The CE and the PCE: a comparison: an analysis of a decline in the ratios of aggregate spending for various categories of expenditures from the BLS Consumer Expenditure Survey and the BEA's Personal Consumption Expenditures over an 11-year period employs a new methodology that takes into account the degree of comparability of those categories

Monthly Labor Review, Sept, 2006 by Thesia I. Garner, George Janini, William Passero, Laura Paszkiewicz, Mark Vendemia

In a study aimed at distinguishing the contributions to total PCE of nonprofits serving households, Charles Ian Mead reported that even more categories of expenditures are affected. (23) At the time of Mead's original research, the amount of PCE attributable to households and to nonprofits serving households had not been determined by the BEA. In a later study, Mead, Clinton P. McCully, and Marshall B. Reinsdorf reported that about 55 percent of the expenditures for nonprofit institutions was directed toward medical care, and about 24 percent toward religious and welfare activities, over the 1992-2001 period. (24)

Also focusing on measuring consumption over time, Jack E. Triplett examined CE data as a wayto evaluate PCE estimates. (25) Unlike Slesnick, Triplett did not use unit-level CE data, but chose published aggregates presented by Raphael Branch. (26) In discussing strengths and weaknesses of the two sources of data, Triplett stated that the input-output methodology employed to produce the PCE is qualitatively better at higher levels of aggregation than at lower ones: "The finer the level of detail, the more likely that the long chain of computation necessary to reach the PCE's indirect estimate of consumer spending will have cumulative errors that affect the totals." (27) Triplett went on to say, "The individual components of PCE and CE have been studied too little to permit conclusions about which is better and what can be learned from comparing the two." (28)

In contrast, in comparing the CE and the PCE in regard to which would be the better primary source of data for weights for the CPI, David Lebow and Jeremy Rudd coneluded, "Neither measure of weights is perfect, but we see advantages to the PCE data on balance." (29) They emphasized the advantage of the PCE in that its data are derived primarily from businesses' responses to economic censuses. However, they also stated, "The main difficulty with the PCE data in this context lies in the need to subtract the purchases of businesses and governments from total expenditure data in order to obtain spending by households and non-profit institutions." (30) Lebow and Rudd stated that a disadvantage of the CE is that its data rely largely on respondents' memories of their own expenditures, as well as of those of others in their consumer unit.

A National Research Council panel that examined whether the CE or the PCE would serve as the better basis of the weights in the CPI was not consistent in its evaluation of the CE:

   On the basis of available evidence, it is unclear whether the
   PCE or CEX weights are superior. What is clear, though, is that
   for some components the two systems produce very
   different results. The major hurdle inhibiting comparison
   among indexes weighted using alternative source data is the
   lack of uniformity in the scope and definition of goods and
   services covered. It is an open question as to how accurately
   expenditure categories can be mapped from the PCE to the
   CEX. We are not in a position to advocate one set of weights
   over the other, but the question certainly warrants further
   investigation ....(31)