A growing market: Expenditures by Hispanic consumers

Monthly Labor Review

Volumn 121, Issue 3, 1998, Pages 3-19

  Paulin, Geoffrey D ^a  

^a NONE

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EID: 0347092167     PISSN: 00981818     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (54)

1. Statistical Absract of the United States: 1996 (Bureau of the Census, 1996), table 19.
2. For examples, see Mark Lino, "Income and spending patterns of single-mother families," Monthly Labor Review, May 1994, pp. 29-37; Geoffrey D. Paulin and Wolf D. Weber, "The effects of health insurance on consumer spending," Monthly Labor Review, March 1995, pp. 34- 54; Geoffrey D. Paulin and Elizabeth M. Dietz, "Health insurance coverage for families with children," Monthly Labor Review, August 1995, pp. 13-23; and Geoffrey D. Paulin, "Health Insurance Coverage for Low-Income Families: Findings from the Consumer Expenditure Survey," Advancing the Consumer Interest, fall 1996, pp. 20-32. The latter article includes results of regressions, the equations for which include ethnic dummy variables. However, the coefficients for the ethnic variables are not shown.
3. For examples, see Mark Lino, "Income and spending patterns of single-mother families," Monthly Labor Review, May 1994, pp. 29-37; Geoffrey D. Paulin and Wolf D. Weber, "The effects of health insurance on consumer spending," Monthly Labor Review, March 1995, pp. 34-54; Geoffrey D. Paulin and Elizabeth M. Dietz, "Health insurance coverage for families with children," Monthly Labor Review, August 1995, pp. 13-23; and Geoffrey D. Paulin, "Health Insurance Coverage for Low-Income Families: Findings from the Consumer Expenditure Survey," Advancing the Consumer Interest, fall 1996, pp. 20-32. The latter article includes results of regressions, the equations for which include ethnic dummy variables. However, the coefficients for the ethnic variables are not shown.
4. For examples, see Mark Lino, "Income and spending patterns of single-mother families," Monthly Labor Review, May 1994, pp. 29-37; Geoffrey D. Paulin and Wolf D. Weber, "The effects of health insurance on consumer spending," Monthly Labor Review, March 1995, pp. 34- 54; Geoffrey D. Paulin and Elizabeth M. Dietz, "Health insurance coverage for families with children," Monthly Labor Review, August 1995, pp. 13-23; and Geoffrey D. Paulin, "Health Insurance Coverage for Low-Income Families: Findings from the Consumer Expenditure Survey," Advancing the Consumer Interest, fall 1996, pp. 20-32. The latter article includes results of regressions, the equations for which include ethnic dummy variables. However, the coefficients for the ethnic variables are not shown.
5. For examples, see Mark Lino, "Income and spending patterns of single-mother families," Monthly Labor Review, May 1994, pp. 29-37; Geoffrey D. Paulin and Wolf D. Weber, "The effects of health insurance on consumer spending," Monthly Labor Review, March 1995, pp. 34- 54; Geoffrey D. Paulin and Elizabeth M. Dietz, "Health insurance coverage for families with children," Monthly Labor Review, August 1995, pp. 13-23; and Geoffrey D. Paulin, "Health Insurance Coverage for Low-Income Families: Findings from the Consumer Expenditure Survey," Advancing the Consumer Interest, fall 1996, pp. 20-32. The latter article includes results of regressions, the equations for which include ethnic dummy variables. However, the coefficients for the ethnic variables are not shown.
6. Scott Koslow, Prem N. Shamdasani, and Ellen E. Touchstone, "Exploring Language Effects in Ethnic Advertising: A Sociolinguistic Perspective," Journal of Consumer Research, March 1994, pp. 575-85.
7. Lisa Peñaloza, "Border Crossings: A Critical Ethnographic Exploration of the Consumer Acculturation of Mexican Immigrants," Journal of Consumer Research, June 1994, pp. 32-54; and Cynthia Webster, "Effects of Hispanic Ethnic Identification on Marital Roles in the Purchase Decision Process," Journal of Consumer Research, September 1994, pp. 319- 31.
8. Lisa Peñaloza, "Border Crossings: A Critical Ethnographic Exploration of the Consumer Acculturation of Mexican Immigrants," Journal of Consumer Research, June 1994, pp. 32-54; and Cynthia Webster, "Effects of Hispanic Ethnic Identification on Marital Roles in the Purchase Decision Process," Journal of Consumer Research, September 1994, pp. 319-31.
