l a n s , and one w o r k i n j u r y which w a s c o v e r e d by W o r k m e n ' s C o m p e n s a t i o n i n s u r a n c e . T h o s e f u l l - y e a r plan m e m b e r s who r e c e i v e d s o m e c a r e t h r o u g h a p r e p a y m e n t plan s p e n t an a v e r a g e of $56, w h e r e a s f u l l - y e a r m e m b e r s ,

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n o n m e m b e r s who r e c e i v e d no c a r e through a plan, spent an a v e r a g e of $46. Although the information obtained in this study provided no b a s i s f o r explaining why the group that had some c a r e through t h e i r prepayment plans spent m o r e than those whose c a r e was without such a s s i s t a n c e , it is possible that some of the group used medical s e r v i c e s m o r e often b e c a u s e at l e a s t some of the c o s t s of the s e r v i c e s would be paid by the prepayment plans.® A s s i s t a n c e f r o m a prepayment plan in paying medical bills o c c u r r e d most frequently when the i l l n e s s r e q u i r e d hospitalization. T h e r e w e r e 60 individuals who w e r e hospitalized at some time during 1950. F i f t y - t h r e e of t h e s e p e r s o n s w e r e f u l l - y e a r m e m b e r s of prepayment plans, and 48 of t h e s e m e m b e r s had all o r part of their hospital b i l l s paid by the plans. Thus 90 per cent of those who were hospitalized and had f u l l - y e a r coverage and 80 per cent of all who w e r e hospitalized had s o m e part of t h e i r hospital bills paid by a plan. With one exception, the prepayment plans paid f o r s o m e s u r g i c a l o r m e d i c a l c a r e in addition to at least part of the cost of the hospital r o o m . T h e r e w e r e only 5 m e m b e r s of prepayment plans who w e r e hospitalized and had no part of the c o s t s paid by plans. This was b e c a u s e the conditions f o r which they w e r e hospitalized w e r e not covered by the plans. In 9 of the hospitalized c a s e s with f u l l - y e a r coverage, prepaid plans paid the entire bill, but the o t h e r s spent s u m s f r o m a few d o l l a r s to $752. The a v e r a g e s u m spent f o r hospitalized c a r e in addition to prepayment p r e m i u m s was $69, in c o n t r a s t to the much l a r g e r s u m of $151 which was spent by those who had no a s s i s t a n c e f r o m prepayment plans in paying bills f o r hospitalized i l l n e s s e s . Although the n u m b e r s on which this a n a l y s i s i s b a s e d a r e s m a l l , and thus caution must be e x e r c i s e d in using the a v e r a g e expenditures, t h e r e i s c e r t a i n l y evidence that most p e r s o n s with f u l l - y e a r prepaid coverage who w e r e hospitalized r e c e i v e d substantial a s s i s t a n c e in paying their hospital b i l l s . However, it might well be noted that to the hospital bills of the 48 people who r e c e i v e d some a s s i s t a n c e f r o m prepaid plans m u s t be added t h e i r bills f o r nonhospitalized i l l n e s s e s , and with this addition t h e i r total m e d i c a l b i l l s averaged $119. ®The National F a m i l y Survey of Medical C o s t s and Voluntary Health Ins u r a n c e made by the Health Information Foundation in 1953 found that expenditures of f a m i l i e s with i n s u r a n c e w e r e higher than those without i n s u r ance. This study stated (p. 27): "This is in part due to g r e a t e r utilization by those with i n s u r a n c e and possibly also utilization of a m o r e expensive type of s e r v i c e , f o r example, a private r o o m in a hospital instead of s e m i private o r ward." The study, however, does not include any detailed analys i s of the r e a s o n s f o r the d i f f e r e n c e s in expenditures a s between i n s u r e d and noninsured groups. ®Eight of the 48 p e r s o n s also had some nonhospital c a r e through prepayment plans.

Medical and Dental C a r e

128

T A B L E 68 Expenditures of Individuals While Hospitalized, F u l l - Y e a r Plan M e m b e r s and Nonmembers

Expenditure c l a s s

Total f u l l - y e a r and nonmembers Number

F u l l - y e a r family m e m b e r s receiving care, t o t a l a . . - . No c o s t Under $100, total Under $50 $50 to $99 $100 to $199 $200 to $299 $300 and over

60 10 34 25 9 7 5 4

P e r cent 100.0 16.7 56.7 41.7 15.0 11.7 8.3 6.7

Source of c a r e Received s o m e c a r e through plans

Received no c a r e through plans

Number

Number

48 9 32 23 9 3 2 2

P e r cent 100.0 18. 7 66. 7 47.9 18. 7 6.2 4. 2 4. 2

12 1 2 2 0 4 3 2

P e r cent 100.0 8.3 16. 7 16. 7 .0 33.3 25.0 16.7

Average expenditures and ranges Persons receiving care Mean Median Range

$85.34 40. 25

$68.93 30.00

. 0 0 to 752.39

. 0 0 to 752.39

$150.98 132.15 . 0 0 to 330.00

a I t should be noted that the t o t a l s of this and the following table do not equal the totals on table 6 7 . T h i s difference i s accounted for by the fact that 8 f u l l - y e a r plan m e m b e r s had both hospital and nonhospital c a r e through prepayment plans; 34 f u l l - y e a r m e m b e r s had hospital c a r e but no nonhospital c a r e through a plan; and 1 f u l l - y e a r m e m b e r had hospital c a r e not through a plan and no nonhospital c a r e . F i n a l l y . 7 persons not belonging to a plan had both hospital and nonhospital c a r e .

There were 452 individuals who received some nonhospitalized c a r e e x cluding drugs and supplies, and 406 of these persons were m e m b e r s of p r e payment plans. Only 119 persons or 29 per cent of those with f u l l - y e a r prepayment coverage and 26 per cent of all persons with nonhospitalized c a r e received some a s s i s t a n c e from prepayment plans. Of the 119 receiving some a s s i s t a n c e from plans, expenditures were known for 1 1 7 ; 1 0 in 10 of the 117 c a s e s the prepaid plans paid the entire cost of nonhospitalized c a r e , and only 5 c a s e s had bills of $75 or m o r e . The average sum spent for nonhospitalized c a r e , all or part of which was paid by the prepayment plan, was $19, in contrast to $46 by those who had no nonhospital c a r e through prepayment plans. Thus, unless it were assumed that most of these people who received c a r e through prepayment plans had only very minor i l l n e s s e s (and this i s certainly not probable), it s e e m s evident that these 117 people r e ceived considerable a s s i s t a n c e in paying for this part of their medical c o s t s . Again, however, it should be recognized that some of these people had hospitalized i l l n e s s e s which were not covered by prepayment plans, and thus their total medical bills averaged $26. ^ E i g h t of these persons received both hospital and nonhospital c a r e from prepayment plans.

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Recreation

144

TYPES OF RECREATION EXPENDITURE Radio, t e l e v i s i o n , and m u s i c a l i n s t r u m e n t s . —The l a r g e s t r e c r e a t i o n e x p e n d i t u r e s w e r e f o r t h e c a t e g o r y which i n c l u d e d r a d i o s , t e l e v i s i o n s e t s , and m u s i c a l i n s t r u m e n t s . All but 1 f a m i l y owned a r a d i o , and m o s t f a m i l i e s had two. S e v e n t y - t w o p e r cent had s o m e r e c o r d - p l a y i n g i n s t r u m e n t ; 39 p e r cent owned a piano o r o r g a n ; and 31 p e r cent had t e l e v i s i o n s e t s . With t h e e x c e p t i o n of t h e t e l e v i s i o n s e t s (74 p e r cent of which w e r e bought o r r e c e i v e d a s g i f t s in 1950), m o s t of t h e s e i n s t r u m e n t s had b e e n bought in p r e v i o u s y e a r s . T h e r e w e r e s o m e 1950 p u r c h a s e s of r a d i o s and m u s i c a l i n s t r u m e n t s , but a l m o s t half of the m o n e y s p e n t f o r a l l t h e i t e m s in t h i s g e n e r a l c a t e g o r y w a s u s e d to buy t e l e v i s i o n s e t s . T h e a v e r a g e e x p e n d i t u r e by t h e e n t i r e g r o u p of f a m i l i e s f o r t h e p u r c h a s e and u p k e e p of a l l t h e s e i n s t r u m e n t s w a s $153, o r 43 p e r cent of t h e i r t o t a l r e c r e a t i o n e x p e n d i t u r e s . S i x t y - f o u r p e r cent of a l l f a m i l i e s r e p o r t e d e x p e n d i t u r e s and s p e n t an a v e r a g e of $240 p e r f a m i l y . Slightly m o r e t h a n o n e t h i r d of t h e f a m i l i e s s p e n t l e s s t h a n $25, and s l i g h t l y m o r e t h a n half s p e n t l e s s t h a n $100. Most e x p e n d i t u r e s of l e s s t h a n $100 w e r e f o r i n e x p e n s i v e radios, r e c o r d players, violins o r other stringed i n s t r u m e n t s , o r for the r e p a i r of v a r i o u s i n s t r u m e n t s . F o r t y - f i v e p e r cent of t h o s e with e x p e n d i t u r e s r e p o r t e d m u c h l a r g e r a m o u n t s — f r o m $200 to $2,438. T h i s g r o u p i n cluded 34 f a m i l i e s that p u r c h a s e d t e l e v i s i o n s e t s at an a v e r a g e p r i c e of $354; 68 p e r cent of t h e s e t s c o s t b e t w e e n $200 and $400, and a l l but one of t h e r e s t c o s t f r o m $400 to $590. T h e o t h e r 11 f a m i l i e s with l a r g e e x p e n d i t u r e s i n c l u d e d 1 f a m i l y t h a t bought an o r g a n f o r $2,438, and s e v e r a l f a m i lies that purchased pianos or radio phonographs. T h e only r e c r e a t i o n i t e m s which w e r e bought on i n s t a l l m e n t in 1950 w e r e r e l a t i v e l y e x p e n s i v e — c o s t i n g $100 o r m o r e . I n s t a l l m e n t c r e d i t w a s u s e d f o r 38 p e r cent of the t e l e v i s i o n s e t s and 42 p e r cent of t h e r a d i o p h o n o g r a p h p u r c h a s e s , a s w e l l a s to buy t h r e e of t h e s e v e n pianos a c q u i r e d d u r i n g 1950, and in t h e p u r c h a s e of an o r g a n and an a c c o r d i o n . O t h e r t y p e s of r e c r e a t i o n e x p e n d i t u r e s . —The a v e r a g e of $203 s p e n t by t h e s e f a m i l i e s f o r a l l o t h e r t y p e s of r e c r e a t i o n w a s u s e d f o r m a n y d i f f e r e n t t h i n g s . A l m o s t a l l f a m i l i e s went to t h e m o v i e s , and 82 p e r cent h a d e x p e n d i t u r e s f o r o t h e r t y p e s of paid a d m i s s i o n s . B e t w e e n 82 and 87 p e r cent bought t o y s and play e q u i p m e n t o r c a m e r a s , o r paid o r g a n i z a t i o n d u e s ; and f r o m 47 to 69 p e r cent had e x p e n d i t u r e s f o r p e t s , s p o r t i n g goods, r e c o r d s and s h e e t m u s i c , and v a c a t i o n r e c r e a t i o n . T h e a v e r a g e s u m s s p e n t by t h o s e r e p o r t i n g e x p e n d i t u r e s f o r any of t h e s e c a t e g o r i e s w e r e n e v e r l a r g e — t h e y r a n g e d f r o m $13 to $42. M o v i e s w e r e t h e m o s t c o m m o n f o r m of r e c r e a t i o n , with an a v e r a g e e x p e n d i t u r e of $28; t h i s w a s l e s s t h a n w a s s p e n t f o r s e v e r a l o t h e r t y p e s of r e c r e a t i o n . An a v e r a g e of $24 went f o r t o y s and play equip-

