Discussion Questions About Household Spending Data

The difference between commercial and governmental organizations when it comes to household spending data can differ for several reasons. The first reason is the purpose of the data collected. Commercial organizations and governmental agencies collect household spending data for different reasons. For commercial organizations, their primary focus is to their overall success (Blyth 2013, pg. 34). Commercial organizations value data that can give an insight into what their current and potential consumers would want to buy identifying what their users prefer then the commercial organizations will be aware of their sales estimates. What separates the data from commercial organizations to the ones gathered by governmental organizations is that commercial organizations embrace data coming from which categories of goods that absorb what proportion of household budgets. The data are the used to reveal clues about the possible productivity of different products. Since commercial organizations focus mainly on profits, the patterns observed and identified can be the foundation to point out opportunities for product diversification or even help in coming up with a different organizational strategy that can he the company achieve its objectives.

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On the other hand, governmental organizations value household spending data as a way of monitoring the success of the current public policy. The data collected can be used by the organization in planning for policy change. When it comes to the actual collection of data, commercial organizations may use the broader wealth of indicators from external sources which may cause a difference. The governmental organizations, on the other hand, aim to understand how a change in policy can have an effect on the consumer spending (Langen 2014, pg. 67). For example, the taxation of several products or services can affect how the public spend when it comes to these goods and services (Wolff 2006, pg. 16). In the case government organizations, the data can be used to help in identifying the right target products and groups. The data indicate the pattern used by consumers when spending between categories of product. The data collected by governmental organizations also suggest the links between income levels of consumers and their spending levels. The policy makers study past expenditure patterns to predict future economic conditions. Policy makers have an advantage of using timely releases on consumer spending to come to a conclusion on the state of both the local and international economy (Picos-Sanchez 2011, pg. 54).

Response to Question 2

The National Statistics publication Consumer Trends offers a massive selection of figures on the spending by households. It is like a guide for the data users because it has relevant information about the products, categories and past information. The convention is based on information that is widely accepted and, therefore, offers confidence for the different users. For data users, it is an essential place to begin when searching for secondary data which can benefit them and help to meet the requirements of organizations that wish to use the data. One way that data users take advantage of the knowledge of conventions such as Consumer trend is that it offers information on products. Information on product comes regarding durability, other goods and services (Higham 2009, pg. 33). Durable products are ones that can be used more than ones while non-durables are products that can only be used ones such as food and drink. The conventions also offer information on the 12 divisions of the products and services. The special categories between goods and services are said to highlight the purpose why the goods and services are bought. The 12 categories may have instances where there are similarities between the uses of different products and services. The consumer trends come in various forms; some adopted in textbooks and economic models which are different from the ones published by governments. The difference in publication offers insight into the various practical issues that affect collection and presentation of data.

Response to Question 3

Household expenditure data is the indicator of the volume of goods or services acquired. The households can pay for the goods and services at any time. When collecting the numbers, it does not matter whether or when a household pays for the services or goods. If interest payments become payable from buying goods utilizing a debit instrument, such as a commercial loan, they are considered as negative income flows and do not affect approximations of household consumption.

Response to Question 4

Economist believe that there is real spending which is represented by constant price spending because the substantial volume of goods is represented by the constant price expenditure. Products and services are available at current and consistent prices. It is necessary to distinguish between changes in relative prices and modifications in the observable prices of a good because the current price of a good or service in successive periods is affected by a mixture of fluctuations in the volume of goods acquired and their prices. This means that the changes in spending at current prices are equally influenced by some combination of variations in volume and changes in prices. On the other hand through a transformation of the same current price, a constant price series can be obtained. By a recalculation of the current price data on expenditure in a particular period depending on the prices paid in the preceding period, an approximation of the change in volume of the goods acquired can be established.It is significant to have sufficient evidence of the prices of goods within each spending category which can be estimated by constant price forecasts. It is possible to create a constant price series by looking at the changes from period to period which represent the scale of volume changes.

Response to Question 5

Yes, it can be argued that in 2008 the amount of Durables acquired was higher than in 2004 because there was an increase in real incomes. According to chart 3, in 2004, the real income was at approximately 8% while in 2008 the actual income percentage increased to approximately 12%. There is a close relationship between the Durable acquired and the increase in real income because as the real income increases so do the Durables acquired. According to the chart, there is further evidence that households spent increasing amounts of their real disposable income on both Durables and Semi durables.

Response to Question 6

According to Chart 4, we can interpret that disposable income is more volatile than is total spending. According to economists, the above interpretation can be defined as consumption smoothing. Looking at chart 5, there is a display of relatively good spread or variability of observations for both the Durables and the Semi durables series than for those reflecting the other categories of goods. We can, therefore, interpret that these patterns as indicators of greater volatility in purchases of Durables and semi-durables than in those of Nondurables and Services.

References

Blythe, J. 2013. Consumer behavior. London, SAGE.

Higham, W. 2009. The next big thing spotting and forecasting consumer trends for profit. London, Kogan Page Ltd. http://www.books24x7.com/marc.asp?bookid=38043.

Langen, N. 2013. Ethics in consumer choice an empirical analysis based on the example of coffee. Wiesbaden, Springer Gabler. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=529032.

Picos-Sanchez, F. 2011.Consumption Taxation as an Additional Burden on Labour Income. Paris: OECD Publishing.

Wolff, G. B. 2006. Measuring tax burdens in Europe. Aussenwirtschaft. 61,