Cuadratic Nicholdson

Variations in Working Class Family Expenditure
Author(s): J. L. Nicholson
Source: Journal of the Royal Statistical Society. Series A (General), Vol. 112, No. 4 (1949), pp.
359-418
Published by: Wiley for the Royal Statistical Society
Stable URL: http://www.jstor.org/stable/2980764 .
Accessed: 11/06/2014 05:50
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .
http://www.jstor.org/page/info/about/policies/terms.jsp
.
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of
content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms
of scholarship. For more information about JSTOR, please contact support@jstor.org.
Wiley and Royal Statistical Society are collaborating with JSTOR to digitize, preserve and extend access to
Journal of the Royal Statistical Society. Series A (General).
http://www.jstor.org
This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

All use subject to JSTOR Terms and Conditions
VOL. CXII.] [PART IV.
Journal of the Royal Statistical Society

SERIES A (GENERAL)
PART IV, 1949.
IN WORKINGCLASSFAMILYEXPENDITURE
VARIATIONS
By J. L. NICHOLSON
[Read before the ROYALSTATISTICAL
SOCIETY, May 17th, 1949, the President,
Dr. DAVIDHERON,in the Chair]
PAGE
Foreword . . . . . . . . 359
Part I.-THE GENERALPATrERNOF FAMILYEXPENDITURE

1. Variations in Total Family Expenditure . . . . . . 360
2. Analysis of Family Expenditure by Means of Regression Lines: Introduction 362
3. Some General Comparisons . . . . 364
4. "Necessities" and "Luxuries" . . 367
5. Income Elasticities of Demand . . . . . 369
6. Food, Rent and Income . . . . . . 372
7. Households in London . . . . 374
ON CHILDREN
Part II.-EXPENDITURE CLASSFAMILIES
IN WORKING
1. Introduction . . . . . . . . . . . . 375
2. The Methods Employed . . . . . . . . . 376
3. The Results Obtained . . . . . . . . 380
4. Summary and Main Conclusions . . . . . . . 388
Appendix I: Regression Lines for Family Expenditure . . . . 388

Appendix II: The Method of fitting "Combined" Regression Lines . . . 389
Appendix III: Description of the Data . . . . . . . . . 391
Foreword
WITHa few exceptions, family budget enquiries in the past have not usually provided separate
data for families of different size. It has not previously been possible, therefore, at any rate for
this country, to study the effects of variations in family size on the composition of family
expenditure.
The present study was made possible through the courtesy of the Ministry of Labour, who
generously supplied sample figures from the working-class family budget enquiry of 1937-8.
The Ministry of Labour were also kind enough to grant permission for publication, but responsi-
bility for all statements and conclusions rests, of course, entirely with the author. It should be
explained that a large part of the work was carried out while I was a member of the Oxford
University Institute of Statistics; and that Part II consists of a special analysis made on behalf of
the Royal Commission on Population in 1946, when it was privately circulated. A great deal
of computational work was involved and most of it was done by Miss J. Morris, of the Oxford
Institute of Statistics, and Mrs. J. E. Manley, of the Central Statistical Office.
The data which formed the basis of this study relate to working class households consisting of
two adults (one man and one woman) and 0, 1, 2 or 3 children under 14 years of age. Separate
figures of expenditure were available for a large number of items, cross-classified by the size of
family and the level of total expenditure. The sample consisted of 124 families in London and
704 in the rest of Great Britain, but the number in London, when cross-classified in this way,
was too small to provide reliable averages, so that most of Part I and the whole of the analysis
VOL.CXII. PARTIV. 25

360 NICHOLSON-Variations in Working Class Family Expenditure [PartIV,
in Part II are confined to households in the rest of Great Britain; for the same reason, families
with 3 children were omitted from Part II, and the figures given in Part I relating to these families
can only be accepted with reserve. A fuller description of the data will be found in Appendix
III, together with most of the figures which were directly employed.
In Part I a study is made of the variations in family expenditure in relation to (i) the number
of children in the family, and (ii) the level of total expenditure. For families of a given size, the
relations between the amounts spent on particular items, such as food or clothing, and total family
expenditure are described by means of regression lines. It is then possible to classify different
items as either "necessities" or "luxuries," these terms being used in a technical sense, and to
make estimates of their income elasticities of demand.
Part II is devoted to the much more hazardous task of trying to estimate that portion of total
expenditure which can be attributed to the presence in a family of one or two children. The
whole of this part of the work is in the nature of an experiment, and with the existing data it is
impossible to show more than the approximate orders of magnitude involved. The results-
particularly those relating to the subdivision of the total expenditure on each child-must be
interpreted with caution, and with due regard for all the qualifications that accompany the figures.
It should, perhaps, also be emphasized that both parts of the analysis refer to working class
families of a given type, and are based on the conditions prevailing in 1937-38. The results cannot
be extended to other types of family, to different conditions, or beyond the range of income
covered by the data.
PARTI.-THE GENERAL
PATrERNOF FAMILYEXPENDITURE
Butcher,baker, candlestick-maker,
Blood, and bread, and taper,
Meat, and wheat. and light,
Along with Jones the draper
The wife finds these in the little shops
On the right of the undertaker.
-DOROTHY WELLESLEY.
1. Variations in Total Family Expenditure

The family budgets collected by the Ministry of Labour in 1937-38 showed, in great detail,
how much was spent by working class families on "meat and wheat and light," as well as on
numerous other things. But, to begin with, we shall confine our attention to the figures of total
expenditure, with particular reference to the following questions:
(1) How much do families of a given size spend, on the average, and how much does
total expenditure vary fromnone family to another, or from one district to another?
(2) Do larger families for the most part spend more, or less, than smaller families*-in
other words, how do the answers to (1) compare for families of different size?
Some idea of the variations between different regionst of the country can be obtained from
the figures of average family expenditure, given in Table 1. A good many of these averages,
including all those for families with 3 children, are based on relatively few families, and may not,
therefore, be reliable. The broad differences nevertheless stand out. Average expenditure was
clearly highest in London; it was also relatively high in South-West England and lowest in Wales
and Northern England.
Families in London are bound to have different habits of expenditure from those in the rest-
of Great Britain; expenditure on rent and travelling, for instance, are considerably higher in
London than elsewhere. Throughout this study, therefore, the London families are kept separate
from those in the rest of Great Britain.
* The answer to this question depends partly, of course, on whether they have more to spend. But
as no comparablefigures of income are available, the discussion is confined to the recorded figures of
expenditure.
t The regions are those used by the Ministryof Labour.

1949] NICHOLSON-Variationsin Working Class Family Expenditure 361
TABLE 1
Average Weekly Expenditure in Different Regions

Familieswith Familieswith Familieswith
Familieswith
n1ochild 1 child 3 childr-en
2 children
Number Average Number Average Number Average Number Average
of expendi- of expendi- of expendi- of expendi-
families ture families ture families ture families ture
s. d. s. d. s. d. s. d.
Scotland. .34 75 1 . 18 77 0 .19 82 9 . 18 67 2
North-East .48 69 5 . 28 69 5 . 18 87 2 . 4 53 8
North-West .35 75 3 . 27 78 3 . 25 77 1 . 10 69 2
Northern. 2 65 3 . 20 71 2 . 11 65 9 . 4 77 3
Midland. .53 75 6 . 37 81 4 . 21 76 11 . 10 75 7
Wales . . 19 63 10 . 10 70 6 . 12 70 5 . 2 63 5
South-East .37 66 3 . 29 75 9 . 18 64 2 . 2 62 10
South-West .36 78 2 . 23 74 4 . 14 76 2 . 5 77 0
London . .46 85 0 . 40 78 8 . 20 85 8 14 83 4
The main features of the variations in total expenditure of families in the rest of Great Britain
are summarized in Table 2. The full distribution, with the families grouped in ranges of 10
shillings, is shown in Table 3 and Diagram 1.
2 TABLE
Weekly Expenditure of Families in Great Britain, excluding London:
Mean, Median and Quartiles*
Lower Upper
Meani Quatrtile Median Quartile
s. d. s. d. s. d. s. d.
Families with no child . . 71 i . 54 7 . 66 8 . 83 3
,,child . . .75 5 . 60 4 . 71 11 .85 8
,,2children . .75 11 .59 11 .70 8 . 86 7
,, ,, 3 ,, . . .69 5 . 50 0 . 68 9 . 84 7
* Medianand Quartileswerecalculatedfrom the data groupedin rangesof 10 shillings,as in Table 3.
One might expect to find that, as the size of the family increases, total expenditure also increases,
since the incomes of families with children must be sufficient to support the children. It is not
surprising, therefore, that the total expenditure of families with 1 or 2 children should have been
higher, on the average, than that of families with no children, although there appears to have
been little difference between the average expenditure of families with 1 child and that of families
with 2 children. What is remarkable is that families with 3 children apparently had a smaller
average expenditure than families with 1 or 2 children, and smaller even than families with no
child. Even more remarkable is the fact that a quarter of the families with 3 children were able
to subsist on less than 50 shillings a week.
In Diagram 1 the distributions of families with 1, 2 and 3 children are each compared with the
distribution of families which had no child. It can be seen that the distributions of families with
0, 1 or 2 children are similar in shape, the only real difference being that families with 1 or 2
children had a consistently higher total expenditure than families without children. There
appears to have been a tendency for families with 3 children to bunch themselves together at the
two ends of the distribution; but, as the numbers in each expenditure group are relatively small
(see Table 3), no significance should be attached to the bi-modal appearance of this distribution.
The distribution by total expenditure of families in London is given in Table 4. The quartiles
have not been calculated for these families, since the number in each size group is not large enough
to yield reliable estimates.
So far, we have confined our attention to the figures of total expenditure. But more interesting
problems arise when we consider the variations in the composition of family expenditure.

362 NICHOLSON-Variationsin WorkingClass Family Expenditure [PartIV,
TABLE3
Distribution of Families by Total Expenditure. Great Britain, excluding London
Totalexpenditure Total
- - - A
^ number 5-
Under30s. 30-40s. 40-50s. 50-60s. 60-70s. 70-80s. 80-90s. 90-100s. Over100s. of
families
Families with no child
Number. . . 3 11 33 53 64 38 33 16 33 .284
Percentageof total . 11 39 11 6 18-7 22 5 13-4 11k6 56 11k6 . 100 0
Families with 1 child
Number. . . - 6 8 33 42 40 26 14 23 .192
Percentageof total . 3-1 4-2 17-2 21-9 20-8 13-5 7-3 12-0 . 100-0
Familieswith 2 children
Number. . . 4 8 23 33 24 17 12 17 .138
Percentageof total . 2-9 5 8 16-7 23-9 17-4 12-3 8-7 12-3 . 100-0
Familieswith 3 children
Number. . . 1 13 7 8 6 13 2 5 . 55
Percentageof total - 18 23-7 12-7 14-5 10.9 23-7 3-6 91 . 100-0
All families
Number . . 3 22 62 116 147 108 89 44 78 . 669
TABLE4
Distribution of London Families by Total -Expenditure
Totalexpenditure Total
A
- - " 5 number
30-40s. 40-SOS. 50-60s. 60-70s. 70-80s. 80-90s. 90-lOOs. OverlOOs. of
families
Families with no child . . . 1 1 0 7 13 6 7 11 . 46
,, ,, I child . . . .. 1 6 10 6 6 4 7 . 40
,,2children. . . .. .. 1 3 5 4 4 3 . 20
3 ,, . . . .. .. 2 3 3 3 1 2 . 14
Al families . . . . 1 2 9 23 27 19 16 23 . 120
2. Analysis of Family Expenditure by Means of Regression Lines: Introduction

It has been known for some time that, among families of a given type, there is usually a fairly
simple relation between expenditure on a particular item, such as food, and total family expendi-
ture. Suppose that we have a homogeneous group of families and that figures of expenditure
on a number of different items are given, classified according to the level of total expenditure.
Let E. denote the amount spent on the rth item and let Y denote total expenditure. It has been
found* that the relation between E, and Y can often be described, with reasonable accuracy, by
a linear equation of the form:
Er = ao + aliY . . . . (1)
Such relations are naturally influenced by the size and composition of the family, but separate
data have not always been available for families of different size. A method which has frequently
been used is to express all the figures in terms of expenditure per equivalent number of adults.
It has been pointed out, however, that there are serious objections to this method, and that it does
not usually succeed in eliminating the effects of varying family composition.t Fortunately, in
the present instance, separate figures have been made available for families of different size, so
that the relations can be studied for each size of family. When the results for families of varying
size are compared, it turns out that there are important differences, which cannot be accounted
for in any simple way.
* Cf. "FamilyExpenditure,"by R. G. D. Allen and A. L. Bowley (1935).
t "ExpenditurePatterns of Families of DifferentTypes," by R. G. D. Allen; one of the Studiesin
MathematicalEconomicsand Econometrics,publishedin memory of Henry Schultz (Chicago, 1942).

The households included in the present analysis were homogeneousin the sense that they
were all working class households,containingtwo adults (one man and one woman), of whom
only one was a wage or salary earner,: and varyingnumbersof children,but no other person.
As expenditureon rent and travellingwas ratherhigher in London than elsewhere,the London
households were consideredseparatelyfrom those in the rest of Great Britain. The whole of
Sections 2 to 6 are devoted to households outside London, and those in London are briefly
discussedin Section 7.
When the figures for any given set of families, containing either 0, 1 or 2 children, were
examined,it was found that the relationsbetweenEr and Y could not, in general,be represented
by simplelinearequations,of the form (1). As can be seen fromDiagrams2 to 10, thereis definite
evidence,in some cases (e.g. food), of a curvilinearrelationship; while in other cases (e.g. rent)
the points are ratherwidely dispersed,and it is probablynot possible to say definitelythat the
relationshipis non-linear. If the data for differentsized families were merged together, the
curvilinearrelationshipwould tend to disappear.
TABLE5
Values of Regression Coefficients
Numberof
children bo b, b2 x 103
Food. . . . . . . 0 . 30 4 . *4479 . - 13157
1 . -89.7 . *7356 . -*26303
2 . -53-0 . 6814 . -23354
3 . -22-9 . 5929 . - 12864
Rent . . . . . . . 0 . -22-9 2460 . -*07273
1 . 101 0 . -.0283 . 05312
2 . -42.1 . *2936 . -*12237
3 . 77-4 . -0425 . *09480
Fuel and light . . . . 0 . 247 . *0655 . -01532
1 . 322 . *0256 . 01808
2 . 0.6 . 0998 . -02320
3 . 298 . 0448 . -00734
Clothing . . . . . . 0 . -26-3 . 1370 . - 02554
1 . -67 0 . *2271 . -06814
2 . -90 0 . 2680 . -08128
3 . 387 . -0135 . 07229
Sundries . . . . . . 0 . -60 . *1044 . *24479
1 . 236 . 0397 . *26017
2 . 184-4 . -3443 . 4109
3 . -123-4 . 4183 . -03054
Meat, bacon and fish . . . . 0 . 119 . 1368 . -04486
1 . -24-9 . *1959 . - 06739
2 . -31-6 *2110 . -*07680
3 . -62-6 . 2936 . -.11337
Dairy products . . . . . 0 . 183 . *1112 . - 03720
1 . -18 -3 . 2014 . - 07361
2 . -46 . 1833 . -05898
3 . 16-3 . 1062 . 00992
Fruit and vegetables (excluding potatoes) 0 . -11 4 . *0563 . - 00544
1 . -29-8 . 1061 . - 03425
2 . -33-8 . 1101 . - 03774
3 . -30*1 . 0828 . - 01076
Tobacco and drink . . . . 0 . -146 . 0790 . -01578
1 . -12-6 . 0580 . 00142
2 . -67 5 . 1915 . -07785
3 . -54 4 . 1788 . -08071
t With the exceptionsmentionedin Appendix III.

