cost variations were limited to the differences arising from owning or not owning a home. Budget costs and rising prices

Since spring 1967, rising prices have increased the costs of the three budgets. Between spring 1967 and spring 1969 the Consumer Price Index rose 8.8 percent, while the cost of family consumption increased 8.6 percent in the lower budget, and 8.7 and 8.8 percent in the intermediate and higher levels. Rough approximations of the fall 1968 and spring 1969 costs of family consumption, using price changes as reported in the CPI for appropriate classes of goods and services, are shown in table 4. BLS plans to reprice the budgets at intervals, including the recalculation of taxes, to provide reasonably current estimates of detailed budget costs for the three levels. The next such pricing will cover prices for spring 1969.

costs (tables 5, 6, and 7). Within each budget level, the indexes reflect not only differences in prices, but also climatic and regional differences in the quantities and types of items required to provide the specified level and manner of living, and differences in State and local taxes. Thus they are comparative living cost indexes, not comparative price indexes.

The annual cost for the lower budget in spring 1967 ranged from $2,334 in small southern cities to $3,022 in Hartford." With U.S. urban average costs equaling 100, this constitutes a range among mainland areas from 87 to 113, or 26 percentage points. In the intermediate and higher budgets, Hartford and Boston were the most expensive mainland areas, averaging $4,343 and $7,198-29 and 39 percentage points, respectively, above the costs of comparable budgets in small southern cities.

Among the major budget categories, comparisons of the costs of food at home, shelter, transportation, and clothing are for equivalent, but not identical, goods and services. Therefore, both the quantities and prices of these components may vary from city to city. Generally these itemsespecially shelter and transportation-contribute most of the intercity differences in consumption costs. Shelter is often considered the primary factor in determining the relative position of an area on a scale of living costs. However, it is influenced by many local conditions, and in any area shelter costs may be relatively high at one level of living but not necessarily high at other levels. Shelter costs for renters at all three levels, and for homeowners at the higher level, were generally greater in large metropolitan areas than in medium-size areas or small cities. This tendency was less marked for homeowners at the intermediate and lower levels.

The range in total shelter costs for mainland cities was 59 percentage points in the lower and 68 and 90 points in the intermediate and higher budgets. Rental costs were highest in Washington, D.C. for the lower budget and in Cleveland and Los Angeles, respectively, for the intermediate and higher budgets. These costs were lowest in small southern cities in the lower and intermediate budgets, and in Portland, Maine at the higher level. Homeowner costs were highest in New York and lowest in small southern cities at both the lower and intermediate levels, while Boston was high and Atlanta low in the higher budget.

care, required 43 percent of total family consumption in the lower, 37 percent in the intermediate, and 30 percent in the higher budgets. By contrast, housing and transportation took 44 percent of the lower, 47 percent of the intermediate, and 52 percent of the higher budgets. Costs of clothing and personal care, on the other hand, were proportionately similar at all three

levels.

These budget distributions of family consumption costs do not reflect the way average couples of the budget type actually spend their money, or the way all couples should spend their money. Table 8 compares the actual spending pattern of the average couple of this type, as reported in the 1960-61 Consumer Expenditure Survey, with the budget costs for consumption.

The family consists of a retired husband and wife, age 65 years or over. The total represents the weighted average costs of renter and homeowner families. See the weights cited in footnote 4.

The lower and intermediate budgets do not include an allowance for lodging away from home city, but the higher budget includes $53 for all areas. These costs are not shown separately or included in any of the housing subgroups

The average cost of shelter is weighted by the following proportions: Lower budget. 40 percent for renters, 60 percent for homeowners, intermediate budget, 35 percent for renters, 65 percent for homeowners; higher budget, 30 percent for renters, 70 percent for homeowners.

Average contract rent plus the cost of required amounts of heating fuel, gas, electricity, water, specified equipment, and insurance on household contents.

Taxes, insurance on house and contents, water, refuse disposal, heating fuel, gas electricity, specified equipment and home repair and maintenance costs.

