Enhancing Family Resources Survey income data with expenditure data from the Family Expenditure Survey: data comparisons

Neela Dayal, Joanna Gomulka, Lavinia Mitton and Holly Sutherland

No MU/RN/40, Microsimulation Unit Research Notes from Microsimulation Unit at the Institute for Social and Economic Research

Abstract: In this paper we focus on a particular data requirement of tax-benefit microsimulation models in the UK: micro-data on both incomes and expenditures. Tax-benefit models estimate the revenue and distributional effects of changes in personal tax and social security policy. They require detailed and high quality micro-data on both incomes and expenditures for two principal reasons. Firstly, taxes may depend on either income or expenditures and it is often the combined the effect of both types of tax that is of interest. Secondly, although the distributional effects of changes are usually evaluated in terms of the distribution of household incomes, "consumption capability" rather than income itself is sometimes considered to be the concept that is most relevant (Department of Social Security, 1996a). This is better represented by the distribution of household expenditures. This second reason for needing both income and expenditure information for the same households is not confined to policy simulation models. It is also a requirement of many studies of household poverty and inequality including the Department of Social Securityís (DSS) Households Below Average Income series.

Date: 2000-12-04
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