364 NICHOLSON-Variations in Working Class Family Expenditure [Part IV,
For reasonswhichwill soon becomeclear,the analysisis simplifiedif a similartype of equation

is assumedto hold good for all items of expenditure. It was decided,therefore,to representthe
relationbetweenEr and Y in all cases by equationsof the form:
Er=bo+b1Yb22 . . . . . (2)
Whenequationsof this type are fittedfor all the differentitems,the valuesobtainedfor the regres-
sion coefficientsmust satisfy the condition 2E, = Y, since the sum of the amountsspent on all
items must equal total expenditure. The condition implies that 7bo = 0, 7b, = 1 and 7b2 = 0.
r r r
It is interestingto notice that, as shown in Appendix I, the ordinaryprincipleof least squares
does, in fact, satisfy these conditions.
Regressioncoefficients,based in all cases on equations of the form (2), were computed for
five main groups of items-food, rent,* fuel and light, clothing and sundries-which together
accountedfor all householdexpenditure,as well as for four subdivisionsof these groupswhich
appearedto have particularinterest. The method of least squareswas employed, the average
figuresin each range of expenditurebeing weightedby the numberof familiesin the range. The
regressioncoefficientsare collectedtogetherin Table 5, and the resultingequationsare compared
with the observationsin Diagrams2 to 10.
Equationswere obtainedfor each of the four sets of families,containing0, 1, 2 and 3 children
respectively,but since the number of families included in the sample becomes smaller as the
number of childrenincreases,t the regressionequations are less reliable for the larger families.
In particular,the number of families with 3 children(only 61, divided between six expenditure
groups)was insufficientto provideaccurateresults,and all the estimatesrelatingto these families
are subject,therefore,to very wide marginsof error. The regressionlines for 3-childrenfamilies
could not, for the same reason,be expectedto fit the observationsat all closely.
Bearingthis in mind, it can be seen from the diagramsthat, in the cases of food, clothingand
sundries,the observedpoints correspondvery closely to the equations. In the case of fuel and
light there is some departurefrom the regressionequations,and in the case of rent the observed
points are ratherwidely scattered. As regardsthe smallergroups, the correspondenceis mode-
rately good for the three food groups (meat, bacon and fish; dairy products; and fruit and
vegetables),though perhapsnot quite so good for tobaccoand drink. It should be remembered
that figures of expenditureon drink and tobacco, given in family budgets, are generallyvery
unreliable.
3. Some General Comparisons
With the help of the regressionequations, we can proceed to compare the distributionof
expenditureshown by familieshaving differentnumbersof childrenand the same total expendi-
ture; as well as the effects,on families of differentsize, of changesin the level of income (which
can be assumedto be correlatedwith total expenditure).
The reason for basingthese comparisonson the theoreticalvalues derivedfrom the regression
lines needs,perhaps,a few wordsof explanation. In the firstplace, althoughthe data for different
sized families are available for the same ranges of expenditure,there is some variationin the
averagefigureof total expenditurewithineach range. Secondly,it is assumedthat, in the popula-
tion from which the sample is drawn, the relationshipbetweenexpenditureon a given item and
total expenditurecould be describedby means of equations of the form (2). The regression
coefficientsobtained from the sample are estimates, subject to ordinarysample errors, of the
correspondingparametersof the population. Thus the value of Er correspondingto any given
value of Y, obtained from the regressionequation, is an estimate of the value which would be
found in the population. And it takes into account not only the figurein a given range of
expenditure,but also the relationshipbetweenthe figuresin differentranges.
Table 6 shows, for each size of family, the estimatedexpendi-ture on variousgroups of items
at threedifferentlevels of total expenditure,viz. 50s. a week, 72s. 8d. a week, which is the average
* The figuresfor rent, used in this analysis, are the averagepayments of those families which were
rentingtheir dwellings.
t See Appendix III.

for families with no children,: and lOOs. a week. It should be remembered that the estimates
for rent and all the estimates for 3-children families are subject to wide margins of error.
TABLE6
Distribution of Weekly Expenditure at Different Levels of Total
Expenditure, Estimated from Regression Lines
Families Families Families Families
withno with 1 with2 with3
children child children children*
s. d. s. d. s. d. s. d.
Food . . . . . . 21 0 . 21 5 . 22 8 . 23 11
Rent. . . . . . . 8 3 . 8 7 . 7 6 . 7 2
Fuel and light . . . . . 4 10 . 4 6 . 44 . 4 6
Clothing. . . . . . 311 . 3 9 . 3 6 . 4 9
Sundries . . . . . 12 0 . 11 9 . 12 0 . 9 8
Includedabove:
Meat, bacon and fish. . 6 6 . 5 8 . 5 7 . 6 1
Dairy products. . . . 6 0 . 6 4 . 7 0 . 7 0
Fruit and vegetablest. . . 1 8 . 1 10 . 1 7 . 1 4
Tobacco and drink. . . 2 3 . 110 . 1 7 . 2 0
Total . . . . 50 0 . 50 0 . 50 0 * 50 0
Food. . . . . . . 26 9 . 29 4 . 30 4 . 33 1
Rent. . . . . . 11 4 9 9 . 10 1 . 9 4
Fuel and light . . . . . 5 10 . 5 8 . 5 10 . 5 3
Clothing. . . . . 6 2 . 6 7 . 6 10 6 10
Sundries . . . . . . 22 7 . 21 4 . 19 7 . 18 2
Includedabove:
Meat, bacon and fish. . . 8 1 . 7 11 . 7 10 . 8 11
Dairy products. . . . 7 3 . 8 5 9 3 . 99
Fruit and vegetablest. . . 2 10 . 3 1 2 10 . 2 10
Tobacco and drink . . . 3 6 3 3 . 3 4 . 3 4
Total . . . 72 8 . 72 8 . 72 8 . 72 8
Food. . . . . . . 31 6 . 34 6 35 8 . 41 11
Rent . . . . . . 14 0 . 11 11 11 2 . 13 7
Fuel and light . . . . . 6 9 . 7 5 . 7 3 . 6 1
Clothing. . . . . . 8 5 . 9 0 . 9 7 . 10 7
Sundries. . 39 4 . 37 . 36 4 . 27 10
Includedabove:
Meat, bacon and fish. . 9 4 . 9 5 9 3 10 6
Dairy products . . . 8 2 9 9 . 10 11 13 2
Fruit andvegetablest. . 4 0 4 0 . 3 8 4 6
Tobacco and drink . 4 10 4 11 4 2 3 8
Total 100 0 100 0 100 0 . 100 0
* The estimatesfor familieswith 3 children,being basedon only 58 families,are subjectto wide margins
of error.
t Excludingpotatoes.
At the level of 50s. a week it can be seen that, as the number of children increases, more is
spent on food, but only slightly less on each of the other main groups. As might be expected,
the amount spent on dairy products increases with the number of children, but the amount spent
on the meat group seems to decline, while expenditure on fruit and vegetables shows very little
change. The amount spent on drink and tobacco shows a small reduction.
At a total expenditure of 72s. 8d. a week, the amount spent on food shows a substantial rise
as the size of family increases, expenditure on fuel and light shows little change, that on clothing
I The differencebetween this figure and that shown in Table 2 is explained by the omission from the
regressionanalysisof the three familieswhose total expenditurewas less than 30s. a week (see Appendix
III).

366 NICHOLSON-Variationsin Working Class Family Expenditure [Part IV,
shows only a slight increase,while expenditureon sundriesshows a markeddecline. We find,

again, that dairy productsshow a markedincrease,expenditureon fruit and vegetablesremains
about the same,while the consumptionof meat appearsto go up only when the numberof children
increasesto three. At this level of expenditure,thereis only a very smallreductionin the amount
spent on tobacco and drinkas the numberof childrenincreases.
Similartendenciesare shown at a level of total expenditureof lOOs.a week. A good deal
moreis spenton food, slightlymoreon fuel and light, more on clothingand ratherless on sundries,
as the size of familyincreases. Thereis little changein the amountsspent on fruitand vegetables,
or meat, exceptthat the additionof a thirdchild appearsto cause an increasein the consumption
of meat; whileexpenditureon dairyproductsnow shows a verysubstantialincrease. Expenditure
on drinkand tobacco shows some decline only when the numberof childrenincreasesfrom one
to two or more.
TABLE7
Percentage Distribution of Expenditure, Estimated from Regression Lines
Families Families Families Families
withno with 1 with2 with 3
children child children children*
TotalExpenditure 50s. per week
Food. . . . . . 42.0 428 . 45 3 . 478
Rent . . . . . . . 164 17-2 150 . 143
Fuel and light . . . . . 97 . 90 . 87 . 90
Clothing . . . . . . 78 . 75 . 69 . 94
Sundries. . . . . . 241 . 23 5 . 241 . 19-5
Included above:
Meat, bacon and fish. . . 130 . 114 . 112 . 121
Dairy products . . . . 119 . 127 . 14-0 139
Fruitandvegetablest. . 3 4 . 36 . 31 . 26
Tobacco and drink . . . 45 . 36 . 32 . 40
Total . . . . 1000 . 1000 . 1000 . 1000
TotalExpenditure 72s. 8d. per week

Food. . . . . . 368 . 403 . 41*7 . 45.4
Rent . . . . . . 156 . 13-4 . 138 . 129
Fuel and light . . . . . 80 . 78 . 80 . 73
Clothing . . . . . 85 . 91 . 94 . 9.4
Sundries. . . . . . 311 . 294 . 271 . 25 0
Included above:
Meat, bacon and fish. . . 111 . 109 . 108 . 123
Dairy products. . . . 100 . 116 . 127 . 134
Fruitandvegetablest. . . 38 . 42 . 39 . 3 .9
Tobacco and drink . . . 48 . 45 . 46 . 46
Total . . . 1000 . 1000 . 1000 . 1000
TotalExpenditure= 100s.per week

Food. . . . . . . 315 . 34 5 . 357 42-0
Rent . . . . . . . 140 . 120 . 112 . 136
Fuel and light . . . . . 68 . 7-4 . 7-2 . 6.1
Clothing . . . . . . 84 . 90 . 96 . 106
Sundries. . . . . . 39.3 . 371 . 36-3 . 277
Included above:
Meat, bacon and fish. . . 9-3 . 9.4 . 93 . 105
Dairy products . . . . 82 . 98 . 10-9 . 132
Fruitandvegetablest. . . 40 . 40 . 37 . 45
Tobacco and drink . . . 4-8 . 49 . 42 . 37
Total . . 1000 . 100.0 . 100-0 . 1000
* The estimatesfor familieswith 3 children,being based on only 58 families,are subjectto wide margins
of error.
t Excludingpotatoes.

1949] NICHOLSON- Variations in Working Class Family Expenditure 367
To facilitate the comparison between different levels of income, the same figures are shown in
Table 7 in the form of percentages of total expenditure. The proportions spent on food, rent and
fuel and light are seen to fall as total expenditure rises, while the proportion spent on the sundries
group increases. In general, the proportion spent on clothing also increases with rising total
expenditure, except in the higher ranges of income for families with few, or no, children. As
regards the smaller groups, the proportions spent on meat and dairy products both fall as income
increases, but in the case of dairy products the decline becomes less as the number of children
increases. Similarly, the proportion spent on fruit and vegetables generally seems to increase,
and the proportion devoted to drink and tobacco also shows a slight tendency to increase with
the level of income. The changes in proportionate expenditure as income rises can, in fact, be
used to indicate the relative urgency of different commodities.
4. "Necessities" and "Luxuries"

Those commodities on which the proportionate expenditure diminishes with rising total
expenditure may be defined as "necessities." Those commodities on which the proportionate
expenditure increases with rising total expenditure may be defined as "luxuries." For example,
at very low incomes a large proportion of expenditure is bound to be devoted to those items,
such as food or rent, which are absolutely necessary, leaving very little for items which are less
urgently needed; while, as income increases, a gradually increasing proportion can be spent on
the less necessary items. There is some correspondence, therefore, between the definitions of
"necessities" and "luxuries," given above, and the common-sense meaning of these terms, but
the use of this classification should not be misunderstood. It is certainly ,not implied that expendi-
ture on items which are classified as luxuries is, in any sense, unnecessary or wasteful. Indeed,
whatever the range of incomes considered, it is obvious that if the proportion spent on some
things declines with rising incomes, the proportion spent on other things must increase at the
same time.
Referring back to formula (2), the proportionate expenditure on a particular item is given by
Er bo?b+
+ bi + b2Y. . . . . * * (3)
whence
-` = say . (4)
dY- b2- y . . . .
Positive values of 0 define luxuries and negative values define necessities, while the arithmetical
values of 0 indicate varying degrees of urgency. Since 0 is a function of Y, a given commodity
may be a necessity in one range of income and a luxury in another range.
Table 8 shows the values of 0 corresponding to three different levels of total expenditure (the
same as were used in the previous Tables). It can be seen that food, rent and fuel and light, as
might be expected, are all "necessities" and, of these, food is the most urgent; fuel and light
seem to become less necessary, however, as income increases. Clothing is a "luxury" at low
incomes, but becomes more necessary as income increases. The sundries group is also, in general,
a luxury, though some items included in this group may be necessities.
The meat group is usually a necessity, but it is interesting to notice that for families with very
small incomes and two or three children-in other words, for those families which are worst
off-it becomes a luxury. Dairy products are also a necessary item. Fruit and vegetables
behave as a luxury at low incomes, but at the higher levels of income they appear to become
necessary. As regards tobacco and drink, it must be remembered that the basic figures are not
very trustworthy; at low incomes this group is evidently a luxury, but as incomes increase it
appears to become more necessary. This conclusion is not, in fact, unreasonable, since the pro-
portionate expenditure on drink and tobacco is unlikely to increase indefinitely with rising incomes.
The next problem is to compare the relative urgency of a particular group of items among
families of different size. Suppose we first consider the different values of 0 for given values of
Y, bearing in mind that small differences in 0 probably have no significance. No obvious similarity
can be noticed between the value of 0 for different sized families, at given levels of income. What
we do notice is that the change in 0 as the number of children increases, when Y is fixed, is in the

368 NICHoLsoN-Variations in Working Class Family Expenditure [PartIV,
same direction,in severalcases, as the changein 0 for familiesof a given size, when Y is reduced.
This tendency,thoughnot consistent,is apparentas regardsclothing,fruitand vegetables,tobacco
and drink, and also, except for families with no children,in the cases of food and the smaller
meat group.
TABLE8
Values of 0 (Multiplied by 103)*
Negative value - necessity. Positive value luxury.
Numrber of Values
chlildrenin Y = 600 Y= 872 Y 1,200 corresponding
family xc to
x= 44.7
Food . . . . - 22 . - 17 . -15 . -18
1 . - 01 . -*15 . -20 . -17
2 . -09 . - 16 . -20 . -*19
3 . - 07 . - 10 . - 11 . (-11)
Rent . . . 0 . - 01 . - 04 . - 06 . -3
1 . - 23 . - 08 . - 02 . -06
2 . - 01 . -07 . - 09 . -09
3 . -12 . - 01 . + 04 . (- 05)
Fuel andlight . . . 0 - 08 . - 05 . -03 . - 06
1 . - 07 . - 02 . - 00 . - 02
2 . - 02 . - 02 . - 02 . - 02
3 . - 09 . - 05 . - 03 . ( -03)
Clothing . . . . 0 . + 05 . + 01 . -01 . +-02
1 . +*12 . ?02 . - 02 . +00
2 . +17 . + 04 . - 02 . - 00
3 . -04 . + 02 . +05 . (1-05)
Sundries . . . . 0 . +26 . +25 . +25 . d- 26
1 . +*19 . + 23 . +24 . +23
2 . -05 . +-22 . +33 . +30
3 . +31 . +13 . ?06 . (+04)
Meat, bacon and fish. . 0 . -- 08 . - 06 . - 05 . - 07
1 . + 00 . -03 . -05 . -04
2 . + 01 . -.04 . - 05 . - 05
3 . +06 . -03 * -07 . (- 08)
Dairy products . . . 0 . -09 . - 06 . -05 . -07
1 . -02 . -*05 . -*06 . -05
2 . -05 . -05 . -*06 . -05
3 . -04 . ' 01 . --00 . (+00)
Fruit and vegetables(exclud- 0 . + 03 . + 01 . +*00 . * 01
ingpotatoes) I . +05. . +*00 . -01 . -00
2 . +06 . +01 . -*01 . -*01
3 . +07 . + 03 . +-01 . (+ 01)
Tobacco and drink . . 0 . +02 . +00 .* 01 . + 01
1 . + 04 . +-02 . +01 . +-02
2 . +11 . +01 . -03 . -02
3 . + 07 . -01 . -.04 . (- .05)
* The estimates for families with 3 children, being based on only 58 families, are subject to wide
marginsof error; this is particularlyso of the figurescorrespondingto a given value of xc, shown in the
last column, which are thereforeplaced in brackets.
Such a tendency is not, in fact, difficult to explain. For a given size of family, the standard
of living is closely related to the level of income (or to total expenditure). But for any given
level of income (or total expenditure) the standard of living is bound to fall as the number of
children increases. A given sum of money obviously goes further when there are fewer people

1949] NICHOLSON-Variations in Working Class Family Expenditure 369
on which to spend it. Thus the standardof living enjoyed by a family with, say, two children
and a given total expenditurewould be similarto the standardof living enjoyed,with a smaller
total expenditure,by familieswith one child. And the degreeto which one commodityis more
(or less) urgentlyrequiredthan another is likely to be more closely related to the standardof
living than to the level of income.
The problem of comparingthe standardsof living of families of differentsize is treated at
length in Part II, the results of which must here, to some extent, be anticipated. It is possible,
as shown in Part II, to select a group of items, the expenditureon which can be used to provide
an approximateindication of the standardof living. After examinationof numerousdifferent
selections,it is found thaitexpenditureon adults' clothing, which is denoted by xc, providesthe
best index for this purpose; and a functionalrelationshipis establishedbetweenxc and Y, so
that, for each size of family, we can determinethe value of Y correspondingto a given standard
of living. For presentpurposes,the standardof livingdefinedby the meanvalueof xc (XC= 44 *7)
is taken as the basis of comparison,and the values of Y, correspondingto this standard,can be
determinedfor eachsize of family. Henceit was possibleto calculatevaluesof 0, all corresponding
to the same standardof living, and these are shown in the last column of Table 4. The values of
0 for families with 3 children,which are shown in brackets, are very rough indeed, since the
familiesof this size were too few to be includedin the analysisof Part II.
We would not, of course,expectto find that the valuesof 0, at a given standardof living, were
identicalfor any one item. The values of 0 shown in the last column of Table 8 do, however,
show much greatersimilaritythan the values correspondingto a given total expenditure.
It would be risky to draw any conclusions from the small differencesbetween these values
of 0. But, if we comparefamilies having 0, 1 or 2 children,we notice that in two of the main
groups-rent and clothing-the values of 0 show a consistent movementin one direction: in
both these cases the (algebraic)values of 0 become smaller as the size of family'increases. If
any inferencewere possible, this would suggest that rent and clothing, at the standardof living
referredto, becomemore necessaryas the size of familyincreases.
5. Income Elasticities of Demand

We have seen that, as income, or total expenditure,increases,the amountspent on a particular
commoditygenerallyincreases,the proportionalchange being sometimesgreaterand sometimes
less than the proportionalchange in total expenditure. The income elasticity of demand is
definedas the ratio of the proportionalchange in expenditureon a given commodityto the pro-
portional change in income. For present purposes, since income figuresare not available,we
shall identifyincome with total expenditure. WritingN for the income elasticityof demand,and
makinguse of formula(2), we define
E dY = dE 2b2Y) (5)
Er4 -Er E (b1 + * . * *
Since N is a function of Y, we may expect to obtain differentvalues at differentlevels of total

expenditure.
We notice, immediately,that there is a close connectionbetweenN and 0. For
d (Er\ 1 dEr Er
dky Y dY Y2
r(-1) (6)
Hence when N = 1, 0 = 0. When N > 1, 0 is positive; and when N < 1, 0 is negative.