9. Jessie X. Fan and Virginia Solis Zuiker, "Budget Allocation Patterns of Hispanic versus Non-Hispanic White Households," Consumer Interests Annual, 1994, pp. 89-96; a more extensive version of the article has been accepted for publication in Journal of Family and Economic Issues, forthcoming. Also see Janet Wagner and Horacio Soberon-Ferrer, "The Effect of Ethnicity on Selected Household Expenditures," The Social Science Journal, February 1990, pp. 181-98.
10. Jessie X. Fan and Virginia Solis Zuiker, "Budget Allocation Patterns of Hispanic versus Non-Hispanic White Households," Consumer Interests Annual, 1994, pp. 89-96; a more extensive version of the article has been accepted for publication in Journal of Family and Economic Issues, forthcoming. Also see Janet Wagner and Horacio Soberon-Ferrer, "The Effect of Ethnicity on Selected Household Expenditures," The Social Science Journal, February 1990, pp. 181-98.
11. Jessie X. Fan and Virginia Solis Zuiker, "Budget Allocation Patterns of Hispanic versus Non-Hispanic White Households," Consumer Interests Annual, 1994, pp. 89-96; a more extensive version of the article has been accepted for publication in Journal of Family and Economic Issues, forthcoming. Also see Janet Wagner and Horacio Soberon-Ferrer, "The Effect of Ethnicity on Selected Household Expenditures," The Social Science Journal, February 1990, pp. 181-98.
12. Peter Cattan, "The diversity of Hispanics in the U.S. work force." Monthly Labor Review, August 1993, pp. 3-15.
13. José F. Medina, Joel Saegert, and Alicia Gresham, "Comparison of Mexican-American and Anglo-American Attitudes Toward Money," Journal of Consumer Affairs, summer 1996, pp. 124-45.
14. See Fan and Zuiker, "Budget Allocation Patterns"; and Wagner and Soberon-Ferrer, "Effect of Ethnicity."
15. See Fan and Zuiker, "Budget Allocation Patterns"; and Wagner and Soberon-Ferrer, "Effect of Ethnicity."
16. See Peñaloza, "Border Crossings." The author conducts an interesting study to answer this question, relying on personal observations of 23 Mexican immigrants from 14 households. Despite her name and heritage, however, Peñaloza's "Anglo" appearance and inability to speak Spanish well made it difficult for her to ensure the trust and participation of her respondents. She had to "prove [her] intentions were earnest, which [she] did by sustained contact, focused interest, and by doing things for the informants, such as providing transportation and translations." As she gained trust, she was able to observe respondents during their daily routines, an experience she found both "challenging and rewarding."
17. See Medina and others, "Attitudes Toward Money," pp. 137-38.
18. See Cattan, "Diversity of Hispanics."
19. See Fan and Zuiker, "Budget Allocation Patterns," and Wagner and Soberon-Ferrer, "Effect of Ethnicity."
20. See Fan and Zuiker, "Budget Allocation Patterns," and Wagner and Soberon-Ferrer, "Effect of Ethnicity."
21. See Webster, "Effects of Hispanic Ethnic Identification," footnote 1.
22. See Fan and Zuiker, "Budget Allocation Patterns," p. 89.
23. See Wagner and Soberon-Ferrer, "Effect of Ethnicity."
24. See Webster, "Effects of Hispanic Ethnic Identification"; Penaloza, "Border Crossings"; and Medina and others, "Attitudes Toward Money."
25. See Webster, "Effects of Hispanic Ethnic Identification"; Penaloza, "Border Crossings"; and Medina and others, "Attitudes Toward Money."
26. See Webster, "Effects of Hispanic Ethnic Identification"; Penaloza, "Border Crossings"; and Medina and others, "Attitudes Toward Money."
27. Koslow and others, "Exploring Language Effects," p. 580.
28. The Interview survey data break down ethnicity for those of Mexican origin into Mexican, Mexican-American, and Chicano. However, the Cattan model (grouping these together as persons of Mexican origin) is used here instead of that of Koslow and others (making distinctions based on degree of "ethnic identification" with the United States). This choice is made both for practical considerations (the approach of Koslow and others adds to the number of potential comparisons, thus yielding smaller sample sizes and making the comparisons more cumbersome) and due to theoretical assumptions (it is assumed that spending patterns are not vastly different for these three groups). Furthermore, there are no other measures of "ethnic identity" for the other Hispanic groups - only for geographic origin. Hence, the term "Mexican" is used here to indicate geographic origin.