The average costs to automobile owners and nonowners in the lower budget are weighted by the following proportions of families: New York, Boston, Chicago, and

Philadelphia, 100 percent for nonowners; all other metropolitan areas, 45 percent for automobile owners, 55 percent for nonowners, nonmetropolitan areas, 55 percent for owners, 45 percent for nonowners. The intermediate budget proportions are: New York. 25 percent for owners, 75 percent for nonowners. Boston, Philadelphia, and Chicago, 40 percent for owners, 60 percent for nonowners, all other metropolitan areas 60 percent for owners, 40 percent for nonowners; nonmetropolitan areas, 68 percent for owners, and 32 percent for nonowners. The higher budget proportions are New York, Boston, Philadelphia, and Chicago, 75 percent for owners, 25 percent for nonowners, all other areas, 100 percent for automobile owners. Intermediate budget costs for automobile owners in autumn 1966 were revised prior to updating to spring 1967 cast levels.

For a detailed description, see the 1967 edition of "Standard Metropolitan Statistcal Areas," prepared by the Bureau of the Budget.

Places with population of 2,500 to 50,000.

The higher budget contained two nonconsumption costs not found at the other levels: Insurance premiums and income taxes.

Table 9 compares cost distributions in two sets of BLS budgets-the retired couple's and one for a younger family of four (husband age 38, nonworking wife, boy of 13, and girl of 8)-living at comparable levels. Certain differences between the budgets for the two family types should be noted.

FOOD. In both sets of budgets, food at home is based on the same three USDA food plans, but the specific budget allowances within each plan vary by age and sex. Moreover, 10 percent is added to the cost for the retired couple's food budget to compensate for less economical buying and for more waste than the larger family has. The older couples also have an allowance for entertaining guests at home which is not given the four-person family. Food away from home for the younger family includes lunches at work and at school-items not applicable for retired couples.

SHELTER. The lower four-person family budget has no homeownership, while at the intermediate and higher levels 75 and 85 percent of families are assumed to be homeowners, currently paying off mortgages on their homes. In contrast, at all budget levels, mortgage-free homeownership is assumed for 60 to 70 percent of the retired couples. In all budgets except for the lower four-person familyshelter costs are the weighted average of owner and renter costs.

Space requirements for the four-person family call for a five- or six-room owned, and a five-room

rental, dwelling. For the retired couple, owned homes have five or six rooms, while rental units contain two or three rooms.

MEDICAL CARE. Medical costs in the lower and intermediate four-person budget were basically the same. Medical care in the higher budget costs more because of the addition of a major medical care insurance policy. By contrast, all three retired couples' budgets had virtually the same cost. The cost of health insurance in the four-person budgets reflected the fact that a majority of families did not bear the full cost, a part or all of the premium being paid by the husband's employer. Retired couples' average out-of-pocket costs for Federal Medicare insurance were assumed to be paid entirely by the couples themselves.

TRANSPORTATION. For both budgets, the type of transportation is related not only to the accessibility of public transportation but also to the average levels of car ownership recorded in the 1960-61 Survey of Consumer Expenditures. In general, automobile ownership was more widespread among the younger families. All families living in small cities were assumed to own cars, as were all other families at the higher level, and those at the intermediate level in cities of 50,000 to 1.4 million population. In the lower budget for four persons, ownership was assumed for 50 to 65 percent of families in metropolitan areas, while at the intermediate level 80 to 95 percent of those living in these type areas were assumed to have cars. These figures are in sharp contrast to automobile ownership assumed for retired couples.

The age of the car when bought was the same for young and old at each budget level, but the proportion of new car buyers in the higher budget was slightly larger (60 percent) for the younger families. The length of time the cars were owned (4 years) was the same for all younger families, as well as for retired couples at the lower level, but all other retired couples kept their cars 7 years.

For the remaining goods and services included in family consumption costs, all budget allowances were developed from quantities of, or expenditures for, items reported in the 1960-61 Consumer Expenditure Survey using data for families of the two budget types, at different income classes to derive the three budget levels.

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