The estimatedvalues of N correspondingto three differentlevels of total expenditure(those
used above) are given in Table 9. The values of N show somewhat similar characteristicsto
those of 0. As regardsthe five main groups,we find that the values of N for food, rent and fuel
and light are generallylower than unity, while those for clothing and sundriesare usuallygreater
than unity. We notice also that in the case of food, as well as in the case of clothing, thereis a
tendencyfor N to fall as income increases,while the sundriesgroup shows the opposite tendency.
(It must be rememberedthat the estimatesfor 3-childrenfamiliesare less reliablethan the others.)

370 NIcHOLSON-Variations in Working Class Family Expenditure [Part IV,
Turning to the smaller food groups, the income elasticity of demand is generally less than
unity for meat and dairy products and generally greater than unity for fruit and vegetables. The
income elasticity of demand for fruit and vegetables is particularly high in the case of families
with small incomes. For each of these food groups, as well as for the whole food group, the
value of N shows a tendency to fall as total expenditure increases; or, at a given level of total
expenditure, as the number of children declines. In other words, n becomes less in each of these
cases as the standard of living increases.
TABLE 9
Estimated Values of (Income Elasticity of Demand)*
Values
Numberof corresponding
childrenin Y = 600. Y ==872 Y = ,200 to
family xc = 44*7
Food . . . . . 0 . 69 . 59 . 4' . *64
1 . 98 . 69 . 30 . 59
2 . 89 . 66 . 34 . 48
3 . *92 . 81 *68 . (64)
Rent . . . . . 0 . 97 *76 . 51 . *85
1 . 21 . *48 . *83 . 58
2 . *98 . 58 . 00 . *26
3 . 50 . 95 . 136 . (145)
Fuel and light . . . . 0 . *48 . *48 . 42 . 49
1 . 52 *73 . .93 . .79
2 . 83 . 74 . *61 . *66
3 . 40 . 44 . 45 . (44)
Clothing. . . . 0 . 137 . 109 . 90 . 119
1 . 195 . 119 . 71 . 105
2 . 246 . 134 . 76 . 98
3 . *78 . 120 . 1-52 . (1-58)
Sundries. . . . . 0 . 165 . 171 . 176 . 169
1 . 1-50 . 168 . 1-79 . 172
2 . 87 . 171 . 210 . 2-00
3 . 196 . 146 . 124 . (1-20)
Meat, bacon andfish . . 0 . 64 . *53 *31 . . 58
1 . 1.01 . 72 36 . . 63
2 . 106 . *71 29 . . *47
3 . 130 . *78 20 . . ( O0)
Dairy products . . . 0 . 56 . 46 27 *51
1 . . 89 . 63 25 . *54
2 . . 80 . *63 38 . 49
3 . 85 . *92 .99 . (1-00)
Fruit and vegetables (excluding 0 . 1 46 . 1 22 . 1-07 . 1-30
potatoes) I . 181 . 110 . 59 . 95
2 . 208 . 115 . 53 . 78
3. . 267 . 165 . 1*27 . (1.20)
Tobaccoanddrink . . . 0 . 133 . 106 . 86 . 115
1 . 165 . 135 . 125 . 131
2 . 305 . 120 . 11 . 56
3 . 206 . 82 . -41 . (-93)
* The estimatesfor familieswith 3 children.being based on only 58 families,are subjectto wide margins
of error; this is particularlyso of the figurescorrespondingto a givenvalue of xc, shown in the last column,
which are thereforeplaced in brackets.
The values of n for tobacco and drink must be regarded as unreliable, since the figures given
for expenditure on these items cannot usually be trusted.t As might be expected, there is a
noticeable tendency, in this group as well, for the value of n to fall as the standard of living rises.
t A negativevalue of N for drinkand tobacco is obviously absurd.

1949] NiCHOLSON- Variations in Working Class Family Expenditure 371
When families of differentsize are compared,we should expect, for the reasons given in the
previoussection, to find greatersimilarityin the values of N if the comparisonis based on a given
standardof living, ratherthan on a given level of income (or total expenditure). At any given
standardof living we should not, however, expect the values of N to show the same degree of
similarityas the values of 0. In fact (6) may be rewrittenin the form:
y2
I r * * * * * . (7)
Er
Now suppose we assume that 0 is practicallyconstant at any given standardof living. Then
we should usually expect to find that, if 0 is negative,the values of -, correspondingto a given
standardof living, becomesmallerwith an increasein the size of family; and that, if 0 is positive,
the values of N correspondingto a given standardof living become larger as the size of family
increases.t The reasonfor this is that the proportionalchangein Y2, as the size of familyincreases
and the standard of living remains constant, would usually be greater than the proportional
changein E,. But the foregoingargumentwould not apply if the values of 0, correspondingto a
given standardof living, were to changewhen the size of family changes.
The values of n correspondingto the standardof living definedby x, = 44 *7 are given in the
last column of Table 9. When these values are compared,it can be seen that, for food and rent,
in becomes smaller when the size of family increases,as we should expect from the values of 0.
Similarly,in the case of sundries,0 beingpositive,the valuesof in at this standardof livingincrease
with the size of family. In the case of clothing,on the otherhand, 0 declinesas the size of family
increasesand n shows a similarmovement.
We have already noticed that, when the comparisonis based on a given total expenditure,
the values of n for food as a whole, as well as for the smallerfood groups, show a tendencyto
increasewith the size of family. But when the comparisonis based on a given standardof living,
the values of n for food, as well as for rent and clothing, show a generaltendencyto fall as the
size of family increases. For sundries,on the other hand, the values of n correspondingto a
given standardof living show a tendencyto increasewith the size of family.
We may conclude, therefore,that at a given standardof living familieswith severalchildren
have a higherincome elasticity of demandfor sundriesand lower income elasticitiesof demand
for food, rent and clothing than families with few or no children. In other words, at a given
standardof living, food, rent and clothing become more necessary,and sundriesbecome more
of a luxury,as the size of family increases.
Another method of comparisonwhich suggestsitself is to measurethe elasticitiesof demand
with respectto variationsin the standardof living (as opposed to variationsin income). Suppose
we denote by X the elasticity of demand with respect to variationsin xc, which is assumed to
representthe standardof living. Then
xc dEr Xc dEr dY
Er dX Er d Y dXc
x0 dY
Now let ,a = y dx, so that p may be termedthe elasticity of income with respect to changes
in the standardof living. Then
(8)
For a given standardof living, p.increasesas the size of family increases: the largerthe family,
the larger the proportionatechange'in income (or total expenditure)requiredto bring about a
given proportionatechangein the standardof living. It follows that, if the values of -j at a given
standardof living decline as the size of family increases,the correspondingreductionin X would
be less pronounced; and if the values of -j at a given standardof living increasewith the size of
family, the correspondingincrease in X would-be more pronounced. The values of X for the
five main groups of items, at the standardof living correspondingto xc = 44 7, are tabulated
below.
t Weassumethat-j is positive. In otherwords,we excludefromconsideration
the caseof "inferior"
goods.

372 NIcHOLSON-Variations in Working Class Family Expenditure [Part IV,
TABLE 10
Values of X Corresponding to xc = 44 7
Familieswith Familieswith Familieswith
n2ochiidren I child 2 children
Food . . . . . *47 . 47 .37
Rent . . . . . 62 . 46 *21
Fuel and light . . . . 36 . 62 . 52
Clothing . . . . . 87 . *83 *76
Sundries . . . . . 1 24 . 1-36 1.55
It can be seen that variations in X and ?j, as the size of family changes, have the expected
relations to one another (cf. Table 9). We still find, however, that in the cases of food, rent and
clothing the elasticity of demand with respect to the standard of living generally seems to decline
as the size of family increases; and for sundries it increases with the size of family. As the
standard of living increases from a given level, larger families show a greater proportionate
increase in expenditure on sundries, and a smaller proportionate increase in expenditure on food
and clothing, than smaller families.
6. Food, Rent and Income

Hitherto our attention has been focussed on the variations in total family expenditure and
the accompanying changes in expenditure on particular groups of items. We have been able
to compare the changes in expenditure on one group of items, such as food, with the simultaneous
movements in another group, such as rent, as income (or total expenditure) increases. We have
not, so far, considered the relation between variations in expenditure on food and variations in
rent at a given level of income. Yet this is a problem of some practical importance. The level
of rent may change from one day to the next, but it usually takes some time for a family's income
to change.
Suppose that two households have the same total expenditure, but that one of them is obliged
to pay a high rent while the other has a relatively low rent. How does the difference in rent
affect the relative amounts spent on food? We would naturally expect the household with a
low rent to spend more on food, simply because it has more money to spare. But does it, in
fact, spend on food as much as, or more than, we would for this reason expect?
To answer this question, we consider the correlation between the deviations of rent and food
expenditure, in individual families, from the values given by the regression equations, discussed
above (see Table 5). Since the computational work involved in this type of calculation is very
heavy, the comparison is confined to food and rent and to families with one child.* It would
also be interesting to compare other items of expenditure-food with drink and tobacco, for
example-at given levels of income; and to see whether different results were obtained for families
of different size. But with the resources and time at our disposal, it has not been possible to
make these additional calculations.
Let f denote the amount spent by an individual family on food and r the amount spent on
rent at a given level of total expenditure, denoted as before by Y.
Let 8f denote the difference between the individual family's expenditure on food and the figure
given by the regression equation of food on total expenditure. Similarly let 8, denote the
difference between the same family's expenditure on rent and the amount given by the regression
equation of rent on total expenditure, the regression equations being those shown in Table 5.
Let as and as denote the standard deviations of 8f and 8, respectively.
Let pf, p7 and p, denote the average proportions of a given total expenditure devoted to food,
rent and all other items respectively, so that:
Pf +Pr +Px 1.
Let rfr.y denote the correlation coefficient between 8f and 8; that is, the partial correlation
coefficient between food and rent with respect to variations in total expenditure. What is the
"expected" value of this correlation coefficient?
* Only those familieswhich were rentingtheir houses are includedin the calculation.

1949] NICHOLSON- Variations in Working Class Family Expenditure 373
A family which spendsless on rent than the amount given by the regressionequationof rent
on total expenditurecan be regardedas havinga "surplus"availablefor distributionamong other
items; and this "surplus"may be eitherpositive (negative8r) or negative(positive 8,). Suppose
that, on the average,this "surplus,"whether-positive or negative,is distributedin proportionto
the averageexpenditureon other items. On this assumption,the regressioncoefficientof 8f on
3r (assuminglinear correlation)would be given by:
5f Pf
rfr Y- =-
asr Pf +Px
With a similarassumptionabout the averagevariationsin rent which accompanygiven varia-
tions in food expenditure,the regressioncoefficientof 8r on 8f would be given by:
asr Pr
rfr Y =
Hence we should find, on the assumptionsmentioned,that:
rfr Y = Pf Pr
P7 Pf
Thus the "expected"correlation depends on the average proportions of total expenditure
devoted to the items in question; and these proportions,as we have seen, vary with the level of
total expenditure. The familieswere thereforearrangedin groups, accordingto total expendi-
ture, and separatecalculationswere made for each group,with the followingresults:
TABLE 11
Partial Correlation of Expenditure on Food and Rent, with Respect to

Variations in Total Expenditure, in Families with 1 Child
Totalexpenditure Numberof - Pf Pr__f
per week families 1-p7 1-Pf
Under 50s. . . 14 . -444 . - 114
50-60s. . 28 -382 -*276
60-70s. 35 -341 . -497
70-80s. 32 -333 - 166
80-90s. . 21 -312 -*241
Over 90s. 24 . -*248 . - 211
In most cases, the partial correlation between food and rent is numerically less than the
"expected"correlation. At a given level of total expenditure,the amount spent on food is
relativelyinelastic(food behavesas a necessity)with respectto variationsin rent; and vice versa.
This seems to be true, at least, of the groupof familiesconsidered. And whereasthe "expected"
correlationbetweenfood and rent declinesnumericallyas total expenditureincreases,the observed
correlationshows no such tendency.
These resultsinvite comparisonwith those previouslyobtained. We may wish to know, for
example, which has a greater effect on food expenditure-a change in rent, total expenditure
remainingconstant, or a comparablechange in income. In order to ensure comparability,the
changein total expenditureon all items other than rent must be the same in both cases.
The effect on food expenditureof a change in rent while total expenditureremainsconstant
is measuredby the regressioncoefficientof 8f on 8r, that is, by
rfr. y
Let F denote expenditureon food, as given by the regressionequation of food on total ex-
penditure. Similarlylet R denote expenditureon rent, as given by the regressionequation of
rent on total expenditure. ThusF and R are both functionsof Y. The effecton food expenditure

of a change in total expendituresufficientto allow a similar change in the amount spent on all
items other than rent is measuredby
dF dFF (1-dR\
d(Y-R) dY dY )
Values of this expression,at differentlevels of total expenditure,can easily be derivedfrom the
regressioncoefficientslisted in Table 5.
The resultsof this comparisonare shown in columns (2) and (3) of Table 12. The figuresin
columns (4) and (5) of the same table show the effects on rent of a change in food expenditure,
total expenditureremainingconstant, and of a comparablechange in total expenditure; the
former being measured by rfr.y ' and the latter by d(Y-F)
The values of rfrr f and of rfy r ' relate to families falling within the specifiedranges of
total expenditure; the values of d(Y R) and of d(YR F) relate to the mid-points of each range,
except for the two outside groups, where they relate to a total weekly expenditureof 40s.
and 100s. respectively. The Table relates, as before, to families with one child which were
rentingtheirhouses.
TABLE 12
Associated Variations in Expenditure on Food, Rent and Total Expenditure
among Families with 1 Child
(1) (2) (3) (4) (5)
Totalexpenditure -r df dF r C5r dR
per week rfr. Y , d(Y-R) fr.Y f d(Y-F)
Under 50s. . . . . 073 . 494 . 179 . *044
50-60s. . . . . *248 . *405 . 308 *068
60-70s. . . . . . *768 . 344 . 321 . *081
70-80s. . . . . 199 . 281 139 . *091
80-90s. . . . *245 . 216 . *237 100
Over 90s. . . . 216 . 116 207 *111
It appearsthat for most of the familiesa changein income, or total expenditure,has a greater
effect on the amount spent on food than a change in rent while income remainsconstant; but
that, as income increases,the effect of a changein income declines,and eventuallybecomesless
than the effect of a changein rent. We have, indeed, alreadynoticed that the income elasticity
of demandfor food declinesas income increases(see Table 9).
On the other hand, it .appearsthat the amount spent on rent is more likely to be influenced
by a changein the amountspenton food, incomeremainingconstant,thanby a changein income,*
a conclusionwhich it is not easy to explain. The numberof familiesincludedin this calculation
is in any case too small to enable us to attach much importanceto these results.
7. Households in London
The sampleon whichthe presentstudyis basedincluded124householdsin the GreaterLondon
area. When subdividedby the size of family and the level of total expenditure,the numberwas
found to be too small to justify the full analysis which has been made of the householdsin the
rest of Great Britain. Nevertheless,by comparingthe figures for London with those for the
rest of the country, it is possible to draw a few 'tentativeconclusions. We shall confine our
attentionto familieswith no children(numbering46) and familieswith one child (numbering44).
When the figuresof expenditure,shown by the Londonhouseholds,were plotted on diagrams,
the points for each size of family did not lie on any clearlydefinedlines. We would not, in this
* The apparentincreasein the effect of a change in income, as we move up the scale, should be dis-
regarded,in view of the low correlationbetweenincome and rent (cf. Diagram 3).