Recreation

145

m e n t , and $41 w a s s p e n t f o r p e t s . F o r t h e o t h e r s p e c i f i e d t y p e s of r e c r e a t i o n e x p e n d i t u r e s , t h e a v e r a g e c o s t of e a c h c a t e g o r y r a n g e d f r o m $13 to $35. F o r e a c h c a t e g o r y , 88 p e r cent o r m o r e of t h e e x p e n d i t u r e s w e r e l e s s t h a n $100; t h e v a s t m a j o r i t y w e r e l e s s t h a n $50, and t h e r e w e r e n e v e r m o r e t h a n 3 f a m i l i e s who r e p o r t e d e x p e n d i t u r e s of $200 o r m o r e . A m o n g a l l t h e c a t e g o r i e s , the l a r g e s t s u m s s p e n t w e r e $404 f o r t h e p u r c h a s e of c a m e r a e q u i p m e n t , and $750 l o s t in g a m b l i n g . Vacation.—In o r d e r to m a i n t a i n c o m p a r a b i l i t y with t h e U. S. B u r e a u of L a b o r S t a t i s t i c s i n c o m e and e x p e n d i t u r e s t u d i e s , only a s m a l l p a r t of t o t a l vacation expenses—the sum spent specifically f o r recreation—is included i n t h i s r e c r e a t i o n a n a l y s i s . F o r t y - s e v e n p e r c e n t of t h e f a m i l i e s r e p o r t e d v a c a t i o n r e c r e a t i o n e x p e n d i t u r e s , at an a v e r a g e c o s t of $18. S e v e n t y - o n e p e r cent of t h e e x p e n d i t u r e s w e r e l e s s t h a n $25, and t h e l a r g e s t a m o u n t spent w a s $100. T h e r e w e r e , of c o u r s e , o t h e r e x p e n s e s c o n n e c t e d with v a c a t i o n s , s u c h a s food, lodging, and t r a n s p o r t a t i o n , but t h e s e i t e m s h a v e b e e n i n c l u d e d with o t h e r f a m i l y e x p e n d i t u r e s of t h e s a m e kind. ^ Although it i s not p r a c t i c a l to d e t e r m i n e what p a r t of f a m i l y a u t o m o b i l e e x p e n s e s should b e a l l o c a t e d to a v a c a t i o n , o r to a l l o c a t e c e r t a i n o t h e r m i n o r v a c a t i o n e x p e n d i t u r e s , it i s p o s s i b l e to c o m b i n e m o s t of t h e m a j o r e x p e n s e s r e p o r t e d in o t h e r s e c t i o n s of t h e b u d g e t , and t h u s o b t a i n a r o u g h i d e a of v a c a t i o n c o s t s . T h r e e - q u a r t e r s of t h e f a m i l i e s r e p o r t e d v a c a t i o n e x p e n d i t u r e s , and t h e y s p e n t an a v e r a g e of $144—less t h a n w a s s p e n t f o r t h e c o m b i n e d c a t e g o r y of r a d i o , t e l e v i s i o n , and m u s i c a l i n s t r u m e n t s , but m u c h m o r e t h a n w a s s p e n t f o r o t h e r c a t e g o r i e s of r e c r e a t i o n . T h e s e v a c a t i o n c o s t s r a n g e d f r o m $1. 50 t o $783. F o r t y - f o u r p e r cent of t h e f a m i l i e s s p e n t l e s s t h a n $100, u s u a l l y b e c a u s e t h e y v i s i t e d r e l a t i v e s o r went c a m p i n g w h e r e the only c o s t s w e r e f e e s f o r a c a m p s i t e o r f o r food which t h e y p r e p a r e d t h e m s e l v e s . Twenty p e r cent of t h e e x p e n s e s w e r e m o r e t h a n $200, but only 2 f a m i l i e s s p e n t m o r e t h a n $500, both f o r t r i p s a c r o s s t h e c o u n t r y which c o s t b e t w e e n $700 and $800. ^ V a c a t i o n e x p e n d i t u r e s a r e c l a s s i f i e d a s f o l l o w s : food, u n d e r food away f r o m h o m e ; lodging, u n d e r h o u s i n g a w a y f r o m h o m e ; a u t o m o b i l e t r a n s p o r t a tion, u n d e r a u t o m o b i l e e x p e n s e s ; and plane o r t r a i n , u n d e r " o t h e r t r a n s p o r tation." V a c a t i o n i t e m s c l a s s i f i e d u n d e r o t h e r p a r t s of r e c r e a t i o n i n c l u d e d , f o r e x a m p l e , f i l m bought f o r t a k i n g p i c t u r e s w h i l e on v a c a t i o n , which i s c l a s s i f i e d u n d e r c a m e r a and c a m e r a s u p p l i e s . V a c a t i o n e x p e n s e s f o r n o n l o c a l e v e n t s s u c h a s f e e s f o r a d m i s s i o n to a zoo o r f o r b o a t r e n t a l a r e i n c l u d e d in vacation recreation as such.

Chapter XIII EXPENDITURES FOR EDUCATION, READING, TOBACCO, AND MISCELLANEOUS ITEMS EDUCATION About t h r e e - q u a r t e r s of t h e f a m i l i e s i n c l u d e d in t h i s s t u d y r e p o r t e d s o m e expenditure for education.1 F o r the entire s a m p l e the a v e r a g e s u m spent w a s $66, o r 1. 1 p e r cent of a l l c o n s u m p t i o n e x p e n d i t u r e s ; f o r t h o s e who r e p o r t e d e d u c a t i o n a l e x p e n s e s , t h e a v e r a g e c o s t w a s $88. N e a r l y half of t h e a m o u n t s s p e n t w e r e l e s s t h a n $50, and a q u a r t e r w e r e b e t w e e n $50 and $100. T h i r t y - o n e , o r s l i g h t l y m o r e t h a n o n e - f o u r t h of the f a m i l i e s with e d u c a t i o n a l e x p e n s e s r e p o r t e d e x p e n d i t u r e s of $100 o r m o r e , n i n e t e e n of which w e r e b e t w e e n $100 a n d $200. T h e r e l a t i v e l y high e x p e n s e s in m o s t of t h e s e 31 c a s e s r e s u l t e d e i t h e r f r o m t u i t i o n p a y m e n t s ( u s u a l l y at a c o l l e g e o r u n i v e r s i t y , but in s o m e c a s e s at p r i v a t e s c h o o l s f o r y o u n g e r c h i l d r e n ) , o r f r o m music, dancing, o r other private l e s s o n s . READING All f a m i l i e s s p e n t s o m e t h i n g f o r n e w s p a p e r s , m a g a z i n e s , o r b o o k s ( o t h e r t h a n s c h o o l b o o k s ) . T h e a v e r a g e e x p e n d i t u r e w a s $49 —only 0 . 8 p e r cent of t o t a l c o n s u m p t i o n e x p e n d i t u r e s . Slightly l e s s t h a n t w o - t h i r d s of t h e f a m i l i e s r e p o r t e d e x p e n s e s u n d e r $50, and only 4 p e r cent s p e n t m o r e t h a n $100. M o s t f a m i l i e s s p e n t only enough to h a v e a daily n e w s p a p e r , a m a g a z i n e s u b s c r i p t i o n o r two, and p e r h a p s an o c c a s i o n a l b o o k . T h e 7 f a m i l i e s who s p e n t m o r e t h a n $100 p u r c h a s e d both n e w s p a p e r s and m a g a z i n e s , and 6 of t h e 7 a l s o s p e n t $40 o r m o r e f o r b o o k s . E d u c a t i o n a l expenditures include tuition fees, expenditures for v a r i o u s k i n d s of p r i v a t e l e s s o n s , b o o k s and s u p p l i e s , and s t u d e n t body d u e s . F o o d bought w h i l e at s c h o o l o r c o l l e g e i s i n c l u d e d with food away f r o m h o m e , and lodging w h i l e at s c h o o l o r c o l l e g e i s i n c l u d e d with h o u s i n g away f r o m h o m e . [ 146 ]

