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1. WHY MIGHT USES OF HOUSEHOLD SPENDING DATA DIFFER BETWEEN COMMERCIAL ANDGOVERNAMENTAL ORGANISATION?

Commercial organisations basically pursue a self-gain in terms of profitability, while governmental

organisations tend to act for the common good of the society and the State. Commercial organisationsare interested in both microeconomics and macroeconomics issues: the former comprehend what

consumers are willing to buy, and the relationship between different amount of spending on various

categories of goods. These analysis are used to reveal the most profitable product lines, and the

chances for changes in strategy or diversification. Macroeconomics matters include aggregate

household consumption on goods and services, and on the potential of the whole economy to bear the

growth of individual firms or industries. Finally, commercial organisations can confront the levels of

sales between them and the competitors, and respond accordingly.

Governmental organisations use consumption data for three main purposes: to evaluate public policies

effects, aims and related changes; to analyse current economy, both from an internal and external

(worldwide) perspective; to foresee future trends in economy and spending. Its important to assess

whether public policies are effective or not, and in this case to improve upon them. Once modifications

are applied, there will be different effects on spending levels to consider. Moreover, public policies can

be targeted to specific groups of people in order to help them (low income people, for instance).

Governmental organisations analyse microeconomics and macroeconomics issues too, this time not for

a personal benefit, but in order to introduce new policies and have an overall evaluation of the current

situation. Diverse spending amounts on different products and the correlation income levels-spending

levels, as well as total consumption data, also helps to compare national economy with the rest of the

world. Lastly, historical data are used to relate changes in the economic circumstances to short and

long-term variations in spending levels, or vice versa: if household spending on certain services/goodschanges permanently over a period of time, that could modify the economy overall.

2. HOW DO DATA USERS BENEFIT FROM SOME KNOWLEDGE OF CONVENTIONS SUCH AS THOSE USEDIN CONSUMER TRENDS?

Conventions, by means of coherence and easy comprehensibility, help to uniform the way data are

presented, thus interpreted, worldwide. For example, applying the COICOP (international standard for the

measurement of consumption), all countries will be able to classify their households spending in terms of

different purposes sought when buying products or services. Other conventions deal with the discrepancy

between acquisition of goods and its respective payment (expense is recognised once goods are received,

not when payment takes place), the differences in housing services involving owner-occupying households

and leaseholders, and second-hand purchases.

3.WHICH TYPE OF DATA SERIES, IN MONETARY TERMS, ON HOUSEHOLD CONSUMPTION INDICATES THE

VOLUME OF GOODS ACQUIRED?

There are three types of data, all related to each other, which express the magnitude of volume acquired in

monetary units. First of all, current-price figures relate the changes in volume of goods acquired to their

price. As a consequence, changes in spending figures, since calculated at current prices, connect again

alterations in volume and in prices. From these figures a third set of data, called constant-price series, can

be obtained. This is the most straightforward way to estimate variations in quantity of goods purchased:

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basically, payments at one periods current price are reformulatedon the basis of the prices charged during

the previous period. The difference between the two periods express the variation of volume of goods

acquired.

4.WHY DO ECONOMISTS SUGGEST DATA USERS SHOULD DISTINGUISH BETWEEN CHANGES IN RELATIVEPRICES AND CHANGES IN THE OBSERVABLE PRICE OF A GOOD?

A relative price is given by the ratio of two prices, therefore it is the measure of the price of a good or

service in relation to another. The problem with these data is the effect of inflation on them: since prices in

different categories of good are affected by different degrees of inflation level, the ratio of two prices

represents a misleading esteem of effective changes in prices. Therefore, changes in relative prices have to

be taken into consideration because they influence households expenditure to a different extent compared

to changes in observable prices.

5.DO THE DATA PRESENTED CONFIRM THE VOLUMES OF DURABLES ACQUIRED IN 2008 WERE HIGHERTHAN THOSE IN 2004 BECAUSE REAL INCOME INCREASED?

From the charts we can clearly state that total volume of spending increased from 2004 to 2008, but this

rate (+2.7% from 1964 to 2008) approximately matched the level of rise in real incomes (+2.6% from 1964

to 2008). Therefore, total consumption and real income went at the same pace. However, if we look

carefully at the composition of total spending, we can clearly see that more was spent on durable goods

than on other categories. The chart displaying real spending as a share of real income clearly shows that,

between 2004-2008, the percentages for Servicesand non-durable goods decreased despite the increase

in income, while the percentage for durable goods increased almost at the same level of income rise. More

Durableswere therefore acquired since a bigger proportion of income was spent on them, and a smallerlevel was spent on services. But after all this is a direct consequence of income increase! Indeed, due to the

greater volatility in the purchase of Durables(connected to their greater income-elasticity, compared to

services), we can conclude that more Durableswere purchased as a consequence of an increase in real

income.

6.DO THE DATA PRESENTED SUPPORT THE VIEW THAT SPENDING ON SERVICES IS MORE VOLATILE AND

INCOME-ELASTIC THAN TOTAL SPENDING ON GOODS?

Even if consumer spending level tends to be quite homogeneous over time despite the change in real

income (consumption smoothing), here we can see that spending on Services is even more uniform than

total spending of goods. It is sufficient to compare charts 4 and 5 to have a demonstration of that: the line

representing quarterly changes in real spending on Services (chart 5) follow a much more constant and

homogeneous path than the one for quarterly changes in real total spending(chart 4) , which have a

greater spread and more uneven path. Total spending is therefore more volatile and income-elastic, due to

the effect of Durables and Semi-durablesspending (which , as showed in chart 5, are even more

changeable and unpredictable) on it.