1949] NICHOLSON-Variationis
in Working Class Family Expenditure 375
case, have beenjustifiedin assuminga curvilinearrelationshipbetweenErand Y,and we assumed,

instead,a linear relationshipof the form (1). Nor did it seem worthwhile computingregression
coefficientsby the method of least squares. It was decided, therefore,to draw freehandlines
of the form:
Er = aO + a,Y
for each of the five main groups of expenditure. It needs to be emphasizedthat the regression
coefficientsand the derivedfunctions,for the Londonhouseholds,are subjectto verywide margins
of error.
Table 13 shows the percentagesof total expenditure,derivedfrom the regressionlines, and
the values of 0 and n correspondingto a total expenditureof 72s. 8d. These figures may be
comparedwith those relatingto householdsin the rest of Great Britainat the same level of total
expenditure.
TABLE 13
Percenitages of Total Expenditure and Values of 0 and n Corresponding to a Total
Expenditure of 72s. 8d. Households in Greater London Area
Number Percentage
of f tota 0 x 103
children expenditure
Food . . . . . 0 338 - 07 .79
1 36.8 -03 . *92
Rent . . . 0 . 19 7 -06 . 74
1 19.7 - 15 . 35
Fuelandlight .. . 0 83 + 02 . 1-18
1 . 79 -*08 *14
Clothing . . . 0 777 . - 00 . 96
1 669 +
t04 . 147
Sundries . . 0 305 +23 1 64
I 28-7 + 22 . 168
As is to be expected,the percentageexpenditureon rent is a good deal higherin London than
in the rest of Great Britain. The proportionateexpenditureon each of the other groups is less
in London, except for fuel and light, wherethe proportionsare about the same.
We find, as before, that food, rent and fuel and light are all "necessary"items, while the
sundriesgroup is a "luxury"; but food seems to be less necessaryin London than elsewhere,
despite the fact that a given income representsa lower standardof living in London. Clothing
appearsto be on the border-linebetweenthese two categories; and it is amusingto notice that
clothing seems to be more necessaryin London than elsewhere.
The income elasticity of demand for food is higher in London, but otherwisethe values of
m do not show any marked differences,when comparedwith households in the rest of Great
Britain.
PART II.-EXPENDITURE ON CHILDREN IN WORKING-CLASS FAMILIES
"I wish you wouldn't squeeze so," said the

Dormouse,who was sittinonext to her. "I can
hardlybreathe."
"I can't help it," said Alice very meekly:
"I'm growing."
"You've no right to grow here," said the
Dormouse.
-Alice's Adventuresin Wonderland.
1. Introduction
1.1. Little attention has hitherto been given to the problem of distinguishing,for families
with children,expenditureon the children from expenditureon the rest of the family. Some
items, of course, are consumedjointly by adults and children(e.g. most meals),and in such cases
VOL. CXII. PART IV. 26

376 NICHOLSON- Variations in Working Class Family Expenditure [Part IV,
it would clearly be very difficult,if not impossible, to find out exactly how much is consumed
by each person. But a family budgetenquiryin which householderswere carefullyinstructedto
keep separateaccounts (so far as possible) for adults and children,and to give full details of all
meals consumedby each memberof the family, should enable a reasonablygood estimate to be
made of expenditurewhich is due to the children. Until such a special enquiryis organized,it
will not be possible to obtain any really accurateinformationon this problem.
1. 2. But in the absenceof any directinformation,it seems worth while examiningthe possi-
bility of obtaining,by indirectmethods,at least a roughidea of the total amountspent on children
in working-classfamilies. An attempt to arrive at an estimateis made in the following pages.
The method, of which a fuller descriptionis given below, is based on regressionanalysis,and
makesuse of the relationshipswhichhave been found to obtain,amongfamilieswhichare broadly
similarin type, betweenexpenditureon separateitems and total household expenditure.
2. The Methods Employed
2.1. Let us assume that we have figures of household expenditurefor families which are
broadlysimilarin type, but which have differentnumbersof children. Clearlythe amount spent
on any particularpurpose,e.g. on children,will be closely relatedto the standardof living which
the family enjoys. A family with a large income will, generallyspeaking, spend more on its
childrenthan a family of the same size which has only a small income. Consequently,if a com-
parison is to be made between families of differentsize with a view to estimatingthe amount
spent on children,we must ensure that the families have approximatelythe same standardof
living. The problem reduces itself, therefore,to that of finding some method of determining
when the standardof living of differentsized familiescan be regardedas equivalent.
To put the problemin a slightlydifferentway: supposethat two families,the first consisting
of husbandand wife, the second consisting of husband,wife and one child, being otherwiseof
similar type, are known to enjoy approximatelythe same standardsof living. The difference
between their total household expenditureprovides an estimate, for that particularstandardof
living, of the amountspent on the child by the secondfamily.
2.2. With the availabledata, it is very difficultto find any means by which the standardof
living of a given family can be clearly and unambiguouslydefined. An approximatesolution
to this problemmay, however,be sought along the following lines.*
Severalstudies of household budgets have shown that, for a group of families with similar
needsand similarscalesof preference,thereis usuallya regularrelationshipbetween(i) the amount
spent on a particularitem, and (ii) the level of income, or of total family expenditure.t We
considera group of such familiesin which the numberof adultsis the same and their needs are
assumedto be similar,but the numberof childrenvaries. Let us assumethat each familyconsists
of husbandand wife plus 0, 1, 2 or more children. From the list of items for which separate
figuresof expenditureare given, we try to select all those which do not appearto depend, in any
way, on the numberof childrenin the family,and which may be assumed,therefore,to be entirely
for the use of the husbandand wife. The expenditure,which may be denoted by X, on this set
of items is taken as definingthe standardof living. The total amount spent on all items com-
bined is denotedby Y, and the subscripts0, 1, 2 . . . are used to indicatethe numberof children
in the family. It was found that, for families having the same number of children, Y could
generallybe representedby a parabolicfunctionof X, so that equationscould be obtainedof the
form:
YO= a0 + b0X + coX2 . . . . . . (1)
Y, = a, + b1X + c,X2 . . . . . . (2)

Y2= a2+ b2X + C2X2 . . . . . . (3)
Equation(2) shows, for families with one child, the relationshipbetweentotal expenditure(Y1)
and expenditureon those items (X) which are takento definethe standardof living. Equation(1)
* The basic idea in this method was first suggested by E. Rothbarth in his "Note on a Method of
DeterminingEquivalent Income for Families of Different Composition," published as Appendix IV to
WartimePatternof Savingand Spending,by Charles Madge, O.U.P., 1943.
t Cf. Part I of the presentwork.

shows the corresponding relationship for families having no children. From the data which
were available (see Appendix III), it was possible to obtain such equations for families consisting
of husband, wife and 0, 1 or 2 children, but not for larger families.
Using y to denote the amount spent on the first child we have:
y1 = Y- Yo= aI-ao + (b--bo) X + (cl-co) x2 . . (4)
Using y2 to denote the amount spent on the second child, we have:
Y2 = Y2- Y1= a2-a, + (b2-b1) X + (C2-c CX2 X * (5)
These equations show the functional connection between expenditure on the first or second child
and expenditure on those items which depend on the standard of living. It was possible to obtain
these relationships only for the first and second children.
2.3. Prhaps the main weakness in this method is the underlying assumption that the tastes
and needs of adult members of a household do not vary as the number of children increases.
The mother and father of two children, spending the same on themselves as a childless couple,
may prefer to distribute this expenditure in a different way, while still enjoying approximately
the same standard of living. But without a much more thorough knowledge of family spending
habits than we have at present, it is impossible to make any allowance for differences of this kind.
2.4. So far we have given only a brief description, in very broad terms, of the general method
of attack. In practice, a number of further problems arose which must now be discussed.
The most difficult problem was that of selecting the list of items (X) which might be assutned
to be purchased entirely for the benefit of the adult members of the household, and which could
be used to define the standard of living. The procedure adopted was as follows: a large number
of different selections were made and, for each selection, the corresponding values of X and Y,
families being distinguished according to the number of children, were plotted on a graph. A
set of freehand lines were then drawn, showing the approximate relationships between X and Y,
for families of different size. From these lines, it was possible to ascertain roughly the form of
the connection between YOand X, Y1 and X, etc.; and hence between Y1, or Y2, and X.
Many of the items which were shown separately in the family budgets could reasonably be
assumed to have been purchased entirely (or almost entirely) for the use of the husband and wife.
It was found, however, that all the larger selections of items gave quite unplausibly low figures
for y1 and Y2. There are, in fact, reasons for believing, as explained in section 2.5 below, that
if X contains any items which are consumed partly by the children, the resulting estimates of the
amounts spent on children are likely to be too small. The conclusion reached, after a large
number of graphs were drawn, was that, in order to avoid obtaining quite unreasonable answers,
the items to be included in X would have to be selected from among the following: adults'
clothing; tobacco and cigarettes; drink; "other expenditure" (i.e. expenditure not included
under separate headings, of which there were about 90). The results obtained by using different
selections from this list are illustrated in the Diagrams shown below.
2.5. While it was possible to reject some of the selections on the grounds that the conclusions
obtained were quite unreasonable, it was clearly desirable to find an objective method of testing
and comparing the validity of the different results. The data made it possible, fortunately, to
introduce a rough check on most of the results.
From the family budgets separate figures were given, under the heading of clothing, for
weekly expenditure on the following items:
I. Men's clothing. IV. Repairs to clothing.
II. Women's clothing. V. Boots and shoes.
III. Children's clothing. VI. Boot and shoe repairs.
These figures (see Appendix III below) were based on average purchases over a period of 12
months.
Suppose we denote by K0, K, and K2 the sum of expenditure on items I, II and III, for families
with 0, 1 and 2 children respectively. For any given set of items included in X, we obtain the

378 NICHoLsoN-Variations in Working Class Family Expenditure [Part IV,
correspondingvalues of X and K0, X and K1, etc., which can be plotted on a graph. We can
then estimateregressionlines of the form:
Ko = lo + moX+nX2 . . . . . (6)
K1 = 11 + mlX + n1X2 . . . . . (7)
K2 = 12 + m2X + n2X2 . . . . . (8)
Writingko and k1 for the estimatedexpenditureon clothing for the first and second child respec-
tively, we have:
ki = K1 - Ko 11-lo + (mi -mo) X + (n1 -no)X2. (9) . .
k2=K2-K1 = 12-11 + (M2-ml) X + (n2-n,) X2 . . * (10)
These equationsenable us to estimatek, and k2 for differentvalues of X. The actual figuresof

expenditureon clothingfor the firstand second child can be obtainedas the differences(for given
values of X) betweenthe total amounts spent on children'sclothing in families having 0, 1 or 2
children. By comparingestimatesand actual figures,we can form some conclusion about the
validityof our assumptions.
This test is applicableso long as X includesexpenditureon a numberof items. But if, for
example,X consists only, or to a large extent, of expenditureon adults'clothing,the test becomes
tautologousand cannot be applied. Where it seemed appropriate,the test was appliedand the
results are shown below. Precise agreementcould not, of course, be expected, because, apart
from difficultiesinherentin the method, the figuresof expenditureon children'sclothing are so
small that even minor errorsmight easily producerelativelylarge discrepancies. In all cases the
estimatedexpenditureon children'sclothingwas smallerthan the true figures; and we must-now
examinewhy this should be so.
2.6. Suppose that, in making the selection of commodities which are taken to define the
standardof living (X), some items are includedwhich should not have been included; which,
in fact, are purchasedon behalf of the children. This will not affect the relationbetweenX and
Y0, which refers to families with no children.* But, as regardsthe relation between Y1 (total
expenditurein familieswith one child) and X, the effect will be that for a given value of Y1,the
value of X will be higherthan it should be; and, consequently,for a given value of X the value
of Y1 will be lower than it should be (since it is assumedthat, for a given size of family, X and
Y increasetogether,whiehis generallythe case). The same, of course,will be true of the relation
between Y2(total expenditurein families with two children)and X; and, with two childrenfor
whom the goods may be purchased,the erroris likely to be greater.
It follows that, for a givenvalueof X, the valueof y 1(= Y1 - Y0), and also of Y2(= Y2 -y),
are likely to be too small, if X includesany items which are purchased,in whole or in part, on
behalf of the children.
This would explain why the differentselections of items to be includedin X give results, in
termsof Yi and Y2, which,judged by the test describedin 2.4, are always too low.
2.7. Thereis anotherdifficultywhichis closelylinked with the problemwe havejust discussed.
It might be thoughtthat we 'couldavoid the possibilityof includingin X items which are actually
purchasedfor the childrenby consideringonly a very small group of items (or even one item
alone) which are definitelyknown to be purchasedentirelyon behalfof adults. But the difficulty
here is twofold. On the one hand, as we reducethe numberof items, the figuresof-expenditure
become smaller, so that irregularitiesbecome more prominentand we can no longer expect to
find a simple relationbetweenX and Y. On the other hand, if tobacco and beer, which can be
assumedto be purchasedentirelyfor adults,t form a large proportionof the items includedin
X, we are unableagain to expecta regularrelationshipbetweenX and Y, since figuresof expendi-
ture on beer and tobacco, given in family budgets,are notoriouslyunreliable. And there is, in
* Except in so far as purchasesmay be made for childrenin other families.
t Childrenare definedas persons unider14 (see Appendix IJI).

19491 NICHOLSON-Variationsin Working Class Family Expenditure 379
fact, substantial evidence that expenditure on these items was seriously understated in the Ministry
of Labour family budgets.*
For these reasons, the regression equations are bound to become less reliable as the number
of items included in X is reduced.
2.8. A further problem which arose in the practical application of the method was connected
with the form of equations (4) and (5), describing respectively the relations between Yi and X,
and Y2 and X. These two equations are derived from equations (1), (2) and (3), as explained in
2.2 above. Now, if equations (1), (2) and (3) are obtained by the ordinary method of fitting
regression lines, there is no guarantee that equations (4) and (5) will be such that y1 and Y2 increase
as X increases (dy and IY2 positive) for the whole range covered by the data. In fact,
when equations (1), (2) and (3) were obtained in the ordinary way, it was frequently found that
equations (4) and (5) showed negative values of dy and dY over a substantial part of the range.
Such results are not acceptable, and can only be explained by weaknesses in the method, or the
data, since we should expect the (absolute) amount spent on children to increase as the standard
of living increases.
2.9. It seemed possible that such anomalous results might be avoided if we assumed that
y1 (or Y2) and X were connected by a linear function, instead of a parabolic function, as in (4)
or (5). This would be the case if the coefficient of X2 were the same in equations (1), (2) and (3).
Alternative results were therefore obtained, based on equations of the form:
Yo = Xo + OX + yX2 . . . . . . (11)
Yl = xlJ + PJX + yX2 . . . . . .(12)

Y2 = (2 + 2X + yX2 . . . . . . (13)
The seven parameters in these equations were obtained by a simple modification of the usual
procedure of fitting regression lines, as explained in Appendix III.
From equations (11), (12) and (13) we obtain the following expressions for y1 and Y2:
Yi i
= Y1-Yo-xl-oi + (Pi PO)X . . . . (14)
Y2= Y2- yl =C2 O2- + (P2-1)X .X . *(15)
These give y1 and Y2 as linear functions of X and, in accordance with the argument of 2.8, we
should expect both ( 1 - P) and (P2 - 1) to be positive.
IP
Equations of the type (1), (2) and (3) will be referred to as "individual" regression lines, while
equations of the type (11), (12) and (13) will be referred to as "combined" regression lines. The
latter type can, of course, also be used when applying the test described in 2. 5.
2.10. A further point requires to be mentioned here. The data to which the regression lines
were fitted consist of mean values of X for given values of Y. But, in fitting the equations, the
sums of squares of deviations were always minimized in the direction of Y, so that there is here
a certain methodological inconsistency.t Since the figures of total expenditure (Y) shown in
the family budgets are more meaningful, as well as more reliable, than the figures relating to a
small group of items (X), strictly speaking the regression equations should have been obtained by
minimizing the sums of squares of deviations in X. The reasons for preferring the former pro-
cedure were that it enabled expressions for y 1 and Y2 to be more easily derived; atid, in addition,
the procedure could be modified, as described in 2.9, without discarding the parabolic form of
equation between Y and X. In practice, the point is hardly likely to be important, especially
if there is a high correlation between Y and the mean values of X.
* As may be seen by comparisonwith figuresof national expenditure.
t It would, of course, have been quite wrong to use the mean values of Y for given values of X in the
regressionanalysis; for expenditureon a small group of items is much more liable to be affectedby random
influences-it is likely, for instance, to fluctuatemore from one week to another-than total expenditure.
Variationsin Y, therefore,have more meaningthan variationsin X.