Education, Reading, Tobacco

147

TOBACCO Seventy-two per cent of the families reported expenditures for tobacco. The f a m i l i e s as a whole spent an average of $57, o r 1 per cent of total consumption expenditures. Those families that purchased tobacco had an average expenditure of $80. Slightly more than one-fourth of this group spent more than $100, and in these c a s e s there was always m o r e than 1 person who purchased tobacco—usually both the husband and wife. MISCELLANEOUS Miscellaneous expenditures included i n t e r e s t payments on loans,

p

bank

c h a r g e s , certain r e a l estate expenses, legal expenses, funeral expenses, children's allowances not accounted for in other expenditure c a t e g o r i e s , and other miscellaneous c o s t s . All but 12 families had expenses for one o r another of these i t e m s . F o r the group a s a whole the average expenditure for all the i t e m s combined was $71 o r 1 . 2 per cent of current consumption expenditures; for those reporting expenses, the average was $76. F o r t y five per cent of the f a m i l i e s spent l e s s than $25, 80 per cent l e s s than $100, and 11 per cent between $200 and $550. Twenty-two families reported expenses for r e a l estate which was neither an owner-occupied home nor used f o r an unincorporated family b u s i n e s s . This group of expenditures averaged $109 for those reporting, and although 54 per cent of the expenses were l e s s than $50, 23 per cent were between $200 and $500. Interest payments on loans were reported by 28 per cent of the f a m i l i e s , with an average expenditure of $53 for those families incurring such debts. Only 3 f a m i l i e s reported spending sums between $100 and $200, and only 1 paid m o r e , reporting the relatively large sum of $534. Seventy-eight of the families had expenditures for bank s e r v i c e s and safe deposit box rental. The average sum spent by those reporting was $12, and 96 per cent of the expenditures were l e s s than $30. Expenditures for a wide variety of other i t e m s were reported by 55 per cent of the f a m i l i e s . F o r all families in the sample, the average spent for these combined items was $31, and for those who reported expenditures it was $56; just over half the expenditures were l e s s than $25, and 82 per cent l e s s than $100. Twenty-nine p e r c e n t of these miscellaneous expenditures r e p resented payments by 31 families for children's allowances which were not a c counted for in other categories of e xpenditure; another 26 per cent was spent by 37 families for funeral expenses. A third item, reported only by 3 families but an important outlay for each of them, was the expense in connection with adopting a child. The 3 families spent an average of $249 for this purpose. p Excluding installment charges, interest not due in 1950, or i n t e r e s t paid on an owner-occupied home.

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Chapter XIV NONCONSUMPTION EXPENDITURES In addition to expenditures for family living, that i s , "current consumption" expenditures, all families reported expenses for personal insurance,^ gifts o and contributions, and personal t a x e s . These nonconsumption expenses complete the picture of total family expenditures during 1950. The average of all expenditures by the families included in this study was $7,228, of which $5,957, o r 82 per cent, was spent for current consumption, and $1,271 for nonconsumption i t e m s . Forty-two per cent of the nonconsumption expenditures went for personal insurance, 14 per cent for gifts and contributions, and 44 per cent for t a x e s . PERSONAL INSURANCE E v e r y family reported some expenditure for personal insurance, at an a v e r age cost of $533. Only 1 family spent l e s s than $100, and 68 per cent spent between $300 and $700. The four highest family expenditures ranged f r o m $1,014 to $1,240. The f a m i l i e s as a whole spent 7 . 4 per cent of their total expenditures for insurance; slightly under two-thirds spent between 5 and 10 per cent, and the highest proportion was 1 5 . 9 per cent. F a m i l i e s with incomes l e s s than $6,000 spent an average of $457 for insurance and those with higher incomes $603. The l a r g e r dollar expenditures of the higher in*Except disability, health, or accident insurance, which was considered a current consumption expenditure. 2 Including federal and state income, personal property, and inheritance t a x e s . Sales and e x c i s e taxes were included with the cost of goods purchased, and r e a l estate taxes on owned homes were in the cost of housing. Real e s tate taxes on property other than homes occupied in 1950 were included with miscellaneous current consumption expenditures.

[ 150 ]

Nonconsumption E x p e n d i t u r e s

151

c o m e group r e p r e s e n t e d 7. 7 per cent of t h e i r total e x p e n d i t u r e s in c o n t r a s t with 7 p e r cent f o r the l o w e r i n c o m e group. T h e head of e v e r y f a m i l y had one o r m o r e of the following types of r e t i r e m e n t protection: Old Age and S u r v i v o r s I n s u r a n c e , a g o v e r n m e n t r e t i r e m e n t plan, o r m e m b e r s h i p in a c o m p a n y - s p o n s o r e d r e t i r e m e n t plan which was often c a r r i e d through a c o m m e r c i a l i n s u r a n c e company. All e x c e p t f e d e r a l w o r k e r s and t h o s e employed in the t e a c h i n g p r o f e s s i o n w e r e c o v e r e d by C a l i f o r n i a Unemployment D i s a b i l i t y I n s u r a n c e , and a l l but 2 f a m i l i e s c a r r i e d s o m e kind of i n s u r a n c e through a c o m m e r c i a l i n s u r a n c e company. T A B L E 78 Expenditures for P e r s o n a l Insurance, by Type of Insurance and F a m i l y M e m b e r

Type of insurance

All F a m i l i e s reporting expenditures families P e r cent Mean Expenditures expendi- Number all Median Range ture f a m i l i e s Mean

All personal insurance F a m i l y , total $ 5 3 3 . 27 Old Age and Survivors Insurance F a m i l y , total 37. 33 Head 36. 79 Other m e m b e r s . . . 54 Government r e t i r e m e n t F a m i l y , total 84. 12 Head 81.37 Other m e m b e r s . . . 2. 75 P r i v a t e company retirement F a m i l y , total® 110. 11 C a l i f o r n i a Disability Insurance F a m i l y , total 23.89 Head 23. 54 Other m e m b e r s . . • 35 C o m m e r c i a l insurance b Family, total 277. 82

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$ 8 9 . 2 7 to 1, 2 4 0 . 4 4

135 132 11

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43.97 44.32 7.78

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31 30 3

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431.47 431.28 145.72

438.71 438.36 134.35

226 80 to 5 8 4 . 8 2 242 00 to 5 6 9 . 6 0 76 00 to 2 2 6 . 8 0

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company r e t i r e m e n t payments w e r e only reported by heads of f a m i l i e s . b D a t a on c o m m e r c i a l insurance were not broken down by family m e m b e r s .

Data w e r e not a v a i l a b l e to p e r m i t s e p a r a t e a n a l y s i s of the types and c o s t s of the v a r i e d c o m m e r c i a l i n s u r a n c e p o l i c i e s ; h o w e v e r , it s e e m e d c e r t a i n that m o s t such p o l i c i e s w e r e f o r l i f e i n s u r a n c e , but a r e l a t i v e l y s m a l l n u m b e r w e r e endowment p o l i c i e s o r a n n u i t i e s . E i g h t y - f i v e per cent of the f a m i l i e s r e p o r t e d c o n t r i b u t i o n s f o r F e d e r a l Old Age and S u r v i v o r s I n s u r a n c e . U s u a l l y the contribution c a m e f r o m the c h i e f b r e a d w i n n e r , but in a few c a s e s s o m e o t h e r m e m b e r s of the f a m i l y w e r e c o v e r e d . At the t i m e t h i s study was m a d e the w o r k e r ' s c o n t r i b u t i o n to Old Age and S u r v i v o r s I n s u r a n c e was 1. 5 per cent of the f i r s t $ 3 , 0 0 0 of

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Nonconsumption Expenditures annual e a r n i n g s .

3

153

T h e r e f o r e , b e c a u s e of the i n c o m e q u a l i f i c a t i o n s of t h i s

study, p r a c t i c a l l y a l l f a m i l y c o n t r i b u t i o n s to O . A . S . I . w e r e $45. A f e w , however, w e r e m o r e o r l e s s than this figure, e i t h e r because those r e p o r t ing had not w o r k e d a f u l l y e a r in c o v e r e d e m p l o y m e n t , o r b e c a u s e m o r e t h a n 1 f a m i l y m e m b e r h a d b e e n c o v e r e d at s o m e t i m e d u r i n g t h e y e a r . T w e n t y p e r cent of t h e f a m i l i e s r e p o r t e d p a y m e n t s to s t a t e o r o t h e r g o v e r n m e n t r e t i r e m e n t s y s t e m s . Again, m o s t of t h e m e m b e r s of t h e s e s y s t e m s w e r e t h e chief b r e a d w i n n e r s . " ^ T h e a v e r a g e p a y m e n t w a s $431, and none w a s l e s s t h a n $200 o r m o r e t h a n $600. S i x t y - t w o p e r cent of t h e f a m i l i e s m a d e p a y m e n t s to c o m p a n y - s p o n s o r e d r e t i r e m e n t p l a n s . T h e a v e r a g e p a y m e n t w a s $177, with j u s t o v e r t h r e e q u a r t e r s b e t w e e n $100 and $200, and t h e h i g h e s t $345. T h e s i z e of t h e p a y m e n t w a s b a s e d in m o s t i n s t a n c e s on t h e a m o u n t of s a l a r y e a r n e d ,

and/or

t h e age when h i r e d . O n e - h u n d r e d and t w e n t y - n i n e of t h e b r e a d w i n n e r s in the s a m p l e w e r e e m p l o y e d by s i x t e e n p r i v a t e c o n c e r n s , and t h i s e n t i r e g r o u p w a s c o v e r e d b y O . A . S . I . T e n of t h e c o n c e r n s , e m p l o y i n g 109 of t h e b r e a d w i n n e r s , a l s o h a d t h e i r own r e t i r e m e n t p l a n s , s e v e n of which had v o l u n t a r y , and t h e o t h e r s c o m p u l s o r y e m p l o y e e m e m b e r s h i p .

