Functional forms of household expenditure patterns in the United States

Engel curve analyses of six major categories of expenditures are presented. Data for U.S. consumer units are from the 1989 Consumer Expenditure Survey. Six different functional forms for each of the six expenditure categories were compared and the form with the best fit between permanent income, as derived from an instrumental variable approach, and expenditure was selected for each expenditure category. Regressions of each expenditure with permanent income and selected household characteristics are discussed.