380 NICHOLSON-Varications
in Working Class Family Expeniditure [Part IV,
2. 11. The method described above enables us to obtain equations in which y1 or Y, (expenditure
on the first or second child) is expressed as a function of X, which is taken to define the standard
of living. From these equations we can estimate, for a particular value of X, the corresponding
value of Yi and Y2. But, since the method employed is essentially experimental and since the
results of applying the test described in 2.5 were usually not very satisfactory, we cannot expect
to reach a precise solution to our original problem. Probably the most that we can hope to
obtain are very approximate estimates of the amounts spent on children corresponding, say, to
the average standard of living of the families concerned. The procedure which is used to obtain
equations such as (14) and (15) should merely be regarded, therefore, as a device for utilizing all
the available information in order to obtain single estimates of Yi and Y'2, corresponding to the
mean value of X. Any attempt to go further than this, and to consider the variations in expendi-
ture as X changes, must rest on very uncertain foundations.
2.12. So far, we have only discussed the problem of estimating the total amount spent on
children, without considering how this total is made up. Exactly the same method of analysis
can, of course, be applied, in order to obtain estimates relating to expenditure on particular
groups of items. It should be remembered, however, that if the total expenditure devoted to
children, under any heading, is small, the results obtained by this method are not likely to be at
all reliable.
Another method of determining the composition of the total expenditure on each child, once
this is estimated, would be to make use of the results obtained in Part I. Regression lines were
obtained, showing, for each size of family, the relation between expenditure on particular items
and total household expenditure, of the form:
to = fo (Yo), t1 =1f(Y1), etc.,
where to denotes the amount spent on a particular item in families with no children, t, the amount
spent on the same item in families with one child, and so on. If these equations are combined
with equations (11), (12) and (13), we can obtain to, t1, . . . as functions of X and hence obtain
the values of to, t1, . . . corresponding to given values of X. The differences, tI - to, and
t2- tl, would then provide estimates of the amounts spent, on behalf of the first and second
children respectively, on the particular item.
2.13. We have already given several reasons which would explain why the results, which are
summarized in the next section, are not very conclusive; but there are other complicating factors,
in addition to those already mentioned.
The data which were used consist of average weekly figures of expenditure in groups of families,
containing two adults (man and woman) plus 0, 1 or 2 children. We have assumed that each of
these groups of families has roughly similar needs, although within each size group there may,
in fact, be considerable variations in needs. Such variations may be due to differences in the
sex and age of the children, to differences in geographical location, or simply to differences in
habits and tastes.
In addition, there may be families which are accustomed to supplying some of their own
requirements. Families with allotments, for example, are able to produce some of their own
food. Clothing is occasionally made up at home, so that only the materials have to be purchased,
while larger families can often economize by allowing clothes to be passed on from one member
to another. It did not seem possible to. make any allowance for factors of this kind, which may,
however, partly account for some of the peculiarities revealed in the results.
Finally, there are fluctuations which are ordinarily associated with the process of sampling.
But, in view of the numerous other difficulties, any attempt to estimate sampling errors would,
I think, be out of place.
3. The Results Obtained

Estimates of Total Expenditure on Children
3.1. As explained in Section 2, the results were found to depend very largely on the choice of
items which were assumed to define the standard of living. More than a dozen different selections
were made, and the corresponding graphs were drawn to illustrate the relations between Y (total
expenditure) and X (expenditure on the particular set of items). Some of these were discarded,

1949] NICHOLSON- Variations in Working Class FanmilyExpeniditure 381
since they gave quite unreasonable results. Diagrams 11, 12 and 13 show the relations obtained,
when X includes the following different selections of items:
xa= weekly expenditure on men's and women's clothes, tobacco (including cigarettes),
drink, and sundries (items not separately specified);
Xb= weekly expenditure on men's and women's clothes and tobacco;
XC= weekly expenditure on men's and women's clothes.
Throughout this survey, unless otherwise stated, the variables are all expressed in terms of weekly
expenditure, in pence, and all the figures relate to households in Great Britain, excluding London.
3.2. Results obtained with the use of x,.-Diagram 11 illustrates the relations between Y and
Xa for the three sets of families, comprising 2 adults and 0, 1 or 2 children. The following equa-
tions are obtained for the "individual" regression lines (see 2.2) between Y and x,(:
Yo = 201 8 + 6 5426Xa - 0070925X2 . . . . (i)
Y, = 232 2 + 7-4438Xa - 0096226Xa2 * * * (ii)

Y2 = 316-6 + 6-6271Xa - 0060407Xa2 . . . . (iii)
Hence we obtain the following equations for y1 and Y2:
Yi = 30 4 + *9012xa - *0025301Xa2 . . . (iv)
Y2= 84-4 - *8167xa + 0035819X . . (v)
The values of y1 and Y2 corresponding to the mean value of xa in the families considered (xa
115 3) are:
Yi = 100 7, Y2 = 37 9.
The "combined" regression lines (see 2.9) obtained from the same data are as follows:
Yo = 192-4 + 6 6844Xa - 0074934x(L2 . . . . (vi)

Yi = 268-0 + 6 8260Xa - 0074934xa2 . . . (vii)
Y, 294-3 + 7 0352x(a . . . . (viii)
from which:
y1 75 6 + *1416xa . . . (ix)
Y2 = 26X3 + 2092x, . . . . . . . (x)
and the values of Y1 and Y2 when Xa a = 115 3 are:

Y =919, Y2=50 4.
Equations (vi), (vii) and (viii) are shown in Diagram 11. Equations (iv) and (v) are not
entirely acceptable, since in each case they show y falling, as xa increases, over a part of the range.
The "individual" and "combined" regression lines both lead, however, to similar estimates
at the mean value of Xa about 8 shillings for the first child and about 4 shillings for the second
child.
3.3. These results can now be tested by the method of 2.5. Let Ko, K1, K2 (as before) denote
expenditure on adults' and children's clothing (excluding repairs and footwear) in families having
0, 1 and 2 children respectively. The equations obtained for the "individual" regression lines
are:
Ko 1*1 + *5288xa - 0006845xa2 . . (xi)
K1= - 15 3 + 9437xa - 0021616Xa2 * (xii)

K2= - 10 8 + 9068xa - 0019378x,2 . . . . (xiii)

382 NICHOLSON-Variationsin Working Class Family Expenditure [PartIV,
Hence we obtain the followingequationsfor expenditureon children'sclothes (excludingrepairs

and footwear):
ki = - 16*4 + *4149xa - *0014770Xa2 . (xiv)
k2 -4 5- 0369xa + 0002238Xa2 . . . . . (xv)
For the "combined"regressionlines we obtain:

K0 = - 98 + *6942xa - 0011519< . . . . (xvi)
K1= 1-7 + *6507Xa- 0011519Xa2 . . . . (xvii)
K2= 1 2 + 6861xa - 0011519Xa2 . . . (xviii)
from which:
k, = 11*5 - 0435xa . . . . . . . (xix)
k2 =- -05 + 0354xa . . . . . . . (xx)
The valuesgiven by these two sets of equationsare comparedwith the actualvalues of expenditure
on children'sclothing in Diagram 14. The comparisonis made first for k1, then for k1 + k2,
since the figuresrelatingto k2 are very small.
The data for each size of family were availablefor various ranges of total expenditure. In
order to obtain the actual figuresof expenditureon children'sclothing, it was necessaryto find
the differencesbetween the amounts shown, in the same ranges of income, for differentsized
families; these differencesthen had to be adjustedso as to correspondto the same values of
xa (since, for a given level of total expenditure,the value of xa varieswith the size of the family).
It can be seen from Diagram 14 that the values of k1 and k2 given by the equationsare too
small. It follows that the valuesof y 1and Y2given by equations(iv), (v) and (ix), (x) are probably
also too small.
3.4. Results obtained with the use of xb.-The relations between Y and Xb (expenditureon
adults' clothing and tobacco) for the three sizes of family are shown in Diagram 12. There
appearsto be less correlationthan in the case of xa, and for this reasonit was not worthestimating
the "individual"regressionlines. The equations obtained for the "combined"regressionlines
are as follows:
YO= 216 1 + 54200Xb + 028465lxb 2 . . (xxi)
Y = 279-9 + 6 2349Xb + 028465lXb 2 . . (xxii)
Y2 231 4 +'8-3536Xb + *028465Xb 2

. . (xxiii)
from which:
Yi = 63*8 + *8149Xb . . . . . . (xxiv)
Y2 =- 48*5 + 2*1187Xb . . . . (xxv)
The coefficientof Xb is much greaterin equation (xxv) than in equation (xxiv), but neitherfigure
is reliable(cf. the remarksin 2. 11).
Correspondingto the mean value of xb (&Tb= 75 5) we have
3, Y2 =111 5.
Y =125
These resultsare more plausiblethan those obtainedfrom the use of xa (see 3.2).
3.5. As the values of Xb are dominatedby expenditureon adult's clothing, in this case no
definiteconclusionscan be expectedfrom applyingthe test of 2.5.
A diagramwas drawnshowing the relationsbetweenK and Xb for the three sets of families.
It was not worth estimatingregressionequations, but freehandlines were drawn through the
variouspoints, describingthe relationsbetweenKo and Xb, K1 and xb, and K2 and Xb.
From these freehandlines we were able to obtain the approximaterelationsbetweenki and
Xb, and betweenk2 and Xb, which are shown by the lines in Diagram 15. When these estimates
are comparedwith the actual values of k, and k2, which are representedby the dots in the same
Diagram,it is found, as indeedwe shouldexpect(see 2.5), that they agreemore closely than those

obtained with the use of xa, (compareDiagrams 14 and 15). The estimates are still too low,
however,and it appearsthat they should be raisedby roughly25 per cent. With this correction
the values of y1 and Y2, correspondingto the mean value of Xb, would appearto be about 13s.
and lis. 6d. respectively.
3.6. Resultsobtainedwiththe use of xc.-The resultsso far obtained,as well as those derived
from other selectionsof items (not shown here), indicate that the estimatescan be improvedby
reducingthe numberof items which are includedin X. As a final example,we shall considerthe
results obtainedwhen X includesonly adult's clothing, expenditureon which is denoted by x,.
Diagram13 showsthe relationsbetweenY and xc for the threesizes of family. The correlation
is evidently much smaller than in either of the previous cases studied. This is to be expected,
since the amount which is common to both Y and X becomes smalleras X is reduced. Further,
the relations between the three sets of values do not indicate a regular connection between
y, (= Y1 - Yo), or Y2 (_ Y2- Yj), and x,. It is clear, therefore, that any estimates based on
the presentdata must be very approximate.
The equationsobtainedin this case, using the method of "combined"regressionlines, are as
follows:
YO= 293 2 + 8 2864x0 + *0466506x 2 . . . . (xxvi)
Y, = 294 3 + 12 8158x0+ *0466506x,2 . . . (xxvii)
Y2 = 328 7 + 14 4217x, + 0466506x2 . . . (xxviii)
Diagram 13 shows that, especiallyin the higherranges of expenditure,these regressionlines do

not give a veryclose fit. The resultingequationsfor y 1 and Y2 are:
Yi = 1 1 +4 5294x, . . . . . . . (xxix)
Y2 = 34-4 + 1 6059x, . . . . . . . (xxx)
Correspondingto the mean value of xc (x 4-

447), the values of y1 and Y2 given by the last
equationsare:
Yi = 203-6, Y2 = 106-2
or approximately17 shillings* and 9 shillingsrespectively.
For reasonswhich have alreadybeen mentioned,these resultscannot be tested by the method
of 2.5. Comparingthe final estimateswith those based on Xb, after the latter are correctedfor
bias (cf. 3 .5), it is seenthat the individualestimatesfor y 1andY2 do not agreeveryclosely,although
the two estimates for the sum of Y1 + Y2 are very similar. It should be rememberedthat y1
and X. are not independent; an errorin yi is likely to producean error,in the oppositedirection,
in Y2, so that the estimatedexpenditureon the two childrencombinedis more reliablethan the
separateestimatesfor each child.
3.7. As the points in Diagram 13 appearedto lie on S-shapedcurves,equationsof the third
degreein x, were also fitted, keeping the coefficientsof both x,2 and x,3 the same for the three
sizes of family. But since the correspondencewith the observationswas only slightlyimproved,
these equationsare not given here.
It will also be noticed that, in most of the Diagrams,the point correspondingto the highest
rangeof expenditurefalls ratherfar away from the regressionlines. It may be that, at this level,
the distributionof expenditureno longerconformsto the patternrevealedby familieswith smaller
incomes and, accordingly,another complete set of calculationswere made omitting the highest
range of expenditurein each case. Since the results obtained were very similar, on the whole,
to those given above, they are not worth quotingin detail.
3.8. Summary.-It has alreadybeen emphasizedthat, with the data at our disposal, it is not
possible to obtain results having any sort of precision. The most that can be claimed for the
foregoinganalysisis that it gives a rough idea of the probableorders of magnitudeinvolved.
* An approximate estimateof theamountspenton the firstchildbyfamiliesin Londongivesan almost
identicalfigure. To obtainthe samestandardof living,the totalexpenditure requiredin Londonappears
to havebeenabout10 percent.higherthanin the restof the countrv.

384 NICHOLSON- Variationisin Working Class Family Expeniditure [PartIV,
At the average standard of living of the families considered, the amount spent on the first
child appears to be of the order of 16 shillings a week, and the amount spent on the second child
of the order of 10 shillings a week. But the ratio between these two figures is very uncertain.
The corresponding figure of total expenditure is about 89 shillings a week in families with
2 children. It appears, therefore, that in families with 2 children, the average expenditure on a
child is about 40 per cent. of the average expenditure on an adult.
3.9. The meaning of these results requires, perhaps, a further word of explanation. We
have attempted to estimate, for a given standard of living, the differences between the average
weekly expenditure-
(a) of families having no children and families having 1 child (Yi);
(b) of families having 1 child and families having 2 children (y2).
To avoid prolixity, these have been termed estimates of the amounts spent on the first and
second child respectively. But it should be realized that Y2 does not refer to a particular child,
and that no allowance has been made for differences in age* or sex. In fact, the average age
of a single child is probably somewhcre between the average age of the elder of two children
and the average age of the younger child. This should be borne in mind whenever reference
is made to expenditure on the "second" child. The estimates naturally take account also of any
economies which may result from extra numbers (cf. 2.13).
Estimated Expenditure on Children's Food and Clothing

3. 10. Estimates of the amounts spent, on behalf of children, on particular groups of items
are bound to be even less reliable than estimates of total expenditure. Bearing in mind that the
conclusions are likely to be rather uncertain, it was thought that it might, nevertheless, be of
some interest to obtain estimates for a few of the main groups of items, particularly food and
clothing. One reason for doing this is that, if we know the proportions spent on the main items,
the previous estimates, which are expressed in terms of pre-war prices, can then be converted into
terms of current prices.
3. 11. Two methods are available. In the first method, to be termed Method A, exactly the
same procedure that was applied to total household expenditure is applied to expenditure on
particular items. In the second method, which will be termed Method B, we first estimate from
equations (xxvi), (xxvii) and (xxviii) values of Y0, Y1 and Y2corresponding to the mean value of
x,. These values of Y0, Y1 and Y2 are then substituted in the regression equations connecting
expenditure on particular items with total expenditure, which were obtained in Part I. In this
way we can estimate the amount spent on a particular item, corresponding to a given standard
of living (defined by xc), for each size of family. The differences provide estimates of the amounts
spent on the first or second child. The accuracy of the results will vary for different items,
depending on how well the regression lines fit the observations.
These two methods are not independent, since they are both based, one directly and the other
indirectly, on the use of x,.
3.12. Method A.-Let Fo, F1 and F2 denote the total expenditure on food in families having
0, 1 and 2 children respectively.
Let fi and f2 denote expenditure on food which is attributed to the first and second children
respectively.
Let AO, A1 and A2 denote total expenditure on clothing and footwear (including repairs) in
families with 0, 1 and 2 children respectively.
Let al and a2 denote expenditure on clothing and footwear (including repairs) which is attri-
buted to the first and second children respectively.
For the estimates relating to food and clothing, we shall give the results obtained by the method
of "combined" regression lines, based on equations of the type (11), (12) and (13), using first xb
and then x,.
* An attemptwas made to ascertainto what extent expenditureon childrenvaried with the age of the
child. But when the familieswere subdividedaccordingto the age of the children,the numbersin each
"cell" were too small to be of any use.

1949] NiCHOLSON- Valiationis in Working Class Family Expenditure 385
3.13. Results obtained with the use of Xb.

For food expenditure we obtain the following equations:
F0= 85 1 + 3 5643Xb- 0090627Xb2 (xxxi)
F, = 127 6 + 3 6669Xb - 0090627Xb2 (xxxii)
F2 = 155 1 + 3 7189Xb - 0090627Xb

2 (xxxiii)
from which:
= 42 5 + 1026Xb . . (xxxiv)
2= 27 5 + 052OXb . . (xxxv)
For clothing, the coefficient of Xb2 was found to be negligible and the equations obtained are as
follows:
A, = 3 8+ 9173Xb (xxxvi)
Al= 3 41?0143Xb
+ (xxxvii)
A2 = 2-29 + 1 269OXb . . . . . (xxxviii)
from which:
a,= 7 2 + *097OXb (xxxix)
a2,- 63 + *2547xb . . . . . (xl)

Corresponding to the average value of Xb (Xb = 75 5), we have:
f= 50 2 a-=14-5
fA=31h4 a2=129
If these estimates are increased, as before (cf. 3.5), by 25 per cent., the results are approximately
as follows:
= 51 shillings a1=
1 shillings
/2 = 3wshillings a2 = 1i shillings
It can be seen from Diagrams 16 and 17 that the above equations do not, especially in the case
of food, fit the observations very well. There is naturally a closer correspondence in the case
of clothing, since Xb includes expenditure on adults' clothing.
3.14. Results obtained with the use of x,.
The equations obtained for food expenditure are as follows:
F0= 102 3 + 5 4337x, - 0241594x2 . . . (xli)
F1= 155-4 + 5 6966x, - 0241594XC2 . * (xlii)
F.2 196 7 + 5 4586x, - 0241594x,2 . . . (xliii)

from which:
fi= 53 1 + 2629x. . . . . . . (xliv)
f2= 413 - 2380x, . . . . . . (xlv)
For clothing, the following equations are obtained:

A = 2 3 + 1 4412x, - 00I19268x,2 . . . (xlvi)
A1= 7 9 + 1 8000x - 0019268x,2 . . . (xlvii)
A2 11 7 + 1h9964x, - 00I9268x,2 * * . (xlviii)

and hence:
a1 = 56 + *3588x. . . . . . (xlix)
a2 = 38 + K1964x. . . . . . (1)