The seven

v o l u n t a r y plans w e r e in f i r m s e m p l o y i n g 64 of t h e b r e a d w i n n e r s ,

57 of

w h o m p a r t i c i p a t e d . T h r e e of the n o n p a r t i c i p a n t s h a d not b e e n e m p l o y e d in t h e i r r e s p e c t i v e c o m p a n i e s long enough to be e l i g i b l e , and t h e o t h e r 4 e v i dently c h o s e not to p a r t i c i p a t e . One of t h e s e c o m p a n i e s , e m p l o y i n g 3 of t h e b r e a d w i n n e r s , paid t h e e n t i r e c o s t of e m p l o y e e m e m b e r s h i p . Seven out of the ten plans w e r e c a r r i e d through c o m m e r c i a l i n s u r a n c e companies; the r e m a i n i n g t h r e e w e r e o p e r a t e d by t h e i n d u s t r i e s t h e m s e l v e s , o r by a bank a c t i n g a s t r u s t e e . T h e r e m a i n i n g s i x f i r m s , e m p l o y i n g 20 of t h e b r e a d w i n n e r s in t h e s a m p l e , had no r e t i r e m e n t p l a n s . A s w a s t r u e of Old Age and S u r v i v o r s I n s u r a n c e , 85 p e r cent of t h e f a m i lies reported payments for California Unemployment Disability Insurance, and in a l l but a few c a s e s t h i s p r o t e c t i o n w a s s o l e l y f o r the chief b r e a d w i n n e r . The C a l i f o r n i a law p r o v i d e s f o r an e m p l o y e e c o n t r i b u t i o n of 1 p e r cent of t h e f i r s t $3,000 of a n n u a l e a r n i n g s , and t h u s t h e s u m paid by 46 p e r cent of t h e f a m i l i e s w a s e x a c t l y $30. H o w e v e r , s i n c e t h e e m p l o y e r m a y if ^In 1951 t h e w o r k e r ' s c o n t r i b u t i o n w a s b a s e d on the f i r s t $3600 of a n n u a l e a r n i n g s . In 1954 t h e c o n t r i b u t i o n r a t e w a s i n c r e a s e d to 2 p e r c e n t , and in 1955 t h e m a x i m u m on which t h e c o n t r i b u t i o n w a s b a s e d w a s i n c r e a s e d to t h e f i r s t $4,200 of annual e a r n i n g s . J a n u a r y 1, 1957, t h e w o r k e r ' s c o n t r i b u t i o n w a s r a i s e d a g a i n to 2 1 / 4 p e r cent of t h e f i r s t $4,200 of a n n u a l e a r n i n g s . ^ T h e U n i v e r s i t y of C a l i f o r n i a a c a d e m i c r e t i r e m e n t s y s t e m h a s b e e n c l a s s i f i e d a s a s t a t e s y s t e m , although it i s a d m i n i s t e r e d by the R e g e n t s of t h e U n i v e r s i t y , r a t h e r t h a n by t h e s t a t e g o v e r n m e n t .

Nonconsumption Expenditures

154

T A B L E 80 Expenditures for C o m m e r c i a l Insurance, by Income C l a s s All f a m i l i e s

Income c l a s s Under $6,000

$6,000 and over

F a m i l i e s reporting expenditures Expenditure c l a s s F a m i l i e s reporting, total. . . Under $100 $100 to $199 $200 to $299 $300 to $399 $400 to $499 $500 to $599 $600 to $699 $700 and over

Number

P e r cent

Number

P e r cent

Number

P e r cent

157 10 49 41 25 12 12 4 4

100.0 6.4 31.2 26. 1 15.9 7.6 7.6 2.5 2.5

75 5 30 24 9 4 2 1 0

100.0 6.7 40.0 32.0 12.0 5.3 2.7 1.3 .0

82 5 19 17 16 8 10 3 4

100.0 6.1 23. 2 20.7 19.5 9.8 12.2 3.7 4.9

Average expenditures, ranges, and per cent reporting expenditures All f a m i l i e s Mean Median F a m i l i e s reporting Mean Median Range P e r cent reporting .

$277.81 249.60

$228.92 203.98

$322.58 293. 59

281.35 257.88

231.97 205.27

326.52 297.30

2 6 . 3 5 to 802.44

3 7 . 8 0 to 672.35

2 6 . 3 5 to 802.44

98. 7

98.7

98.8

he wishes pay all or part of the required contribution himself, 29 per cent of the reported contributions were l e s s than $30. One-quarter of the f a m i l i e s reported contributions above $30, up to a maximum of $54. In a few c a s e s these l a r g e r sums were the result of more than 1 family member working in covered employment, but in the main they represented individual contributions for coverage extending beyond what was required under the California Disability Insurance law.^ In this study no attempt was made to determine what additional protection was provided by the l a r g e r contributions. All but 2 families c a r r i e d some kind of c o m m e r c i a l insurance, and the average expenditure for all families was $278 —slightly more than half of the average sum invested by all families in total personal insurance. The sums paid for these policies varied greatly, since they afforded many dif^The California law provides that employers may elect to insure the r i s k s covered under the Unemployment Disability Insurance law with a private company or by s e l f - i n s u r a n c e , but these s o - c a l l e d voluntary plans must provide protection which is g r e a t e r than that which is required by the act. See Section 450. 1 (a), p. 91; section 4 5 2 . 5 , p. 93; section 456, p. 95.

Nonconsumption Expenditures

155

f e r e n t k i n d s and a m o u n t s of p r o t e c t i o n . A few f a m i l i e s m a d e p a y m e n t s of l e s s t h a n $100 but 57 p e r cent of a l l p a y m e n t s r a n g e d f r o m $100 to $300, and 16 p e r c e n t w e r e b e t w e e n $300 and $400. One f a m i l y in 5 s p e n t l a r g e r s u m s , up to a m a x i m u m of $802. F a m i l i e s with i n c o m e s of l e s s t h a n $6,000 s p e n t an a v e r a g e of $232, and t h o s e with h i g h e r i n c o m e s paid p r e m i u m s a v e r a g i n g $327. T h i s g r o u p of f a m i l i e s s p e n t 7 . 4 p e r cent of t h e i r t o t a l e x p e n d i t u r e s f o r i n s u r a n c e p r o t e c t i o n . If a l l t h e e x p e n d i t u r e c a t e g o r i e s , both c o n s u m p t i o n and n o n c o n s u m p t i o n , a r e p l a c e d in o r d e r of s i z e , the s u m s p e n t f o r i n s u r a n c e i s s i x t h f r o m the top—lower only t h a n t h e p r o p o r t i o n s s p e n t f o r food, t r a n s p o r t a t i o n , h o u s i n g , clothing, and t a x e s . N e a r l y half t h e a v e r a g e t o t a l i n s u r a n c e e x p e n d i t u r e r e p r e s e n t e d p a y m e n t s e i t h e r to s t a t e , f e d e r a l , o r c o m p a n y r e t i r e m e n t p l a n s , and t h e r e m a i n d e r w a s u s e d to p u r c h a s e v a r i o u s t y p e s of i n d i v i d u a l i n s u r a n c e p r o t e c t i o n f r o m c o m m e r c i a l c o m p a n i e s . In m o s t c a s e s the s u m s s p e n t f o r i n d i v i d u a l c o m m e r c i a l p o l i c i e s p r o v i d e d a s u b s t a n t i a l d e g r e e of i n s u r a n c e p r o t e c t i o n , s i n c e 62 p e r cent of t h e p a y m e n t s w e r e $200 o r m o r e . The a v e r a g e c o m m e r c i a l i n s u r a n c e p r e m i u m of $281 paid by t h e s e f a m i l i e s w a s l a r g e r t h a n t h a t allowed f o r l i f e i n s u r a n c e in t h e H e l l e r C o m m i t t e e budget f o r a s a l a r i e d w o r k e r . ® T h i s budget i n s u r a n c e plan with a p r e m i u m of $229, t o g e t h e r with f e d e r a l Old Age and S u r v i v o r s I n s u r a n c e , p r o v i d e s a f a m i l y i n c o m e of about o n e - h a l f t h e t o t a l budget e x c l u d i n g i n c o m e t a x e s if the h u s b a n d d i e s when t h e c h i l d r e n a r e young, and a r e d u c e d s u m when t h e c h i l d r e n a r e g r o w n . C l e a r l y , not a l l f a m i l i e s h a d t h i s m u c h p r o t e c t i o n ; what t h e i r p r o t e c t i o n a c t u a l l y w a s d e pended upon t h e p a r t i c u l a r c o m b i n a t i o n of i n s u r a n c e p o l i c i e s which t h e y w e r e p u r c h a s i n g . P r a c t i c a l l y a l l b r e a d w i n n e r s , h o w e v e r , had s o m e p r o t e c t i o n at r e t i r e m e n t , and a l s o s o m e a d d i t i o n a l p r o t e c t i o n f o r t h e i r f a m i l i e s in c a s e of d e a t h . G I F T S AND CONTRIBUTIONS All f a m i l i e s s p e n t s o m e t h i n g f o r g i f t s and c o n t r i b u t i o n s , a v e r a g i n g $177 p e r f a m i l y , o r 2 . 4 p e r cent of t o t a l c o n s u m p t i o n and n o n c o n s u m p t i o n e x p e n d i t u r e s . Most f a m i l i e s s p e n t m o d e r a t e a m o u n t s —36 p e r cent u n d e r $100, a n d n e a r l y t h r e e - q u a r t e r s u n d e r $200. T h e h i g h e s t q u a r t e r s p e n t s u m s r a n g i n g f r o m $200 to $1,206, m o s t of which i n c l u d e d r e l a t i v e l y l a r g e a m o u n t s e i t h e r f o r c h u r c h c o n t r i b u t i o n s o r f o r t h e s u p p o r t of p e r s o n s o u t s i d e t h e e c o n o m i c f a m i l y . F a m i l i e s with i n c o m e s l e s s t h a n $6,000 s p e n t an a v e r a g e of $169; t h o s e with h i g h e r i n c o m e s s p e n t $184, o r 9 p e r cent m o r e , although t h e i r t o t a l c o n s u m p t i o n and n o n c o n s u m p t i o n e x p e n d i t u r e s w e r e 21 p e r cent 6

T h e 1950 c o s t would have b e e n the s a m e a s t h e c o s t in t h e 1953 and 1954 budgets.

