A consumption measure for automobiles

In this article, we estimate consumption of automobiles by using a user-cost approach and data from the Consumer Expenditure Surveys Interview Survey (CE). The user-cost approach is a method for valuing the flow of services from long-lived goods. A key input into user cost is the depreciation of the good, which we estimate by using purchase data from the CE. Consumption measures of long-lived items are an important part of measuring the economic well-being of households. These long-lived items include owned housing and durable goods. Measures of expenditure sometimes are used to approximate consumption, but the expenditure on goods and the consumption of goods differ for items that are purchased infrequently and used for several years. Other than housing, automobiles are the most expensive durable good that households purchase. The economic literature assumes that automobiles depreciate slowly over a long period; this assumption implies that the consumption of automobiles is spread over multiple years.