The foregoingequationsarecomparedwith the actualvaluesin Diagrams18and 19. Correspond-

ing to the averagevalue of xc (, = 44- 7) we have:
f1= 64*9 al= 21 6
(- 30 7 a2 = 12 6
As in the case of the results relatingto total expenditure,the estimatesbased on xc are, on the
whole, higher than those based on Xb. When the latter are correctedfor bias, the two sets of
estimatesagree fairly well.
3.15. It is not, of course, claimed that any of the above equations provides an adequate
descriptionof the relationbetweenexpenditureon children'sfood, or clothing, and the standard
of living. They are given here for purposesof illustration,and are used only in orderto obtain
estimatescorrespondingto the averagestandardof living of the familiesconsidered. In particular,
the negativevalue of the coefficientof xc in equation(xlv) is not acceptable.
3.16. Method B.-The values of Y obtained by substitutingxc = xc = 44 7 in equations
(xxvi), (xxvii) and (xxviii) are as follows:
Y= 756 8 Y,= 960-4 Y2= 1066 6.
Substitutingthese values in the regressionequations,of which the coefficientsare given in Table 5
(Part I, p. 363), we obtain the following estimatesfor the amountsspent on children'sfood and
clothing:
fi=8Oi1 a-=25-6
f= 340 a =15*1
wheref,jf2, a,, a2 denote the same quantitiesas before.
The regressionequationsconnectingfood and clothing with total expenditurefit the observa-
tions fairly well for families with 0, 1 and 2 children,the fit being slightly better in the case of
food.
Comparingtheseresultswith those basedon MethodA with the use of xc (see 3.14), we notice
that Method B gives higherestimatesin all cases; but the estimate of food expenditureon the
firstchild is the only case wherethe differenceis substantial.
3.17. Summary.-In consideringthese estimates, it should be rememberedthat an error in
one directionin f1 (for instance)would producean errorin the opposite directionin f2; and that
the estimatedexpenditureon the two childrentogetheris always more reliablethan the separate
estimatesfor each child. It seems unlikely,in fact, that the amountsspent on food for the first
and second childrenwould have the ratio indicatedby the "B" estimates. All we can probably
say is that, in familieswith two children,the averageamountspenton food for each child appears
to be between 4 shillings and 5 shillings, at the averagestandardof living of the families con-
sidered-that is, approximatelya thirdof the total expenditureon each child; and that the average
expenditureon clothingappearsto be about one-eighthof the total expenditureon each child.
The value of F2 correspondingto the mean value of xc (xc = 44 7) is found from equation
(xliii) to be 32s. 9d. The resultsimply that, at this level, the averageamount spent on food for
a child is about 35-40 per cent. of the averageamount spent on food for an adult.
Estimated Expenditure on Other Items

3.18. It is possible,finally, to make estimatesfor a few of the remaininggroupsof items, but
it should be rememberedthat, where the total expenditureis small, the estimatesare bound to
have a wide marginof error. The following additionalgroups of items were considered; rent,
fuel and light, householdgoods, medicalexpensesand voluntaryinsurance.
For each of the first two childrenestimates were made, correspondingto the mean value of
xc, by meansof both the MethodsA and B and the full resultsare summarizedin Table 14 below.
For Method A, since it was not worth estimatingthe various regressionequations, the figures
were plotted on graphsand freehandlines were drawn as closely as possible throughthe points
relatingto each set of families. The points were found to be scatteredratherwidely about the

1949] NICHOLSON-Variations in Working Class FanmilyExpetnditure 387
lines, thus emphasizingthat no precisioncan be claimedfor any of these results. The estimated
amountsspent on behalf of each of the first two children,correspondingto the averagevalue of
x?, were then read off the diagrams.
TABLE 14
Estimated Average Weekly Expenditure on Children
Method A Method B
Total, Total,
1st child 2nidchild 1st and 2nd Ist child 2nd child I st and 2nd
childr-en childreni
s. d. s. d. s. d. s. d. s. d. s. d.
Food . . 5 5 2 7 8 0 . 6 8 2 10 9 6
Clothing I. . . 10 1 1 2 11 . 2 2 1 3 3 5
Rent . . . . 10 10 2 0 . 1 9 10
Fuel and light . . . 10 6 1 4 8 7 1 3
Household goods* . . 1 8 1 2 2 10 1 2 1 6 2 8
Medicalt. . . . 7 3 10 . 7 3 10
Voluntaryinsurance. . 7 4 11 10 2 1 0
Remaining items . . 5 1 2 1 7 0 . 4 10 1 6 6 4
Total . . . 17 0 8 10 25 10 . 17 0 8 10 25 10
* Furniture,carpets, drapery,pottery, brushes,ironmongery,etc.

t Medicines,doctor, dentist, hospital funds, etc.
$ ExcludingNational Insurance,Trade Unions and Friendly Societies.
The B estimatesfor rent and fuel and light were based on the regressionequationspreviously
estimated(see Table 5, p. 363). For the remainingcases the amountsspent on each groupwere
plotted against total expenditure,freehandlines were drawn through the observationsand the
requiredestimateswere then read off the diagrams.
In orderto allow for the differentproportionsof familieswhich owned, or were buying,their
own houses, the rent figureswereadjusted,each figurebeing dividedby the proportionof families
which were renting their houses.* Rent was a case in which the correlationswere rather low,
and the estimatesare thereforeassociatedwith verywide marginsof error.
3.19. It has alreadybeenemphasizedthat the estimatesobtainedfor the combinedexpenditure
on the first and second children are more reliable than the separateestimates for each child.
Exceptin the cases of rent and food, the estimatesof total expenditureon both children,obtained
by the two methods, agree remarkablywell. Although the two methods are not completely
independent,these resultsenable us to have more confidencethan we might otherwisehave had
in the generalmethod here employed.
Estimates in Terms of 1946 Prices

3.20. All the foregoing estimatesare expressedin terms of prices ruling in 1937-38, at the
time of the Ministryof Labourfamily budget enquiry. These estimatesmay now be converted
into terms of recent prices. For this purpose we shall use the price indices relating to 1946,
which are obtainablefrom the White Paper on National Income and Expenditure(Cmd. 7099).
When the priceindicesfor food, clothing, rent, fuel and light and other items are weightedby
the proportionsspent for both childrentogetheron each of these groups,the generalprice index
shows an increasebetween 1938 and 1946 of 46 per cent. if the A estimatesare used, and 48 per
cent. if the B estimatesare used.
Hence, using the estimatesgiven in 3.6, the equivalentexpenditureon two children,in terms
of 1946 prices, would be in the region of 38s. a week, at the averagestandardof living of the
families concerned. This estimate correspondsto a total expenditure,in families having two
children,of about ?7 a week.
* Very similarresults were obtained when the rent figureswere left unadjusted. The figures of total
expenditure,used in the earlier sections of Part II, included the unadjustedfigures for rent. Both the
unadjusted(a) and the adjusted(b) figuresare given in AppendixIII.

388 NICHOLSON- Variations in Working Class Family Expenditure [Part IV,
4. Summary and Main Conclusions

4.1. From the Ministryof Labourworking-classfamily budget enquiryof 1937-38, detailed
figures of expenditurewere obtained for families consisting of two adults (one man and one
woman) and varyingnumbersof children,the data being classifiedaccordingto total expenditure.
The figureswhich were found to be suitablefor analysiswere drawnfrom about 650 families of
industrial workers in Great Britain (excludingLondon), having not more than two children.
From the various items for which separate figures of expenditurewere given several different
selectionsweremade of those commodities,the consumptionof whichseemedto be closely related
to the standardof living and independentof the numberof children. A study was then made
of the relationshipsbetweenthe averagefiguresof expenditureon these commoditiesand total
householdexpenditure,for three groups of families, containingeither 0, 1 or 2 children(under
14 years of age). At any given standardof living total household expendituremust increase
with the number of children. By comparingthe relationshipsobtained for the differentsized
families,it was possible to arriveat approximateestimates,correspondingto a given standardof
living, of that part of total expenditurewhich could be explainedby the presenceof one or two
children. Estimateswere also made of the averageexpenditure,attributableto the children,on
variousgroupsof items, such as food and clothing.
4.2. The resultswere found to depend,to a large extent, on the particulargroup of commo-
dities, expenditureon which was assumedto definethe standardof living. Because of the diffi-
culties inherentin the problemand the experimentalcharacterof the methods employed,several
differentestimateswere made, on variousassumptions.
The most acceptableestimates,which can, however, only be regardedas approximate,wvere
those obtainedwhen the standardof living was definedby expenditureon adults' clothing (xc).
At the averagestandardof living, so defined,total householdexpenditurein familieshaving two
childrenamountedto about 89s. a week, and it was estimatedthat about 26s. a week was spent
on the two children. The amount spent on the first child appearedto be rathermore than on
the second child, but separateestimatesfor each child could not be made with any confidence.
In terms of 1946 prices, the equivalentexpenditureon two childrenwould be about 38s. a
week out of a total family expenditureof about ?7 a week.
Theseestimatesare subjectto numerousqualifications,whichhave been mentionedin previous
sections. In particular,no allowance could be made for differencesin the age or sex of the
children,and the resultsshould be interpretedin the light of the remarksin 3.9.
APPENDIXI-REGRESSIONLINESFORFAMILYEXPENDITURE
Considera group of n families, all having the same numberof children. Let Y denote total
expenditureand let Er denote the amount spent on the rthitem by a given family. Let E denote
summationover all differentfamilies and let Z denote summationover all differentitems.
r
We assumethat the relation betweenEr and Y is of the form:
Er = a. + brY + crY2
Since E E= Y, we must have:
r
. Er =
dY, 2Y. br + c = ,
and
dY2 ,
Z E = 2 Z c. = 0.
r
In otherwords,the values of a., b. and c. mtistbe such that the following conditionsare satisfied:
Zc,=0, Zb,= I anda,ar=0.

r r r

19491 Vaiations in Working Clatss Family Expenditure
NICHOLSON- 389
Suppose that the regressioncoefficientsare determinedby the ordinarycondition of least

squares, namely that
Y(Er - a, - brY -crY)
should be a minimum.
This condition leads to the following equations:
Z(Er - ar - brY - CrY2) 0,
E2Y(Er -ar -brY -CrY2) 0,
and E2Y2(Er - ar - brY - CrY2) = 0.
We have 3 such equationsfor any given value of r. Combiningthe equationsfor all different
values of r. we have:
E(Y-Ear- Ybr- Y2 Cr)= 0,

r r r
7(Y2- Y2r-Y2 Y3 VCr) 0,

r r r
and Z(Y3 - Y2 ar -Y3 2br -Y4ZCr) 0.

r r r
| n y EY2
Writing A= y EY2 ZY3
,Y2 EY3 Y4
y Ey y2
we obtain E * A - 2Y2 ,y2 EY2 = 0,

r
E2Y3 z3 VY4
Nbr=
r = 1
n 2Y EY
and E2Cr,* y E Y2 E Y2 0.
r
EY2 Ey3 Zya
Hence the values of ar, br and cr, obtainedby the method of least squares,satisfy the required
conditions.
LINES
REGRESSION
APPENDIX11-METHOD OF FITrNG "COMBINED"
The method of fitting"combined"regressionlines, referredto in 2.8, is as follows:
Let summationextendingover families with no childrenbe denoted by X, over familieswith
0
one child by T, and over families with two children by E. Let the values of Y, X and X2,
1 2
measured from their respective means in each set of families, be denoted by Z, r and i. For

example, T refers to values of X for families with no children, measured from the mean value
0
in these families. The regression equations can then be written in the form:
= OT + ye
= r1T
1 + yR
2= 2 + Yi
To obtain the four parameters, P0, P1, 2 and y, in these equations, we impose the usual condition
that
E (4O - PT - yi)2 + - - y0) + ' - - y)2
0 1 2
should be a minimum. By partial differentiation, we obtain:
0
TO - o2
0
- y
0
0 . . . . . (a)
41-51Er2 yZri = O . . . . . (b)

2 1 1
2 2 2
SiCO + i41 + 42 - ? Eiq

-1 f-2ET -y(zE2 - v2 + i2) =0 . (d)
0 1 2 0 1 2 0 1 2
From equations (a), (b) and (c) we have:
- YITi
ZT4r'
3 = t r (r-0, 1, 2)
2
r
and hence:
7 r
_
(r-O, 1, 2)
r r2 r
Equation (d) now becomes:
)
ZT4o. Ti1 * iX . Zr2 iT
I
0 +E1YU + 2 - _ _ 2_ + 1 + 2 2
0 1 2
~~~
{
~~~((Y) _Er)2 (z&r)2
- 2
=y ( E2 +
__ E2) _
+ 1 +
Loieu2 ge2 fto 2
This equation gives a figurefor y which is then substitutedin the expressionsfor r3,

1949] NICHOLSON- Variations in Working Class Family Expeniditiure 391
APPENDIX III-DESCRIPTION OF THE DATA

In 1937-38 an inquirywas held by the Ministryof Labourinto working-classfamilyexpendi-
ture in the United Kingdom. Budgetswere collectedfor each of 4 weeks, at quarterlyintervals.
A detailed account of the inquiry, togetherwith the main results, was given in the Ministryof
LabourGazettefor December,1940, and January-February, 1941.
In orderto obtain separatefiguresfor familiesof differentsize, the Ministryof Labourmade
a special analysis of the budgets supplied by about 800 households, the heads of which were
engagedin an industrialor commercialoccupation. These householdswere drawnfrom about
2000 which had furnishedweekly recordsof clothing expenditurefor a whole year; each house-
hold includedtwo adults (one man and one woman)and-0, 1, 2 or 3 childrenunder 14 years, but
no otherperson. Budgetssuppliedby householdsin which the numberof childrenvariedduring
the year, or which were living in hciusesprovidedby the employers,free of rent, were excluded.
For presentpurposes,the figuresrelatingto the four weeks of the inquirywere averaged.
In the large majorityof householdsonly one personwas earninga wage or salary. Although
it was believedthat all householdsin whichboth adultswereearningmoney had been deliberately
excludedfrom the sample,it came to light, at a late stage in the work, that some of these house-
holds-namely those containingchildren-had not been excluded. It is unlikely,however,that
their inclusionwould affect the results of the regressionanalysis,wherevariationsin income are
taken into account. And all such families were excluded from the calculations describedin
Section1 of PartI, wherethey wouldhaveinfluencedthe comparativefiguresof averageexpenditure
of families of differentsize.
Wherethe numberof householdsin a particularexpendituregroup was too small to provide
reliableaverages,particularsof such householdswere omitted from the data originallysupplied
by the Ministry of Labour, and they were therefore excluded from the regressionanalysis in
Parts I and II. They have, however,been includedin the calculationsdescribedin Section 1 of
Part I.
In view of the relativelyhigh expenditureon rentand travellingin London,the budgetssupplied
by householdsliving in London were tabulatedseparatelyfrom those living in other parts of the
country. The familiesincludedin the regressionanalysiswere distributedas shown below:
Rest of
London Great
Britain
2 adults (man and woman) and no other person. . . 46 . 281
- ,, ( ,, ,, ) ,, 1 child under 14. . . 44 . 222
2 ,, ( , ,, ) ,, 2 children under 14 . . 20 . 143
2 ,( ,, , ),,3 , ,,14 . . 14 . 58
Total . . . . . . . . . 124 . 704
For each group, detailedfiguresof expenditureon various items (numberingabout 90) were
given for differentlevels of total expenditure,classifiedin ranges of ten shillings (30s. to 40s.,
40s. to 50s.,. . . 90s. to 100s., lOOs.and over). It was found, however, that the number of
familiesin London and the numberof 3-childrenfamiliesin the rest of Great Britainwere too
small to provide reliable averageswhen the data were cross-classifiedin this way. The main
analysiswas consequentlyrestrictedto householdsin the rest of Great Britain,and familieswith
3 childrenwere includedonly in Part I.
The followingtablescontainall the data relatingto thesefamilieswhichweredirectlyemployed

in the presentanalysis.
VOL. CXII. PART IV. 27

392 NrcHoLsoN-Variations in Working Class Family Expenditure [Part IV,
- 00N coo oCh - Om o- 'r~0n r- ?-'r0o4

Or
as 000
O en ? O ?00 00 O NN
bo Z
t- . . . . . . . . . ~. . . . . . . . . . ..
4 i O
ne>Nr O-~ e^
4
t "mo0 O\~N0 N tYce
-- 00Ot0o 0 00 NO WI to en
n e 000
,$ S! o-. . -. . C. r' . -. -0. . ~. f. . .