Nonconsumption Expenditures

156

g r e a t e r . Thus the l a r g e r dollar expenditure of the higher i n c o m e group r e p r e s e n t e d 2. 3 per cent of their total expenditures, in contrast with 2. 6 per cent spent by the lower i n c o m e group. T A B L E 81 E x p e n d i t u r e s f o r G i f t s and C o n t r i b u t i o n s , by T y p e of E x p e n d i t u r e Contributions Total

Total

Church

Welfare

Other

Gifts Cash (cash or support goods)

Families reporting expenditures Number

Expenditure class Families reporting, total U n d e r $100, t o t a l . . U n d e r $20 $20 to $39 $40 to $59 $60 to $79 $80 to $99 $100 t o $199 $200 t o $299 $300 a n d o v e r

159 57 0 8 9 15 25 61 23 18

158 119 16 31 19 31 22 25 10 4

134 109 35 26 28 19 1 16 5 4

156 156 95 45 11 3 2 0 0 0

104 103 78 14 7 3 1 1 0 0

154 131 25 32 37 19 18 18 2 3

16 3 1 0 1 1 0 9 0 4

100. 0 99.0 75.0 13. 5 6.7 2.9 1.0 1.0 .0 .0

100. 0 85. 1 16. 2 20. 8 24.0 12. 3 11.7 11.7 1.3 1.9

100. 0 18. 8 6.2 .0 6. 2 6. 2 .0 56. 2 .0 25. 0

P e r cent Families reporting. total U n d e r $100, t o t a l . . U n d e r $20 $20 to $39 $40 to $59 $60 to $79 $80 to $99 $100 t o $199 $200 to $299 $300 and o v e r

100. 0 35.8 .0 5.0 5.7 9.4 15.7 38.4 14.5 11.3

100.0 75.3 10.1 19.6 12.0 19.6 13.9 15.8 6.3 2.5

100. 0 81. 3 26. 1 19.4 20. 9 14.2 .7 11.9 3.7 3.0

100.0 100.0 60. 9 28. 8 7. 1 1.9 1.3 .0 .0 .0

A v e r a g e e x p e n d i t u r e s , r a n g e s , and p e r c e n t r e p o r t i n g e x p e n d i t u r e s All f a m i l i e s Mean Median Families reporting Mean Median Range P e r cent r e p o r t i n g .. .

$176.79 124.50

$89.62 62.50

$60.14 35.00

$19.03 15.00

$10.45 4 . 84

$65.00 47. 13

$22.17

176.79 124.50

90.18 62.85

71.36 50.00

19.39 15.00

15.97 9. 50

67. 11 50. 00

220.38 120.00

2. 00 to 1.00 to 1. 50 to 22. 00 to 5. 00 to . 50 to 1 5 . 0 0 to 621.90 735.40 712.40 100.00 1,080.00 1,206.38 86.00 100.0

99.4

84.3

98. 1

65.4

96. 9

10. 1

All but 1 f a m i l y contributed something to a church, o r to a w e l f a r e or other type of community organization, and their a v e r a g e expenditure was $90. Most of t h e s e contributions w e r e small—half w e r e l e s s than $63, and t h r e e - q u a r t e r s w e r e l e s s than $100. Contributions l a r g e r than $100 a l m o s t always included r e l a t i v e l y l a r g e church donations, and all of the fourteen

Nonconsumption Expenditures

157

largest sums, which ranged from nearly $210 to $735, included contributions of $150 or over to churches. The second l a r g e s t of the expenditures were gifts of cash or goods to persons outside the economic family. All but 5 families reported such gifts, and the average sum spent was $65;

49 per cent spent l e s s

than $50, but 5 reported sums ranging from $214 to $622.

There were

also 16 families who provided some support for someone outside the economic family. These expenditures were insignificant for the entire group of families —$22 per family—but families who had these r e s p o n s i bilities often spent quite substantial sums. Nine families reported amounts between $100 and $200,

and 4 spent between $315 and $1,080,

usually for a s s i s t a n c e to the mother of the husband or wife. PERSONAL TAXES E v e r y family reported paying personal taxes,

and the average outlay for

this purpose was $561, o r 7 . 8 per cent of total consumption and nonconsumption expenditures. Ninety-seven per cent of the average family tax bill went for federal income t a x e s . All families paid federal taxes with an average payment of $546. Eighty-seven per cent of the bills were between $300 and $800, f a m i l i e s paid l a r g e r sums, up to a maximum of $1,425.

and 9

This group of

9 f a m i l i e s had incomes b e f o r e taxes ranging from $7,242 to $9,104. F o r all the families in the sample federal income taxes amounted to 7 . 6 per cent of their total expenditures; t e r s were between 5 and 10 per cent;

a little more than t h r e e - q u a r -

1 in 10 was l e s s than 5 per cent

and slightly more than one-eighth of the payments ran from 10 to a maximum of 1 4 . 5 per cent of total expenditures.

Although income taxes

were affected by the number of dependents as well as by the s i z e of other allowable deductions,

as would be expected, families with incomes

under $6,000 paid much lower federal taxes than those with higher incomes—averaging $452 as compared with $631.

The lower income group

spent 6 . 9 per cent of total expenditures for t a x e s , spent 8 per cent.

In this connection,

and the higher group

it should perhaps again be pointed

out that to be eligible for inclusion in this study the chief breadwinner's earnings were required to be between $4,800 and $7,500,

and total family

income not m o r e than $10,000. State income taxes were paid by 126 f a m i l i e s , o r 79 per cent of the total sample.

The average state tax was only $14;

88 per cent of the

payments were l e s s than $25, and none was as much as $50.

The a v e r -

age state tax paid by families with incomes under $6,000 was $9 —not quite half as much as was paid by families with higher i n c o m e s . Only 37 families reported what they paid in personal property t a x e s .

Nonconsumption Expenditures

158

TABLE 82 Expenditures for P e r s o n a l Taxes, by Size and Types [Total p e r s o n a l t a x e s a | F e d e r a l income tax]

State income tax"

F a m i l i e s r e p o r t i n g expenditures Expenditure c l a s s

Number

P e r cent

F a m i l i e s reporting, t o t a l . . Under $50, total Under $25 $25 to $49 $50 to $99 $100 to $199 $200 to $299 $300 to $399 $400 to $499 $500 to $599 $600 to $699 $700 to $799 $800 to $899 $900 to $999 $1,000 and o v e r

159 0 0 0 1 2 7 23 29 31 36 19 6 2 3

100.0 .0 .0 .0 .6 1.3 4.4 14. 5 18. 2 19.5 22.6 11.9 3.8 1.3 1.9

Number 159 1 0 1 0 3 7 24 28 38 31 18 4 2 3

P e r cent 100.0 .6 .0 .6 .0 1.9 4.4 15. 1 17.6 23.9 IS.5 11.3 2.5 1.3 1.9

Number

P e r cent 100.0 100.0 88. 1 11.9 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0

126 126 111 15 0 0 0 0 0 0 0 0 0 0 0

Average expenditures, r a n g e s , and per cent r e p o r t i n g expenditures Families reporting Mean Median Range

$560 57 a 547 3 7 a

$545.75 536.23

76 54 to 1,445 25 a 100 0

P e r cent r e p o r t i n g

45.66 to 1,425. 25 100.0

$14.17 12.64 .37 to 48.00 79. 2

a

T o t a l personal t a x e s include, in addition to f e d e r a l and s t a t e income t a x e s , personal property t a x e s paid by 37 f a m i l i e s , and an i n h e r i t a n c e tax paid by 1 f a m i l y . (See the text for f u r t h e r discussion of t h e s e two types.)

Undoubtedly,

many m o r e f a m i l i e s paid t h e s e t a x e s ,

together with r e a l property t a x e s .

but reported t h e m

The a v e r a g e of those personal prop-

erty t a x e s reported w a s only $10, with 95 per cent l e s s than $25. Since the s u m s w e r e always s m a l l ,

the fact that many undoubtedly did not r e -

port this tax s e p a r a t e l y would have only a v e r y slight effect on the total f a m i l y tax b i l l s .

A s w a s true of other t y p e s of t a x e s ,

those f a m i l i e s

with i n c o m e s l e s s than $6,000 paid l e s s in personal property t a x e s than did the higher i n c o m e brackets—an a v e r a g e of $6, in contrast with slightly m o r e than t w i c e that amount.

Only 1 f a m i l y reported any other

kind of p e r s o n a l tax—$185 on an inheritance r e c e i v e d the previous y e a r . ^ n

T h e r e w e r e 4 f a m i l i e s who r e c e i v e d i n h e r i t a n c e s in 1950 but reported no inheritance tax in 1950, probably b e c a u s e the tax w a s paid b e f o r e the m o n e y was received.

