Old‐Young Differences in Consumer Expenditure Patterns

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Abstract
It has been claimed that transfer payments to retired people reduce aggregate private saving. In their attempts to understand this issue, some writers have called for additional research to clarify the spending behavior of the older and younger households. The present paper uses regression analysis to examine the old‐young differences in expenditure patterns as revealed by the 1972–73 BLS Consumer Expenditure Survey. With data limitations noted, the findings suggest that, for consumer units headed by older (65+) and younger (<65) persons, the marginal and average propensities to spend relative to after‐tax income were virtually the same when estimated at the mean values of their respective characteristics, such as after‐tax income and family size. The statistical model utilized also suggests that, if given the older units' mean values for these characteristics, the younger group would have exhibited higher propensities to spend than the older.

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