-n t . . . . . . 8- *.
0 -~~~~~~~~~~~~~~~~~~~~0
oe
00~~~~~~~~~~~~~~~~~~~
0 Oen 0 o -o N Nen 0 N 0\ en
.-.
o I 00e 7N 00 e.
-w ONc
o N
- N ~O
00? "d0 Ne " I-q en
-N e\ ON0 4
~~~~ 0 4)~~~~~~~~~~~~~
.t 000 t0O~ 00 en 0 '-or- ao t- ro N
e or-
00
u . .... ~ ~ ~ ~~~~.. . . ... . .. .. . . . .
0ef N ' - 0
t t '.t00
0r-o. 00O1
c70N 0.0-
O -im?N N
ON N
amt m e~I~~ fn
n No e 0000O 4bO '
bo~~~~~~~~~
'.O0, n qas00NWI00r-- W '0 CVd'0
InVN0 ~0 0-- - r
t . ....~~~~~~~..
N -" . . ... . .... --0 . . N . _ l. - vE
ez * .0Nr-*' 0. 0. * -c N -00 -0 *
S: 00'0'0 * v*~ 0. '.Q00.'0
-. .. ... '.e... . . . N *0
-b ~ '0'0 'IO - -S N - 000 o en N
4) ix3 N i=gi W 19gr 3a43 ta ' 3Q3,
0~~~~~~~~~~~~~~~~~~~~
Z . . ~~~~~~~~~
. . . .
4) ~~~~~~~~~~0
0~~~~~~
'ZS 0~~ ~ 0~
H 00~~~~~~~~

19491 NiCHOLSON- Variations in Working Class Family Expenditure 393
r- eq Itt 0 "-qtn ".400 tn en Nt eq

N ".0 t, "ON M W) 00
"-q en Nt
bo
00 tn t- 00 0 c Itt 0 (ON"C W) "Ocl "Oai 0 en 00

o "t el Y tn cn 00 eq 0 c en N N ON 0 tn O
t- Itt c m W)en 00
ON en N en oo
00
,c oo oo "O tn eq tn t-- 00 ON,c

00 en
4 oo ,c
00
V-
u
oo oo -t as WI en en N co I:$
-,t ON ON en 0 CIA 'IO en N r-.4 N cq V-4 00 oo c
Cdnc$
tl- C14tn en 00 "O 00 as (ON 0
en 00 N ONr- eq ch
O
5 Cd
en eg co c O."
00 N
00 W)N WI0 o Cd
\'O
eq WI t
vt
"O N 00 00 en -1-4
ON O'S Nt
Nt
to O.'.
0 Cd s-4
.4..j cd
u cd
Oz
1:1 0 0
cl
Cd .Co
4
. . . . . . . . . .
++
O 0
0
IZ
cl 0
Cd
0 . . . . . .
44 Cd
++ bo
cl 0 to
-bo 0 10. 4
Cd Cd10 4-4 0
Cd to CZ -ci 0
0
O., cla0 0
0 Cl It:$ to 0
0 O.,
0,0 > C.'s &= z
E--4 0
-cs 0 Cd- Cd O= Cd " 0

2
O
C,3o-o
Cd
<
> 02UP4
0,0 4)
CA
H CJ
0
CdW;8
cd
Cd
Cd 0 0
0
Z :;, >
E...'
P .04
LT, C) COO V)

394 NiCHOLSON- Variations in Workitig Class Family Expenditure [Part IV,
oo 0,-, I'D r- en W)0 N "t a en rn en en 'IC00

r-q- el
-4N
N4 00 eq tn m r- 00
N W) 00 N N r- ON
00 01.1 t- "D00 a t-- 00

ON tona cans
N ON IRt .A 00
00
4 oo tn as
N 00 N N
0
N
r-
N en 00
00
00
00
,O 00 \%C
en 00 ON cN 0
cN oo W)
+JI
Om en\cN.N tn N 'Itt I" \c oo WI 00 eq 00

8 r- 00 N WI 11,
WI f--,
0 0
C14 . . . . . . C,
WI00 en CN t qN 00 W) r- 0 oo
t- 00 en
0
Ci 0
. . . . . . Cd
W0 "
44
Cd
0 0
'a A4
r-4
O -4
, A
rA
-:500
-4
Cd LT.O
E ++ 00D
.0.4
vn u
0 . . . . . .
u
0
cu
cri
R4
,%t *-
C) . . . . . . 0
4-J
0 0 cd
bo bo
0 40,
-4
: gt-j -4
(A
W
Cd 7
0 to 0 0
0 0
F.4 O rA
r.1 Cd
0
Cl 04
0 ct -8 Z
AOW4 4-oo t u 4
--4
-
cd
44
W rAU u r4
44
z W;Bo
W A
cri 0 0
0
0
z
I 0
u U) k-

19491 NiCHOLSON- Variatioiis in Working Class Faniilt) Expetiditure 395
c N 00 en c V- 00 V- 00 00 00 00
t- en
,zu
44
t- en c "C 00 0 0 'IC 00 \Ic
oo
oo 00 "C -4
en oo N 00 en
00
cq
en oo ON Ic en N 00 en 11.0 00
It:3 0
0
w
44
N,C t- eq "C N 0 0 ON tn
ON ON en t-- 00
0
rA
"C 00 ON 00 N r-
oo 00
0
rA
0
rA
-4
r
rA
+5
0
0 4-i.,..4
0 Cd
0
Z
0
rA
E
++
Cli . . . . . 0 Cd
Z: Cd
0 0 Cd 0
+-)
4.4 ",.,o
0 Cd
f4j Cd -'orA
0
0 0 10 0 0
0
0 0 Cd Cd
0 w
t; 0Uo
0 0
;t4 on
'03 0 0 15
>
rA
0-4
LL4 LL.

396 NiCHOLSON-Variationsin Working Class Family Expenditure [Part IV,
Notes on the Diagrams
All the diagramsrelate to households in Great Britain,excludingLondon.

In Diagrams2 to 19 the scales representaverage weekly expenditure,in pence.
Crosses (x x x) and lines shown thus: relate to families with no children.
Circles (ooo) ,, - --- ,,
- one child.
Dots ( * *) ,, ,, two children.
Squares (0Z0 0I) ,, ,, ,, ,, three children.
Y denotes total expenditure(in pence).
xa denotes expenditureon adults' clothing, tobacco, drink and sundries (not separatelyspecified).
xb denotes expenditureon adults' clothing and tobacco.
xc denotes expenditureon adults' clothing.
The equations of the regressionlines shown in Diagrams 2 to 10 are given in Part I (Table 5).
The equations of the lines shown in Diagrams 11 to 14 and 16 to 19 are given in Part 11, Section 3.
Diagram 14 is explainedin paragraph3.3 and Diagram 15 in paragraph3.5 of Part II.

U~~~~~~~~~~ r
_
Qbn O-- w
X
1
I !? ~~~<
, ' -l
LL
x~~~~~~~~~~~-
X= C. :
LI <
-J r ? ____ [ aDF ;:;
I I~l I I~~~~~-0
Ii~~~~~~~~~~~~~~~~~~~~~~~~~~~I
0- SI*~ -
3I of 5 0
5311INVAV 40 dasfnN 3VIN308d 31'V.J

398 NiCHOLSON-Variationsin Working Class Family Expenditure [Part IV,
FOOD
600
Soo~~~~~~~~~~~~~~~~~~~.
500 .
400
300
200
100
0~~~~~
0 I I I I I I I
400 800 1200 1600
TOTAL EXPENDITURE (PENCE)
DIAGRAM 2.

RENT
200
Ot~~~.
IoO
00
150
0 _
400 000 1200 1600
DIAGRAM 3.

FUEL&
120
//
80~~~~~~~~~~~~~~
600 X./f W~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0
40_
20
400 800 1200 1600

TOTALEXPENDITURE
(PENCE)
DiAC}RAm4

CLOTHING
150 _.?
100
50
- o/~~~~/
0
400 800 1200 1600
TOTAL EXPENDITURE(PENCE)
DIAGRAM 5.

402 NICHOLSON-Variationsin WorkingClass Family Expenditure [Part IV,
SUNDRIES
.800
II
200 _ /
600 _ //1
1//
400 j ,'
...... ~ ~ / *..~
I . I .I , ,l,..
400 eoo 1200 1600
DiAGRAM6.

MEAT& FISH
150
a
125 ..
100 w
75t
. .~t
0~~~~~~~~~~~~~
50A/
KLGA 7.
A
10o 400 1200 1600
TOTALEXPENDITURE
(PENCE)

DAIRY
PRODUCE
160
~~o. 000 * _ .
_~~~~~~~*
.*. ._._*
120 * -
400 800 1200 1600

DIAGRAM 8.

1949] NIcHoLsON- Variations in Working Class Family Expendituire 405
FRUIT &
VEGETABLES
60
.S
40 ~ ~ ~ ~ ~ /
30 _ia
/ ,/....
20 0
x/.
10 of
400 800 1200 1600

DIAGRAM 9.
TOBACCO
6 DRINK
80 ,
o' x
60X
400 800 200 1600

DIAGRAM 10.

406 NICHoLSoN-Variations in WorkingClass Family Expenditure [Part IV,
Y,
1600
1400
1200
1000
800
600 ',/
400
S0 100 150 200 250 300 Xa
DIAGRAM11.

1949] NiCHOLSON-Variations in Working Class Family Expenditure 407
y
1600
1400
, /
'200, X
1000 /
4? -
8000' %
I *0
YJ~ ~ ~ -
20 40 60 80 100 120 140 Xb
DIAGRAM 12.
-~ ~ ~ ~
1600
600~~~~~00
i 400L oe/
I000 _ < 0O i
0
600 _e 9 ,/
400 [
10 20 30 40 50 60 70 80 90 0 X
13.
D DAGRAM
VOL. CXIJ. PART IV. 28

k4k
40
30
20
go
50 100 150 200 250 xa
k5
20
IS
5 *
o00 150 200 2s0 x

70 a
DIAGRAM 14.

kl+ 8j
60
50
40
30
20
10
20 40 60 80 loo 120 x
k,
25
20
20 40 60 80 100 120
DIAGRAM 15.

410 N1CHoLsoN-Variations in Working Class Family Expenditure (Part IV,
F1
450
400
350.7
400 0 - - b
.~ .~~~~.
.
~ ~ ~ - 7
3200
.,
7. -.A DIAGRAM 16.
A~~~~~~~~~~~~~~~.
70~~~~~~~~~~~~*
A
,
7
./~ /
/,
140-
20
1200 . .'';@/;;///
80 0/ ? ,e /
200
20 40 60 80 t00 120 140 zc
DIAGRAM 17.

1949] NIcHOLSON-Variations iti Working Class Family Expenditure 411
F
450
400
350
/X./" /
300
250_ f' //
/O
200
10 20 30 40 50 60 70 80 90 100 Xc
DIAGRAM 18.
A ji
140 .
120 ./ o
200 /
eof
././4~~~~~~~/. Xx-
Oo .// / /ox
607/
40
,_~~~~~~~~~~~~~.
,--- * * * I
A/
/0/
20
I0 20 30 40 50 60 70 80 90 100 XC
DIAGRAM 19.

412 Discussion on Mr. Nicholson's Paper [Part IV,
DIscUSSIONON MR NICHOLSON'S
PAPER
Professor R. G. D. ALLEN: It is with great pleasurethat I move a vote of thanks to Mr.
Nicholson for a paperwhich obviouslyhas involveda greatdeal of labour,and althoughmuch of
the work may be regardedas experimental,his conclusionsgive us muchto think about. Perhaps
I should include in this vote of thanks two official organizations-the Royal Commissionon
Population for commissioningthe second part of this paper, and the Ministry of Labour for
making available the detailed budgets of the 1937-38 inquiry. That particularinquiry was
unfortunatein that the war came and preventeda full analysisbeing made, and it is only recently
thatadditionalworkhas been done on the very valuablematerialthat lies in the budgets. I under-
stand the Ministryof Labourhave made furtheranalyses,and I hope these will be published.
Mr. Nicholson'ssampleconcerns704 familiesin GreatBritain,apartfrom the Londongroup.
Thesefamilieshave been selectedto containtwo adults-one man and one woman-and a varying
numberof children,but it seems to me, looking at AppendixIII-it is not clear, I think, in the
text-that an additionalfactor has been used in selection. All these familieswere amongstthose
makingreturnsevery week during the year on clothing expenditure,and I wonderwhetherthis
might not have importedsome bias. Families who find themselvesable every week to produce
a clothingbudgetarenot necessarilytypicalof the whole groupof families. PerhapsMr. Nicholson
would commenton this.
Another point that arisesis that, with only some 700 familiesin the sample, the cross-classi-
fication which Mr. Nicholson has employedinvolves a considerablenumberof classes with very
few entries. The general difficultyis to get enough entries for a fairly fine analysis without
increasingunduly the over-all size of the sample. This is an importantmatter, particularlyif
budgetinquiriesare to be taken at all frequently,as I hope they will be. One way out of this
difficultywould be to have a basic sample of large size elaboratelystratifiedon a nationalbasis.
Such a national samplecould then be used for the taking of small sub-samples,with a variable
samplingfraction to ensurethat small groups (such as families with three or more children)are
adequatelyrepresented.
The analysisin Part I takes cognizanceof two factors-family income and family size and
composition. There are, of course, other factors affecting family expenditure which Mr. Nicholson,
like other investigators,has ignered. There are regional differences,including differencesin
relative prices, as well as differencesin habits, tastes, and so on. But Mr. Nicholson gives a
more elaborateanalysisthan has usually been made in the past. A simple method often used is
to take equivalencescales, counting, e.g., an adult male as 1-0, an adult female as 0-83, and so
on, and so to eliminatethe effectof familysize. Thatis a point I will come to later, and one which
interestsme verymuch. In Table 3, givingthe distributionof familiesby total expenditure,there
is a smallpoint whichI am sure Mr. Nicholson can clearup readily. I cannotmake the numbers
in this Table agree with those given in the detailedtables in Appendix III, and I wonderwhere
the apparentdiscrepancyarises.
I am interestedin the frequencydistributionsof Diagram 1, obtainedfrom AppendixIII. As
the shift is made from no-childrento one-childand two-childrenfamiliesthe income distribution
shifts almost unchangedto the right, which means that some fairly simple explanationcan be
offered. The simplest form wotuldbe that, as the family gets older, the number of children
increases and the income increases,and thereforethe whole distributionshifts to the right. I
was interestedalso to see the amount of shift. Looking at Diagram 1, the amount of shift to
the right as the first child is addedseemsto be ratherless than 10s.a week. Does that cover the
additionalcost of the child? This is a questionnot posed by Mr. Nicholson, who was concerned
with gettingan estimateof the cost of the first and secondchild, and not with the furtherquestion
whetherthe cost is in fact coveredby additionalincome. The estimatedweekly cost of the first
child from his Table 14, is 17s.; this is subjectto a good marginof error,but in any case it would
seem to be definit.elymore than the 10s. The shift to the right with the first child suggeststhat
the cost of the first child is apparentlynot met by the additionalincomewhichthe familyenjoys.
Of course, the needs and tastes of the family with one child are not necessarilythe same as those
of the family with no children. But that is the very broadresult,for what it is wortb.
The distributionof expenditureamong families with three childrensuggestsa bi-modalcase
-some families have childrenbecause they can afford them, and some in spite of the fact that
they cannot afford them. But the results for the three-children families are based on only a
small number, and little reliance should be placed on them.
In Table 5 Mr. Nicholson sets out the results of his fitting of regression coefficients on expen-
diture for different family sizes. He finds quite definite evidence, as we see from the diagrams,
that the regression is curvilinear for a family of given size. This is something Professor Bowley

1949] Discussion on Mr. Nicholson's Paper 413
and I began to suspect in our earlier work in this direction. In Mr. Nicholson's work this
cturvilinearity appears for families of a given size, but when families of different sizes are merged
it becomes less marked, and the linear pattern becomes more prominent. If these regression
equations are to be applicable down to very small incomes, the bo coefficient should be zero.
With bo zero we have a much simpler case, where the coefficient 0, which gives the distinction
between "necessities" and "luxuries," becomes equal to b2. In fact, the distinction between
"necessities" and "luxuries" then turns upon convexity, and one can say that a "luxury" is an
item where expenditure goes on increasing indefinitely with income, but "necessary" expenditure
reaches a peak as income is increased.
ActLually,the b,,'s are far from zero and not easy to interpret. For example, for families with
two children, the negative b,,'s might imply that, as income is reduced, nothing is spent on food,
rent, fuel and light, and clothing, and even on many sundries such as tobacco and drink. It
might appear that expenditure is on items such as medicine-that a family with two children, and
with low income, lives almost entirely on aspirins ! All this simply stresses the fact that the
regressions must be strictly confined to the ranges of income to which they are fitted.
In Part 1I of the paper the problem that Mr. NichoJson has considered is, in fact, a general
problem which has been examined much more in another connection. The problem is to define
equivalent standards of living for families in different positions or in different situations. Once
equivalent standards of living are found, the corresponding incomes can be deduced and com-
parisons made. Take, for example, the problem of the definition of an index of the cost of living.
If we have families in different price situations and can define equivalent standards of living, the
ratio of the incomes which correspond gives us the cost of living index. Mr. Nicholson has
tackled the same kind of problem, but in a different context. He has looked at his data and has
tried to find expenditures specifically on children and specifically on adults, and to use these to
define equivalent standards of living. Of course he finds little of help to him in these particular
data. Very few expenditures can be described as specifically on children. Children's clothing
is one of them; but even this expenditure may need to be supplemented by replacement expenditure
on adult clothing-replacement of items passed on to the children. Recorded expenditure on
children's clothes is not directly appropriate to Mr. Nicholson's purposes.
The most interesting part of the paper, from my own point of view, is the conclusion in Part II
on the use of equivalent scales for eliminating family size. Mr. Nicholson has said. as I have
myself said in another place, that equivalent scales are not appropriate, and that there are significant
differences in patterns of expenditure of families of different sizes which are not explainable in any
simple way. I was interested to see the orders of magnitude Mr. Nichoison has obtained, and I
have extracted and rearranged some of his figures in a rather different form. The expenditure,
in shillings per week, of a family of two adults and two children, at the average standard of living
as defined by Mr. Nicholson, is given in the following table:
Total Attributable Attributable

expenditure to two aduilts to two childreni
Food . . 323 . 24 . 83
Clothing . . 8+ . 5 . 3-I
All other items . 48 . 34 . 14
Total . . 89 . 63 26
What 1 was interested in was the ratio of expenditure on adults to expendituire on children-a
ratio which bears upon the equivalence scale. The ratio of spending on children's food, as
compared with adults', is about 35 per cent.; for clothing it is mnuchhigher-about 65 per cent.;
for other items about 40 per cent.; and for total expenditure about 40 per cent. These figures are
much lower than the scales for equivalence usually adopted. One I have in mind is a scale
Professor Bowley has used: the average of two adults (one male and one female), 09; 0 5 for
children under six, 0 7 for those from six to ten, 0 83 for those from ten to fourteen, an average
of 0 7. Therefore, according to this scale, the ratio of expenditure on children to that on adults
is approximately 0 7: 0 9, or over 75 per cent. It would seem, from Mr. Nicholson's admittedly
rough results, that not only is the equivalent scale inappropriate because it does not differentiate
between different items, but it is also of the wrong order of magnitude.
In conclusion, Mr. Nicholson's work shows the need for further budget studies specifically
designed for particular problems, such as that of determining the cost of children for middle-class
as well as working-class families. Mr. Nicholson has helped us along tlle way towards the proper
designing and analysis of such budget studies.

Mr. C. T. SAUNTDERS, in secondingthe vote of thanks: Mr. Nicholson has developedsome new
techniquesin the studvof familybudgetswhichwill be both of statisticaland practicalimportance,
and these results, experimentalas they are, justify the very considerablelabour and patience
involvedin this analysis.
It is obvious that there is increasinginterest in family budget inquiries, for a great many
practicalreasons. The improvementof methodsof conductingfamily budgetinquiriesis among
the matters arouisinginterest in the United Nations and the I.L.O. statistical orgens. Mr.
Nicholson's results suggest a number of directions in which family budget inquiries could be
improvedand standardizedto facilitate some of the refinedtreatmentswhich can be extremely
useful.
The first and most obvious is that this kind of work shows how worth while it can be to
publish the details of family budget inquiries,and not simply the broad averages. It is always
possible for specialists,who are welcomedby the Ministry of Labour and other authorities,to
securedetaileddata, and work on them; but it is not always easy for all the people who may be