29. In "Effect of Ethnicity," Wagner and Soberon-Ferrer examine Interview survey data from 1980-81; in "Budget Allocation Patterns," Fan and Zuiker examine Interview survey data from 1980 to 1990.
30. A report describing the 1992-93 survey results indicates that the "Interview survey collects detailed data on an estimated 60 to 70 percent of total household expenditures. In addition, global estimates - that is, expense patterns for a 3-month period - are obtained for food and other selected items. These global estimates account for an additional 20 to 25 percent of total expenditures." See Consumer Expenditure Survey 1992-93, Bulletin 2462 (Bureau of Labor Statistics, September 1995), p. 231.
31. The reference person is the first person the respondent names when asked to "Start with the name of the person or one of the persons who owns or rents this home." It is with respect to this person that the relationship of other members of the consumer unit is determined.
32. As used here, the Hispanic group includes the following subgroups: Mexican American, Chicano, Mexican, Puerto Rican, Cuban, Central or South American, and other Spanish.
33. The following categories are classified here as non-Hispanic: German, Italian, Irish, French, Polish, Russian, English, Scottish, Afro-American, Dutch, Swedish, Hungarian, other, and "do not know."
34. Other races include American Indian, Aleut, Eskimo, Asian or Pacific Islander, and other.
35. Because the focus of this study is expenditure patterns by ethnicity (specifically Hispanics), it may seem curious that the data are defined, in part, based on race as well as ethnicity. This reflects the standards used by U.S. statistical agencies as specified by the Office of Management and Budget. See "Revisions to the Standards for the Classification of Federal Data on Race and Ethnicity," Federal Register, Oct. 30, 1997, pp. 58781-90. Also, because Hispanics are overwhelmingly white by race (see table 1), no attempt is made to control for racial differences among Hispanics in this study.
36. Results include complete reporters only. In general, complete income reporters are those families that provide values for at least one major source of income, such as wages and salaries, self-employment income, or Social Security income. However, even complete income reporters may not have provided a full accounting of all income from all sources.
37. The Consumer Expenditure Survey defines children as the offspring -by birth, adoption, or other legal arrangement - of the reference person and spouse, if present. However, this means that grandparents raising grandchildren and other similar consumer units are not technically defined as having children, even though these persons are under 18. In this study, children are defined as persons under the age of 18, although it is possible that persons 18 years and older are still living with parents or that persons under 18 could, in unusual circumstances (college students who are under 18, for example), be the reference person. It is assumed that, although parents may still be providing support for some, persons under the age of 18 have different needs than those 18 years and older, so family expenditure patterns will differ by age of persons present more so than by the relationship of these persons to the reference person.
38. Conservative estimates from the Bureau of the Census suggest that Hispanics accounted for more than one-fourth of all immigrants in 1994, with the following breakdown by geographic origin: Mexico (111,400), Cuba (14,700), Central America (39,900), South America (excluding Brazil and Guyana, 35,200), and Spain (1,400). Note that countries like the Dominican Republic, which accounted for 51,200 Hispanic immigrants in 1994, are not included in this estimate because it is assumed that immigrants from such areas would define themselves as being of "other Spanish" origin. Also, Brazil and Guyana are omitted because only persons from Spanish-speaking countries in Central or South America are considered Hispanic. And because Puerto Rico is technically part of the United States, persons moving from Puerto Rico to the U.S. mainland are not considered immigrants. Also, in 1994, Hispanic immigrants accounted for about 0.8 percent of the resident Hispanic population; non-Hispanic immigrants accounted for 0.2 percent of the resident non-Hispanic population. (See Statistical Abstract, tables 8 and 12.)
39. The annualized aggregate expenditures are obtained by finding average expenditures per family in each ethnic group for the 3 months for which they report their expenditures. These 3-month average figures are then multiplied by 4 to "annualize" them, and this figure is multiplied by the total number of consumer units in each group. For example, table 1 shows that there were 7,791,811 Hispanic consumer units in the population during the study period. Table 3 shows that the average annualized expenditure for food at home is $3,761. Multiplying 7,791,811 by $3,761 yields approximately $29.3 billion, as shown in table 2.
40. Graham Bannock, Ron Baxter, and R. Rees, A Dictionary of Economics (Middlesex, Harmondsworth, Penguin Books Ltd., 1972), p. 140.
41. Milton Friedman, A Theory of the Consumption Function (Princeton, NJ, Princeton University Press for National Bureau of Economic Research, 1957), p. 221.
