Chapter

That’s the way the money goes: expenditure patterns as real incomes rise for the poorest families with children

Paul Gregg, Jane Waldfogel and Elizabeth Washbrook

in A more equal society?

Published by Policy Press

Published in print January 2005 | ISBN: 9781861345783
Published online March 2012 | e-ISBN: 9781447301394 | DOI: http://dx.doi.org/10.1332/policypress/9781861345783.003.0012
That’s the way the money goes: expenditure patterns as real incomes rise for the poorest families with children

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This chapter examines the changes in the expenditure patterns and access to specific goods and services from 1997 to 2001, as incomes rose in response to benefit changes and employment shocks. The data used in this chapter is from the Family Expenditure Survey (FES) which was conducted from 1996/97 to 2000/01. The overall aim of the chapter is to illustrate where the increased income goes in terms of patterns of household consumption and ownership of goods. Particular attention is given to specific items that are consumed by the children or that promote their learning and development. Based on the notion that deprived families often lag behind others in their spending on these items, this chapter aims to discover whether these low-income families increase their spending and narrow the gaps between them and other families as their income rises. From a comparative perspective, the chapter presents the spending patterns for low-income families with children and the spending patterns of higher-income families with children before and after the policy reforms of the Labour government. Comparisons of families with children who were less likely to be affected by the policy reforms are also tackled. In addition to discussing spending patterns of families in the UK, the chapter also examines how measures of material deprivation change as incomes rise. Specifically, the chapter probes into durable goods owned by low-income families such as cars, washing machines, tumble dryers, telephones, and computers. Understanding how measures of material deprivation change is crucial to the government's decision to include an indicator of consistent poverty. Results show that as incomes rise within low-income families, their expenditure patterns also change and become more akin to affluent families. The difference lies in their spending emphases: low-income families tend to prioritise spending on goods for children more than affluent families.

Keywords: expenditure patterns; incomes; Family Expenditure Survey; increased income; household consumption; durable goods; low-income families; spending patterns; material deprivation

Chapter.  10645 words.  Illustrated.

Subjects: Social Stratification, Inequality, and Mobility

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