Chapter XV INSTALLMENT BUYING T h e u s e of i n s t a l l m e n t c r e d i t in the p u r c h a s e of a u t o m o b i l e s and c e r t a i n k i n d s of h o u s e h o l d a p p l i a n c e s and f u r n i s h i n g s , a s w e l l a s t e l e v i s i o n s e t s and m u s i c a l i n s t r u m e n t s , , h a s b e e n d i s c u s s e d in t h e c h a p t e r s d e a l i n g with e x p e n d i t u r e s f o r t h e s e g o o d s . No i n s t a l l m e n t p u r c h a s e s w e r e r e p o r t e d f o r o t h e r t y p e s of goods s u c h a s clothing o r j e w e l r y . T h e p r e s e n t c h a p t e r s u m m a r i z e s s o m e of t h e d e t a i l e d d a t a c o n s i d e r e d " e a r l i e r but i s p r i m a r i l y c o n c e r n e d with the o v e r - a l l u s e of t h i s kind of c r e d i t by f a m i l i e s in t h e s a m p l e , and with t h e extent to which i n s t a l l m e n t d e b t s , i n c u r r e d both in 1950 and in e a r l i e r y e a r s , w e r e l i q u i d a t e d by t h e end of 1950. T h e f i n a l s e c t i o n p r e s e n t s a c o m p a r i s o n with d a t a p u b l i s h e d in t h e S u r v e y of C o n s u m e r F i n a n c e s c o n d u c t e d by the F e d e r a l R e s e r v e S y s t e m in c o o p e r a t i o n with t h e R e s e a r c h C e n t e r of t h e U n i v e r s i t y of M i c h i g a n . S i x t y - f o u r , o r 40 p e r cent, of t h e f a m i l i e s i n c l u d e d in t h e H e l l e r C o m m i t t e e s t u d y u s e d i n s t a l l m e n t c r e d i t to buy one o r m o r e i t e m s in 1950. F i f t y - f i v e f a m i l i e s bought a u t o m o b i l e s , and i n s t a l l m e n t c r e d i t w a s u s e d f o r t w e l v e , o r 22 p e r cent, of t h e s e p u r c h a s e s . O n e o r m o r e of t h e h o u s e f u r n i s h i n g s i t e m s l i s t e d on t a b l e 83^ w e r e p u r c h a s e d by 152 f a m i l i e s , 30 p e r cent of w h o m bought a t l e a s t one of t h e s e i t e m s on i n s t a l l m e n t . F i f t y f a m i l i e s bought t e l e v i s i o n s e t s , r a d i o s , o r m u s i c a l i n s t r u m e n t s , and 42 p e r c e n t u s e d i n s t a l l m e n t c r e d i t in m a k i n g t h e i r p u r c h a s e s . F i n a l l y , 1 f a m i l y u s e d t h i s t y p e of c r e d i t to m a k e r e p a i r s on a h o m e , and a n o t h e r to buy books. T h e r e w e r e c o n s i d e r a b l e d i f f e r e n c e s in t h e f r e q u e n c y with which i n s t a l l m e n t c r e d i t w a s u s e d f o r t h e p u r c h a s e of v a r i o u s i t e m s . S e v e n t e e n p e r cent of t h o s e who p u r c h a s e d f u r n i t u r e u s e d t h i s t y p e of c r e d i t , and f r o m 26 to 38 S t e r n s f o r which i n s t a l l m e n t c r e d i t w a s not u s e d by any f a m i l y in t h i s s t u d y a r e e x c l u d e d f r o m t a b l e s 83 and 84. [ 159 ]

Installment Buying

160

T A B L E 83 N u m b e r of F a m i l i e s w i t h 1950 P u r c h a s e s - o f I t e m s Bought on I n s t a l l m e n t

Total families purchasing

I t e m s b o u g h t on i n s t a l l m e n t

All i t e m s Automobiles Housefurnishings, total Furniture Textiles Floor coverings Wool r u g s o r c a r p e t s Other Flatwear Vacuum cleaners Washing machines Stoves Sewing m a c h i n e s Refrigerators Dryers Ironers Television, radio, phonographs, m u s i c a l i n s t r u m e n t s , total Television Radio-phonographs Pianos or organs Accordions Home r e p a i r s or replacements Books

Families purchasing on i n s t a l l m e n t Number

P e r c e n t of total purchasing

159 55 152 115 108 63 34 42 30 28 26 17 13 13 6 3

64 12 46 20 1 11 9 2 1 9 7 2 6 5 2 1

40.3 21.8 30. 3 17.4 .9 17.5 26.5 4.8 3. 3 32. 1 26.9 11.8 46. 2 38. 5 33. 3 33.3

50 34 12 8 1 115 86

21 13 5 4 1 1 1

42.0 38. 2 41.7 50.0 100.0 .9 1.2

T A B L E 84 T o t a l 1950 E x p e n d i t u r e s and 1950 I n s t a l l m e n t E x p e n d i t u r e s f o r I t e m s B o u g h t on I n s t a l l m e n t Aggregate expenditures I t e m s bought on i n s t a l l m e n t

All i t e m s Automobile Other, total Housefurnishings T e l e v i s i o n and m u s i c a l instruments H o u s e r e p a i r s and replacements Books

Total

On i n s t a l l m e n t

Installment expenditures P e r cent of t o t a l expenditures

P e r cent of t o t a l installment

$169, 9 7 2 . 4 1 72, 764. 85 97,207.56 52,797.24

$43,580.03 16,957.61 26,622.42 14, 5 1 0 . 8 5

25.6 23.3 27.4 27.5

100.0 38.9 61. 1 33.3

22,414.41

11, 7 6 9 . 3 2

52. 5

27.0

20,646.20 1,349.71

250.00 92. 25

1. 2 6.8

.6 .2

per cent of the purchases of wool rugs, washing machines, television sets, vacuum cleaners, and refrigerators were made on installment. In 1950 a total of $169,972 was spent for those items usually bought on installment; $43,580 or 26 per cent of this sum represented installment purchases. These purchases accounted for 23 per cent of the total sum spent for automobiles, 52 per cent of the total expenditures for television,

Installment Buying

161

T A B L E 85 1950 Installment Expenditures, by Type of Expenditure All installment expenditures

Automobiles

Housefurnishings and other

F a m i l i e s reporting expenditures Expenditure c l a s s All f a m i l i e s reporting Under $500, total Under $100 $100 to $199 $200 to $299 $300 to $399 $400 to $499 $500 to $999 $ 1 , 0 0 0 to $ 1 , 4 9 9 $1, 500 to $1, 999 $2, 000 to $2, 499 $2, 500 to $2, 999

Number

P e r cent

Number

P e r cent

Number

P e r cent

64 33 3 8 9 11 2 17 4 6 3 1

100.0 51.6 4.7 12.5 14. 1 17. 2 3. 1 26.6 6.2 9.4 4.7 1.6

12 1 0 0 0 1 0 2 3 4 1 1

100.0 8.3 .0 .0 .0 8.3 .0 16. 7 25.0 33.3 8.3 8.3

55 36 3 8 10 13 2 14 2 2 1 0

100.0 65.5 5. 5 14.5 18. 2 23.6 3.6 25.5 3.6 3.6 1.8 .0

Average installment expenditures, ranges and per cent of f a m i l i e s reporting expenditures F a m i l i e s reporting Mean Median 'Range P e r cent reporting

$680. 94 449.13

$1, 4 1 3 . 1 3 1, 4 4 4 . 2 4

$484.04 342.25

9 2 . 6 0 to 2, 5 8 6 . 2 2

3 5 2 . 4 5 to 2, 5 8 6 . 2 2

9 2 . 6 0 to 2,437.56

40.3

7.5

34.6

radios, and musical instruments, and 28 per cent of the money spent for the types of housefurnishings and equipment for which installment purchase was used by any family. Of the $43,580 spent on installment purchases in 1950, 39 per cent went for automobiles, 33 per cent for housefurnishings and equipment, and the remaining 28 per cent almost entirely f o r television s e t s , radios, and m u s i c a l instruments. The 64 families who bought one or more i t e m s on installment spent an average of $681 for these purchases. Almost all these f a m i l i e s spent more than $100; 48 per cent spent sums of $500 or more, and 22 per cent spent between $1,000 and $2,586. The largest installment purchases were reported by the 12 families who bought automobiles; t h r e e quarters of these expenditures were $1,000 or more, and the average was $1,413. Fifty-five families who used installment credit for other kinds of goods spent an average of $484. One-fourth of these expenditures were b e tween $500 and $1,000, and 9 per cent were l a r g e r sums up to a maximum of $2,438. The liquidation of installment debt. —Every family that made installment purchases paid off all o r part of these 1950 obligations, and by the end of

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m o r e t h a n o n e - t h i r d of t h e s e i n c r e a s e s w e r e l e s s t h a n $200; a l i k e n u m b e r r a n f r o m $200 to $500, and t h e r e m a i n d e r w e r e a l l m o r e t h a n $600, up to a m a x i m u m of $6,570. T h e p u r c h a s e of r e a l e s t a t e r e s u l t e d in m u c h l a r g e r i n c r e a s e s in a s s e t s t h a n did any o t h e r t y p e of i n v e s t m e n t o r s a v i n g s .