42. Recent studies using total expenditures as a proxy for permanent income include Julie Nelson, "Individual Consumption Within the Household: A study of Expenditure on Clothing," Journal of Consumer Affairs, summer 1989, pp- 21-43; E. Raphael Branch, "Short Run Income Elasticity of Demand for Residential Electricity Using Consumer Expenditure Survey Data," The Energy Journal, 1993, pp. 111-21; and Geoffrey Paulin, "A Comparison of Consumer Expenditures by Housing Tenure," Journal of Consumer Affairs, summer 1995. A version that includes an analysis of condominium owners is available from the Bureau of Labor Statistics, Division of Consumer Expenditure Surveys (Working Paper 249, December 1993).
43. Recent studies using total expenditures as a proxy for permanent income include Julie Nelson, "Individual Consumption Within the Household: A study of Expenditure on Clothing," Journal of Consumer Affairs, summer 1989, pp- 21-43; E. Raphael Branch, "Short Run Income Elasticity of Demand for Residential Electricity Using Consumer Expenditure Survey Data," The Energy Journal, 1993, pp. 111-21; and Geoffrey Paulin, "A Comparison of Consumer Expenditures by Housing Tenure," Journal of Consumer Affairs, summer 1995. A version that includes an analysis of condominium owners is available from the Bureau of Labor Statistics, Division of Consumer Expenditure Surveys (Working Paper 249, December 1993).
44. Recent studies using total expenditures as a proxy for permanent income include Julie Nelson, "Individual Consumption Within the Household: A study of Expenditure on Clothing," Journal of Consumer Affairs, summer 1989, pp- 21-43; E. Raphael Branch, "Short Run Income Elasticity of Demand for Residential Electricity Using Consumer Expenditure Survey Data," The Energy Journal, 1993, pp. 111-21; and Geoffrey Paulin, "A Comparison of Consumer Expenditures by Housing Tenure," Journal of Consumer Affairs, summer 1995. A version that includes an analysis of condominium owners is available from the Bureau of Labor Statistics, Division of Consumer Expenditure Surveys (Working Paper 249, December 1993).
45. In this way, the "other" category is omitted. Although it accounts for more than 5 percent of the budget, it is not clear what kinds of intracategory substitutions would be made with respect to changes in income or other characteristics, so the regression of other expenditures on characteristics leads to results that are at best unclear and at worst meaningless.
46. There are slightly fewer degrees of freedom for the housing regressions because variables related to size of dwelling are occasionally missing in the Consumer Expenditure Survey data. Because there are few missing values and the pattern is presumed to be random, however, the analysis should not be detrimentally affected.
47. Suppose, for example, that one family usually earns $20,000 per year, and another one usually earns $15,000 per year, but for some reason, the latter family unexpectedly received an additional $5,000 in income during the past year. Even though both families earned $20,000 in current income, they probably would have different spending patterns due to different permanent incomes.
48. For a detailed discussion of complete and incomplete reporters and plans to impute missing incomes, see Geoffrey D. Paulin and David L. Ferraro "Imputing income in the Consumer Expenditure Survey," Monthly Labor Review, December 1994, pp. 23-31.
49. The Mexican subgroup includes reference persons describing their ethnicity as Mexican American, Chicano, or Mexican.
50. See table 8 for total expenditures (permanent income) for each of the Hispanic subgroups.
51. Because Mexican families have, on average, 0.4 more children than other Hispanic families, while also having the same number of persons over 65, it would appear equally likely that the extra person is either a child or another adult aged 18 to 64.
52. According to the Interview survey results for the total population in 1994, families whose reference person was 65 years or older were less likely to buy apparel than those who reference person was under the age of 65. Only 73 percent of the former group reported purchases, compared with 85 percent of all consumer units (regardless of age). Similarly, only 72 percent of families whose reference person was retired reported expenditures for apparel in 1994. (Retired persons presumably make fewer purchases of business attire items, for example.) Thus, the fact that Cuban families are more likely to have reference persons who are 65 years and older may help explain why they report lower apparel expenditures, on average.
53. The values of λ for each expenditure in this section are unchanged from their values in the earlier portion of this article.
54. Reprints of this article with additional regression results are available from the author at the Bureau of Labor Statistics, Division of Consumer Expenditure Survey, Room 3985, Washington, DC 20212; telephone: (202) 606-6900; or from the Monthly Labor Review at the address listed on cover two.