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t e e n of t h e 15 f a m i l i e s t h a t bought h o m e s which they o c c u p i e d in 1950 i n c r e a s e d t h e i r a s s e t s by an a v e r a g e of $12,558. T h e s e f o u r t e e n h o m e s r a n g e d in p r i c e f r o m $8,675 to $22,500, with 71 p e r cent b e t w e e n $11,500 and $18,750. Nine f a m i l i e s p u r c h a s e d o t h e r r e a l e s t a t e , with an a v e r a g e i n v e s t m e n t of $13,750; t h e s u m s involved r a n g e d w i d e l y — f r o m $2,650 to $18,650, and t h e r e a l e s t a t e p u r c h a s e d i n c l u d e d s e v e r a l l o t s , a s w e l l a s a h o u s e bought to r e n t , and h o m e s to b e o c c u p i e d by t h e o w n e r s in 1951. S u r p l u s e s a l s o r e s u l t e d f r o m t h e r e d u c t i o n of l i a b i l i t i e s t h r o u g h p a y m e n t s on m o r t g a g e s o r o t h e r k i n d s of d e b t s . S e v e n t y - s e v e n f a m i l i e s t h a t p u r c h a s e d t h e i r h o m e s b e f o r e 1950 r e d u c e d t h e m o r t g a g e s on t h o s e h o m e s by an a v e r age of $620. Seven f a m i l i e s m a d e p r i n c i p a l p a y m e n t s of l e s s t h a n $200 d u r ing t h e y e a r ; in f i v e of t h e s e c a s e s p a y m e n t s w e r e low b e c a u s e t h e p u r c h a s e p r i c e of t h e h o u s e w a s l e s s than $7,000. S e v e n t y - o n e p e r cent of the p r i n c i pal p a y m e n t s w e r e b e t w e e n $200 and $500, and only 6 f a m i l i e s paid $1,000 o r m o r e . T h i s l a s t g r o u p of f a m i l i e s i n c l u d e d 3 who wiped out m o r t g a g e d e b t s of b e t w e e n $6,000 and $7,000 a p i e c e when t h e y s o l d t h e i r h o m e s . T h e r e w e r e a l s o 5 f a m i l i e s who r e d u c e d m o r t g a g e s on o t h e r p r o p e r t y with a n a v e r a g e p a y m e n t of $516. O t h e r t y p e s of d e b t s w e r e r e d u c e d by a c o n s i d e r a b l e n u m b e r of f a m i l i e s . E l e v e n m a d e p a y m e n t s a v e r a g i n g $638 on c a r s which h a d b e e n p u r c h a s e d on i n s t a l l m e n t b e f o r e 1950. T w e n t y - s i x paid on o t h e r i n s t a l l m e n t d e b t s i n c u r r e d in e a r l i e r y e a r s , and t h e i r p a y m e n t s a v e r a g e d $115. T w e n t y - e i g h t f a m i l i e s r e d u c e d t h e i r o u t s t a n d i n g b i l l s by an a v e r a g e of $112; 71 p e r c e n t of t h e s e p a y m e n t s w e r e l e s s t h a n $70, and only 1 f a m i l y r e p o r t e d m o r e t h a n $385, a s a r e s u l t of paying a b i l l of $695 f o r h o u s e f u r n i s h i n g s . E i g h t e e n f a m i l i e s d e c r e a s e d t h e i r m o n e y d e b t s to s u c h a g e n c i e s a s b a n k s and i n s u r a n c e c o m p a n i e s , with an a v e r a g e p a y m e n t of $411. Nine of t h e s e d e c r e a s e s w e r e l e s s t h a n $200, and t h e two h i g h e s t w e r e $750 and $2,735. In t e r m s of t h e m o n e y i n v o l v e d , t r a n s a c t i o n s r e l a t e d to r e a l e s t a t e w e r e t h e m o s t i m p o r t a n t s o u r c e of i n c r e a s e d a s s e t s a m o n g t h e s e f a m i l i e s . N e a r l y half of t h e t o t a l i n c r e a s e r e s u l t e d f r o m e x p e n d i t u r e s f o r p u r c h a s e s ,

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p r o v e m e n t s , o r s p e c i a l a s s e s s m e n t s on owned h o m e s , and 31 p e r cent c a m e f r o m t h e s a m e g r o u p of e x p e n d i t u r e s f o r o t h e r r e a l e s t a t e . T h e r e m a i n i n g i n c r e a s e s i n c l u d e d bank d e p o s i t s o r i n v e s t m e n t s in s t o c k s and b o n d s . D e c r e a s e s in l i a b i l i t i e s w e r e a l s o i n t h e m a i n r e l a t e d to r e a l e s t a t e ; 71 p e r cent of a l l t h e m o n e y i n v o l v e d i n t h e s e d e c r e a s e s r e p r e s e n t e d p a y m e n t s on m o r t g a g e s — l a r g e l y on owned h o m e s . M o s t of t h e r e m a i n i n g m o n e y d e c r e a s e s w e n t f o r p a y m e n t s on i n s t a l l m e n t d e b t s , o r on m o n e y d e b t s which

C h a n g e s in A s s e t s and L i a b i l i t i e s

175

w e r e u s u a l l y owed to s u c h a g e n c i e s a s b a n k s o r l o a n and i n s u r a n c e c o m panies. D e f i c i t s : d e c r e a s e s in a s s e t s a n d / o r i n c r e a s e s in l i a b i l i t i e s . —Although 81, o r j u s t o v e r half t h e f a m i l i e s r e p o r t e d a n e t d e f i c i t at t h e end of 1950, t h e r e w e r e 148 f a m i l i e s who r e p o r t e d s o m e d e f i c i t d u r i n g t h e y e a r . Sixtys e v e n of t h i s l a r g e r g r o u p had t o t a l s u r p l u s e s which outweighed t h e i r t o t a l d e f i c i t s , and a s a c o n s e q u e n c e t h e y e n d e d t h e y e a r in a net s u r p l u s p o s i t i o n . T h e m o s t u s u a l way to d e c r e a s e a s s e t s w a s to s p e n d p r e v i o u s l y a c c u m u l a t e d c a s h . E i g h t y - f o u r f a m i l i e s r e d u c e d t h e i r bank a c c o u n t s by an a v e r a g e of $1,269. Although 52 p e r cent of t h e s e w i t h d r a w a l s w e r e s u m s of l e s s t h a n $500 p e r f a m i l y , n e a r l y a t h i r d r a n g e d f r o m $1,000 to $10,500. Two of t h e f o u r l a r g e s t w i t h d r a w a l s w e r e a p p r o x i m a t e l y $6,000 e a c h , and t h e o t h e r s w e r e $8,800, and $10,500. T h e s e s u m s w e r e r e p o r t e d by 3 f a m i l i e s t h a t m a d e down p a y m e n t s of $6,000 o r m o r e on new h o m e s , and a f o u r t h t h a t i n c r e a s e d i t s s t o c k h o l d i n g s by $6,100. T h i r t y - n i n e f a m i l i e s d e c r e a s e d a s s e t s by s e l l i n g p e r s o n a l p r o p e r t y — l a r g e l y h o u s e f u r n i s h i n g s —and t h e a v e r a g e a m o u n t r e a l i z e d f r o m t h e s e s a l e s w a s $82. Only f o u r s u c h s a l e s w e r e f o r s u m s above $200: 2 f a m i l i e s s o l d a u t o m o b i l e s f o r $210 and $250, and 2 s o l d h o u s e f u r n i s h i n g s f o r $353 and $562. T h i r t y - f i v e f a m i l i e s r e c e i v e d m o r e m o n e y f r o m t h e s a l e of s t o c k s and b o n d s owned b e f o r e 1950 than t h e y i n v e s t e d in s t o c k s and b o n d s d u r i n g 1950. T h e a v e r a g e d e c r e a s e in a s s e t s f r o m t h e s e s t o c k t r a n s a c t i o n s w a s $933; 10 f a m i l i e s had d e c r e a s e s of l e s s t h a n $200, but 9 r e p o r t e d d e c r e a s e s of m o r e t h a n $1,000, the h i g h e s t of which w a s $7,979. T e n f a m i l i e s s u r r e n d e r e d i n s u r a n c e p o l i c i e s , with an a v e r a g e a s s e t d e c r e a s e of $870. T h e a m o u n t s r e c e i v e d f r o m t h e s e p o l i c i e s v a r i e d w i d e l y , f r o m $100 to $2,372. Two f a m i l i e s s o l d h o m e s and did not buy new o n e s , and a t h i r d s o l d a h o m e f o r s l i g h t l y m o r e t h a n t h e c o s t of t h e one t h e y p u r c h a s e d . A s a r e s u l t of t h e s e t r a n s a c t i o n s the 3 f a m i l i e s h a d an a v e r a g e d e c r e a s e in a s s e t s of $8,896. T h r e e a d d i t i o n a l f a m i l i e s s o l d o t h e r r e a l e s t a t e with an a v e r a g e a s s e t d e c r e a s e of $2,733. In addition to d r a w i n g upon p a s t s a v i n g s o r i n v e s t m e n t s , m a n y f a m i l i e s i n c r e a s e d t h e i r i n d e b t e d n e s s d u r i n g 1950. S i x t y - s e v e n owed an a v e r a g e of $128 m o r e on b i l l s f o r goods and s e r v i c e s at t h e end of t h e y e a r t h a n t h e y h a d at t h e b e g i n n i n g of t h e y e a r . F i f t y - f i v e p e r cent of t h e s e o u t s t a n d i n g d e b t s w e r e l e s s t h a n $100; 82 p e r cent w e r e l e s s t h a n $200; and a l l w e r e u n d e r $600, with the e x c e p t i o n of 1 f a m i l y that i n c r e a s e d i t s b i l l s by $1,160. T w e l v e f a m i l i e s t h a t p u r c h a s e d a u t o m o b i l e s on i n s t a l l m e n t i n c r e a s e d t h e i r d e b t s by an a v e r a g e of $570, and 45 i n c r e a s e d o t h e r i n s t a l l m e n t d e b t s by an a v e r a g e of $248. T h i r t e e n f a m i l i e s f i n a n c e d t h e 1950 p u r c h a s e of h o m e s with m o r t g a g e s , and t h e a v e r a g e i n c r e a s e in t h e i r l i a b i l i t i e s a s a r e s u l t of t h e s e m o r t g a g e t r a n s a c t i o n s w a s $10,423. S i m i l a r new m o r t g a g e s (plus one r e f i n a n c i n g of a m o r t g a g e ) on o t h e r t y p e s of r e a l p r o p e r t y w e r e r e p o r t e d b y

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7 f a m i l i e s , who i n c r e a s e d t h e i r l i a b i l i t i e s by $10,486. T h e m o r t g a g e s on owned h o m e s ( l e s s any 1950 p r i n c i p a l p a y m e n t s ) r a n g e d f r o m $5,049 to $16,762, and on o t h e r r e a l p r o p e r t y f r o m $7,167 to $13,635. A f e w f a m i l i e s i n c r e a s e d o t h e r d e b t s , but t h e s u m s i n v o l v e d w e r e a l w a y s s m a l l . In t e r m s of t h e m o n e y involved in d e f i c i t s , t h e m o s t i m p o r t a n t d e c r e a s e i n a s s e t s w a s t h e w i t h d r a w a l of m o n e y f r o m b a n k s , which a c c o u n t e d f o r 54 p e r cent of a l l a s s e t d e c r e a s e s . M o s t of t h e r e m a i n i n g d e c r e a s e in a s s e t s c a m e f r o m the s a l e of s t o c k s o r b o n d s and r e a l e s t a t e . N e a r l y t h r e e - q u a r t e r s of t h e t o t a l i n c r e a s e in l i a b i l i t i e s r e p r e s e n t e d r e a l e s t a t e m o r t g a g e s , and 17 p e r cent r e p r e s e n t e d d e b t s to such a g e n c i e s a s b a n k s , o r l o a n and insurance companies. S u r p l u s and d e f i c i t by i n c o m e l e v e l s . — W h e n t h e f a m i l i e s w e r e divided into two i n c o m e g r o u p s — t h o s e with i n c o m e s above and below $6,000, t h e l o w e r g r o u p h a d an a v e r a g e n e t d e f i c i t of $188, and t h e u p p e r b r a c k e t a o n e t s u r p l u s of $64. In both g r o u p s s o m e f a m i l i e s r e p o r t e d net d e f i c i t s and s o m e net s u r p l u s e s ; h o w e v e r , only 45 p e r cent of t h e l o w e r i n c o m e g r o u p , in c o n t r a s t with 52 p e r cent of the u p p e r b r a c k e t , r e p o r t e d net s u r p l u s e s . T h e p r o p o r t i o n s of f a m i l i e s in t h e two g r o u p s r e p o r t i n g t h e v a r i o u s t y p e s of s u r p l u s o r d e f i c i t t r a n s a c t i o n s w e r e quite s i m i l a r , although of c o u r s e t h e s u m s of m o n e y involved d i f f e r e d c o n s i d e r a b l y . A m o n g f a m i l i e s with net s u r p l u s e s , the a v e r a g e s u r p l u s of t h o s e with i n c o m e s below $6,000 w a s $1,068, and of t h o s e with h i g h e r i n c o m e s , $1,070. F o r f a m i l i e s with net d e f i c i t s , the a v e r a g e d e f i c i t w a s $1,205 in t h e l o w e r i n c o m e b r a c k e t , and $1,044 in the u p p e r b r a c k e t . F o r both i n c o m e g r o u p s i n c r e a s e s in a s s e t s w e r e g r e a t e r t h a n d e c r e a s e s in a s s e t s , and i n c r e a s e s in l i a b i l i t i e s w e r e g r e a t e r t h a n d e c r e a s e s in l i a b i l i t i e s . H o w e v e r , in t h e l o w e r g r o u p t h e $1,148 net i n c r e a s e in l i a b i l i t i e s m o r e t h a n c a n c e l e d out t h e $960 net i n c r e a s e in a s s e t s , w h e r e a s f o r t h e u p p e r b r a c k e t t h e $1,574 net i n c r e a s e in a s s e t s o u t w e i g h e d t h e $1,510 net i n c r e a s e in l i a b i l i t i e s . T h i s r e s u l t e d in the d e f i c i t of $188 f o r t h e l o w e r g r o u p , and the net s u r p l u s of $64 f o r t h e h i g h e r i n c o m e f a m i l i e s . S u m m a r y of t h e s u r p l u s - d e f i c i t p o s i t i o n s of a l l f a m i l i e s . — S i n c e t h e a v e r a g e net i n c r e a s e in l i a b i l i t i e s f o r t h e e n t i r e s a m p l e w a s l a r g e r t h a n t h e a v e r a g e net i n c r e a s e in a s s e t s , the f a m i l i e s a s a whole ended t h e y e a r 1950 with an a v e r a g e net d e f i c i t of $57. A c o m p a r i s o n of a l l i n c r e a s e s and d e c r e a s e s in a s s e t s s h o w s that f o r t h e s a m p l e a s a whole m o r e m o n e y w a s i n v o l v e d in a c q u i r i n g a s s e t s t h a n in l i q u i d a t i n g t h e m . T h e a v e r a g e net i n c r e a s e in a s s e t s w a s $1,280. R e a l % p e r s o n a l i n s u r a n c e p a y m e n t s d u r i n g t h e y e a r had b e e n c l a s s i f i e d a s i n c r e a s e s in a s s e t s r a t h e r t h a n a s e x p e n d i t u r e s , both g r o u p s would h a v e shown s u r p l u s e s — $ 2 6 9 f o r t h o s e with i n c o m e s u n d e r $6,000; $667 f o r t h o s e with i n c o m e s of $6,000 and m o r e .

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e s t a t e , p a r t i c u l a r l y o w n e r - o c c u p i e d h o m e s , w a s t h e m a j o r a s s e t in which i n c r e a s e s s u r p a s s e d d e c r e a s e s . A s m a l l e r though i m p o r t a n t a s s e t which i n c r e a s e d m o r e t h a n it d e c r e a s e d w a s t h e a m o u n t of m o n e y owed to t h e f a m i l i e s . The only i m p o r t a n t a s s e t which d e c r e a s e d m o r e t h a n it i n c r e a s e d w a s m o n e y on hand o r in t h e b a n k ; a s a whole, t h e f a m i l i e s w i t h d r e w m o r e money during the y e a r than they deposited. When a l l i n c r e a s e s a n d d e c r e a s e s i n l i a b i l i t i e s a r e c o m p a r e d , we find that i n c r e a s e s w e r e g r e a t e r d u r i n g t h e y e a r t h a n d e c r e a s e s , and t h u s f a m i l i e s f i n a n c e d s o m e e x p e n d i t u r e s f r o m s o u r c e s o u t s i d e of c u r r e n t i n c o m e , by u s i n g e i t h e r a c c u m u l a t e d r e s e r v e s o r c r e d i t . T h e a v e r a g e net i n c r e a s e i n l i a b i l i t i e s w a s $1,337. E v e r y s p e c i f i e d t y p e of l i a b i l i t y c o n t r i b u t e d to t h e o v e r - a l l net i n c r e a s e , and a g a i n r e a l e s t a t e , p a r t i c u l a r l y o w n e r - o c c u p i e d h o m e s , w a s t h e m o s t i m p o r t a n t t y p e . M o r e m o n e y w a s i n v o l v e d in m o r t g a g e d e b t s i n c u r r e d d u r i n g t h e y e a r t h a n w a s u s e d f o r p r i n c i p a l p a y m e n t s on m o r t g a g e s , although m a n y m o r e f a m i l i e s m a d e t h e l a t t e r t r a n s a c t i o n s . Money owed to p e r s o n s o u t s i d e t h e f a m i l y , s u c h a s p e r s o n a l l o a n s , w a s t h e next m o s t i m p o r t a n t t y p e of l i a b i l i t y in t e r m s of the m o n e y i n v o l v e d . In t e r m s of s u r p l u s and d e f i c i t , s u r p l u s e s — t h a t i s , i n c r e a s e s in a s s e t s a n d / o r d e c r e a s e s in l i a b i l i t i e s — c a m e m o s t f r e q u e n t l y f r o m r e a l e s t a t e (usually home purchase or improvement). Deficits (decreased a s s e t s a n d / o r i n c r e a s e d liabilities) w e r e l e s s concentrated; among the most frequent w e r e bank w i t h d r a w a l s and i n c r e a s e s in t h e a m o u n t of m o n e y owed to s t o r e s , lending agencies, or individuals. S u r p l u s and d e f i c i t b y e x p e n d i t u r e l e v e l s . — W h e n t h e f a m i l i e s w e r e c l a s s i f i e d by s i z e of e x p e n d i t u r e s f o r c u r r e n t c o n s u m p t i o n , r a t h e r t h a n by i n c o m e l e v e l s , it w a s found t h a t t h o s e t h a t s p e n t l e s s h a d a n e t s u r p l u s , and t h o s e with h i g h e r e x p e n d i t u r e s s h o w e d a net d e f i c i t . T h e t o t a l g r o u p of 159 f a m i l i e s h a d an a v e r a g e e x p e n d i t u r e of $5,957 f o r a l l c u r r e n t c o n s u m p t i o n i t e m s , and a n e t d e f i c i t of $57. T h e r e w e r e 88 f a m i l i e s who s p e n t l e s s t h a n $6,000, and 71 w h o s e e x p e n d i t u r e s w e r e $6,000 o r m o r e . S i x t y - n i n e p e r c e n t of t h e f a m i l i e s who s p e n t t h e l o w e r s u m s r e p o r t e d a n e t s u r p l u s , but 22 p e r c e n t of t h e h i g h e r e x p e n d i t u r e b r a c k e t had a s u r p l u s . T h e l o w e r g r o u p h a d an a v e r a g e net s u r p l u s of $417, and t h e u p p e r g r o u p h a d an a v e r a g e n e t d e f i c i t of $643. T h u s t h e r e w a s e v i d e n c e t h a t a m a j o r i t y of t h e f a m i l i e s in t h e u p p e r e x p e n d i t u r e g r o u p , e i t h e r by s p e n d i n g a c c u m u l a t e d r e s e r v e s o r by u s i n g c r e d i t , a t t a i n e d a l e v e l of l i v i n g s l i g h t l y h i g h e r t h a n would h a v e b e e n p e r m i t t e d by t h e i r c u r r e n t income."* 4 F o r a d i s c u s s i o n of t h i s s u b j e c t in c o n n e c t i o n with a n e a r l i e r s t u d y s e e U . S . D e p a r t m e n t of L a b o r , B u r e a u of L a b o r S t a t i s t i c s , Money D i s b u r s e m e n t s of W a g e E a r n e r s and C l e r i c a l W o r k e r s , 1934-36, B u l l e t i n 638, pp. 174-175.