able to use materialof this kind, particulatlyfrom other countries,to obtain the relevantdata.
Secondly,this kind of work raises the interestingproblemof the use of income data, as well
as of expendituiredata, in family budgets. Some budget inquiries have purportedto separate
income and expenditure,but the results which emergedhave not been particularlysignificant.
For so refinedan analysisit is not really sufficientto rely on expenditurefiguresas a directguide
to income figures.
The refinedtreatmentadoptedby Mr. Nicholson demandsa greatdeal more reliabilityin the
returnsof familyexpenditure. One of the subjectsnow agitatingexpertsin this field concernsthe
two alternativeways of gettingfamily budgets,one by a form to be completedin writing,and the
other by interview. The tendencyin the United States is to believe that the interviewmethod,
thoughat first sight less reliable,is on the whole more useful. The bias inseparablefrom fornm
fillingis substantialenough to affectthe results. It includesthe bias causedbv the actual process
of keepinga recordof expenditure; the fact of keepinga record may well affect the patternof
expenditure. This form of bias seemscompletelyunavoidableby ordinarymethodsof sampling.
The paperdeals with an analysisbased on the experienceof ten years ago. How would this
workout in a set of familybudgetsat thepresenttime ? Ver.yroughlyone can makeone approach
from the figuresin Table 6. The family with two childrenand total expenditureof 50s. represents
something,like the averageworking-classfamily of 1937-38. Again, the familywith two children
and an income of lOOs.represents,in money terms, somethinglike the average working-class
familyat the presenttime. How would the experienceof such a familyto-daycomparewith that
of the familyearninglOOs.in 1938? Theirfood expenditurewould havegone up proportionately
ratherless than total expenditure. Rent, fuel and light, and clothingexpenditurewouildprobably
have gone up to ratherless than the expenditureof the lOOs.family beforethe war. The biggest
increasein expendituremust fall on the "sundries"item. But within that item expenditureon
tobacco and drink,takingthe two together,cannot be much more than doubled. Possibly there
has beena greaterexpenditureon medicines. All this suggeststhe need to distinguishthe different
effects on the patternof expenditureof changesin relativeincome level, of the passageof time,
and of the operationof "artificial"factors such as rationingand shortage.
The vote of thankswas put to the meeting and carriedunanimiously.
Mr. PHILIP LYLE said that he had found Mr. Nicholson's paper extremelyinteresting. Mr.
Nicholson had fitted regressionequationswith termsin Y and Y2separatelyfor the cases of no
children,one, two and threechildren,andthevaluesof theregressioncoefficients.shownin Table5,
wererathersurprising. If, for any particularitem, such as food, we comparedthe changesin any
one of the coefficientswith the numberof childrenthereappearedto be no correlationwhatever,
the valuesof the coeflicientschangingboth in magnitudeand signin an apparentlyrandomfashion.
He felt that in such a case it would be betterto fit a multipleregressionequationwith termsin 1,
Y2,C, C2and CY (whereC==numberof children),the last term to allow for interaction. As this
involved the solution of five simultaneousequationsfor each of the five groups, he had not had
time to carry this out, but was able to do so, roughly, by means of approximation. Using the
six total expenditureranges, between40s. and lOOs.a set of six equi-spacedfigureswas tound
whichwasnot significantlydifferentfrom theactualset in Table1, 2 or 3 (Table4 was not included),
so this equi-spacedset was used. Further,the weights(numberof familiesin each range)were
neglected. These approximationsallowed of the data being treatedas a 6 x 3 factorialdesign,
so that the computationof all the regressioncoefficientsin all five sets presentedno difficulty.
It appearedthat in all five groups(food, rent, etc.) the termin C2was not significant,although
with more extensivedata, particularlyfor more than two children,there would undoubtedlybe

1949] Discussion on Mr. Nicholson's Paper 415
significantcurvature. The termin y2 was significantonly for food and sundries,and the inter-
action term was significantin every case exceptrent.
In Table 6, neglectingthe last column, which seemedto be unreliable,the mean extra cost in
food perchildwas lOd.,Is. 93d. and 2s. ld. for the threetotal expenditurestaken;the corresponding
figuresfrom the multipleregressionequationwere Is., Is. lOd.and 2s. 9d. respectively.
He joined in thankingMr. Nicholson for his interestingpaper.
Mr. H. S. BOOKER congratulatedthe author especiallyupon his attemptto measurethe cost

of children. He was not completelysatisfiedwith the results, but he had attemptedhimselfto
measurethe cost of children,so far as food was concerned,and was just as dissatisfiedwith his
own resultsas with Mr.Nicholson's. I-e had had some 1,400budgets,andif, like Mr.Nicholson,he
workedonly with those of familiesconsistingof manandwifewithno children,one or two children,
he found the typicalmarriedman withoutchildrenwas older then the one with children. Thus, in
addition to measuringthe influienceof children,he was measuringpartly the degreeto which a
young marriedcouple had heartierappetitesthan the older marriedcouple whose childrenhad
left home. If this featureexisted in Mr. Nicholson's budgetshe did not think it could be dis-
covered, for the Ministryof LabourSurveydid not ask for the ages of adults.
He wished to discuss the results of the inquiry in generalterms. The cost of childrenin a
working-classhousehold could be expressedin money value, but it was borne usually by the
changedstandardof living. The aggregateincome of the household,and hence its expenditure,
tended not to changegreatlywith the arrivalof a child, and that was more true in 1937-38 than
now. Realizingthe problem, Mr. Nicholson, ingeniously,attemptedto measureto what extent
income would have to increaseto compensatefor the increasedcost of a child. The solution
offeredwas to find those items of expenditurefrom which only the adults benefited,and typical
items were adults' clothing and, perhapsnot so satisfactoryin practice,tobacco and beer, so far
as theywererecorded. For instance,if therewas an expenditureof lOs.a weekon adults'clothing,
tobacco and beer, with an income of 70s. for families without children and with an income of
85s. for familieswith one child, the differencebetweenthe 70s. and the 85s. gave a measureof the
cost of the child. The argumentseemed to be entirely reasonable. Let the results, however,
be examinedto see how reasonablethey appeared. It would be foolish not to do so, even though
it indicatedsuspicionof the data, the assumptions,the methods,or perhapsmerelythe arithmetic.
Mr. Nicholson'sresults showed an averageexpenditureof about 26s. a week on food in families
consistingof man and wife only, with an extra6s. a week for the firstchild and an extra 3s. a week
for the second child. These additions "eemedto the speakerlow for the food cost of a child,
especiallyas allowancewas made for the parents to maintain their old standardof living. He
had worked on this problem and the results were, equallv with Mr. Nicholson's, subject to
difficultiesof interpretation. But he found that two adults spent an averageof 21s. a week on
food, and the effect of the presence6f a child aged 6 to 14 (he groupedchildrenaccordingto age)
was to increasethe expenditture on food bv 6s. 6d. a week--7s. for a first, 6s. 4d. for a second,and
only 4s. for a third such child. A child aged 1-6 increasedexpenditureon food by 6s. a week.
Further, he was quite certain that the standardof living of families with children had fallen,
especially for those with children aged 6 to 14. He was certain because expenditureon food
associatedwith a child was 62 per cent., whilstconsumptionof breadby weightwas 86 per cent.,
of that associatedwith an adult. The family with the child was using a greaterproportionof its
food expenditureon a cheap source of calories, and this indicatedincreasedpoverty.
This suggestedan alternativeway of measturingwhethera changein family compositionwas
associatedwith a changein the standardof living. It mightlegitimatelybe assumedin this country
to-day that all families had enough to eat when "enough"was measuredin terms of calories.
Hence, if the changein purchasesof breadwas proportionatelyequal to the changein expenditure
on food, then the standardof living was unchanged. A modificationwould have to be introduced
if the additionalperson in a family-for example,a baby-required a specialkind of food, or if
the additionalperson had discriminatingeffects on the wastage of bread as comparedwith the
wastageof other foods.
The results of this investigationcould be criticizedon generalgrounds. In fact, he criticized
the assumptionthat therewerearticlesusedentirelyby adults,consumptionof whichwas indepen-
dent of family composition. Mr. Nicholson fullv realizedthe difficultiesand expressedthem, so
really he was not criticizingthe author of this paper. His doubts rather were about applying
regression analysis when it depended on the validity of assumptionswhich were themselves
doubtful. In such cases he could not help wonderingNvhether, despiteits usefuilnessfor certain
purposes,regressionanalysiswas not made to do more work than it could usefullypeiform. It
was a mechanicalmethod, and such methods often did not show where to look for reasons,and

where assumptionsor possibly data might be wrong. It might be that the value of the product
of regressionanalysis was less than its cost, and an economistnever liked that.
Mr. J. R. CLEMENTSON said that what he had heard on this paperimpressedhim with the fact
that time and labour could be spent on unreliablematerial. The previous speaker,in his con-
clusions, had dealt with the point he wished to make. HIehimself had had to make surveysof
family income for commercialpurposes,to show what surpluses were available for spending.
In Mr. Nicholson'spaper 1,000familiesweredealt with,and it was assumedthat they all had two
children,but statisticallythev had 215children,and many familieshad as manv as six.
No recognitionhad been givenin the paperto familygifts, but in working-classfamiliesa coat
or a frock was very often given to a child as a present. It was also assumedthat none of these
familiesgot into debt, thoughthat often happened. They got out of debt again when the children
beganto pay their breadmoney. It must be rememberedthat it was people who were being dealt
with, not cardindices. It'wasassuinedthat they wereall good housekeepersor bad housekeepers,
good parentsor bad parents; but in dealing with families, or any statisticalsurvey of this type,
it was well to forget higher mathematicsand to get down to simple arithmetic. The ordinary
man was concernedwith potnds, shillings and pence in his family budget. Here was a family
in which a child had to have a special milk food costing lOs. a week, but the total liqllid food
bill otherwisefor all the family was only 7s. 3d. a week. He urged that these things should be
dealtwithin a simplemanner,ensuringthat the basicfacts werecorrect. For 1937-38a particular
cross-sectionof the population must have been taken. Did it include people who were out of
work ? There appearedto be no recognitionof employmentor unemploymentin this survey.
Mr. WILLSMORE thought that the author had fallen into a trap in using clothing as an index
of the scale of living. Whena womanhad two childrento bringup she had not the time to spend
as muchon her personalappearanceas whenshe had no children,and it was a fact that all married
women, quite apart from financialreasons, did not take as mnuchcare about their clothes when
they had children as they did when they were first marriedand without a family. Therefore,
when the authortook two families,one with childrenand one without, and said that becausethe
expenditureon adult clothing was the same in both the standardof living was the same, he was
wrong. It meantthat the male adult, in the familywith children,was clothinghimselfbetterthan
the male adult in the other family.
Mr. KEMSLEY said that in Table 14 he was puzzled by the percentageof cost of children.
He noticed, as ProfessorAllen had, that the ratio of food cost for the child was 35 per cent.
comparedwith the adult, and of clothingnearly65 per cent. The figurefor "sundries"was about
60 per cent. "Sundries"must include a large amount of goods bought for the household as a
whole, such as furnitureand other items. He wondered whether sundries could be broken
down in rather more detail in order to explain this difference in the proportiGn of the cost of the
child in respect of sundriesas comparedwith food. He thoughtthe amountof food was rather
low. Incidentally,Mr.Nicholson calculatedthat the figurefor tobaccofor man and wife was 3s.,
and for the four-personfamily 4s., indicating that the extra two children accountedfor an ex-
penditureon tobacco and cigarettesof Is.
A furtherpoint concernedthe ratio of food expenditurefor the first and second chila. It
indicatedthat, if the standardof living were constant, the averageage of the tvo childrenin the
two-childfamily was lower than the averageage of the single child in the one-childfamily, since
the average price of the various foodstuffs purchasedby the families shouildb'e more or less
constant. It would be interestingto have the averageage of the children.
He then turnedto a point made by several speakers,namelv, the question of representative
samples. The originalsample, pre-selectedby the Ministryof Labour,was over 20,000; 12,000
were collected, and this numberwas furtherrestrictedto 2,000, taking only those who supplied
an annualrecordof clothingexpenditureand four-weeklyfiguresfor otheritems. Mr. Nicholson
had had to restricthis sample furtherin order to secure the families requiredfor his analysis.
The proportionatereductionwas large, and he felt that here some bias might come in.
He felt that with regardto any budgetinquiry, the more intensivethe surveywas made, and
the moreinformationthatwasrequested,the more difficultit was to securea representativesample.
What was gainedby securingthe detailedinformationfrom each individualwas lost, possibly,by
riskinga greaterbias, involvinglack of representativeness in the sample. For that reason many
people had been investigatingthe possibilityof getting informationby interview.
Like Mr. Booker, he had made experimentsin attemptingto discoverthe extra cost of food
for children. In doing this, he did not select families of a particulartvpe, becausethat would
haveinvolvedthrowingawayalmost halfthesample. His solutionof the problemwas to dividethe

1949] Discussion on Mr. Nicholsons' Paper 417
personsin a familyin a seriesof types, broadlyclassifiedaccordingto sex and age, to describethe

family expenditurein terms of the total of a numberof parameters,one each for each type, and
estimate the parametersby least squares. The advantagewas that one's information was not
restrictedto a particulartype of children. It included other families where, for example, there
might be a grandmother,or familiesin which an unmarriedbrotheror sister was living.
Mr. A. J. THAYREsaid that, being a stockbroker,statistics of the workingclass family were

ratheroutsidehis normalfieldof study. Variouspointshad occurredto him duringthe discussion,
one of whichpromptedhim to ask about treatmentof holiday expenditure. In his own domestic
budgethe accountedfor holidays as a sundryitem. Perhaps,more correctly, the food element
and the rent elementin holiday expenditureshould be separatedand accountedfor under those
headings. He gave hypotheticalfigures to illustrate how large a share of working family ex-
penditureeach year might now be attributedto holidays, and suggestedthat statisticsof family
expendituremight be seriouslvbiased if this item were not properlytreated in future inquiries.
He would be interestedto learnhow the expertstreatedthis particularproblem.
Mr. NICHOLSON, in reply, expressedhis gratitude.to the various speakers-particularlyto

Professor Allen and Mr. Saunders-for their complimentaryremarks,and to others for their
stimulatingcriticisms. His indebtednessto both ProfessorBowleyand ProfessorAllen, who were
the pioneersin this field, must be obvious to anyone who had read their works. But his obliga-
tions were not confinedto the influenceof their writings. It was Professor Allen who first
instructedhim in the elementsof statistics,and his earliest efforts at researchwere done under
the guidanceof ProfessorBowley.
Most of his comments on the detailedpoints raised in the discussionwould be reservedfor
submissionin writing,but one or two commentscould be made now. First, with regard to the
bi-modalappearanceof the distributionof familieswith threechildren: the total numberof such
familieswas very small, and a simple test appliedto the figuresshowed, as was mentionedin the
paper, that therewas no significancein the bi-modalappearanceof this distribution.
ProfessorAllen had noticed an apparentdiscrepancybetweenthe total numberof families in
one table and the total shown elsewhere. The explanation would be w'oundin the third and
fourth paragraphsof AppendixIII.
Mr. Willsmorehad suggestedthat the use of expenditureon clothing to definethe standardof
living would cause the estimatedexpenditureon childrento be too low. But his argumentimplied
that familieswith childrenwould be enjoyinga higher standardof living than childlessfamilies
who spent the same as they did on clothing. If this argumentwere valid the estimatesobtained
for the expenditureon childrenwould tend to be, not too low as Mr. Willsmorehad suggested,
but too high.
He was not sure whetherMr. Booker'sfigureswere strictlycomparablewith his. Mr. Booker
did not say what standardof living his familieswere enjoying,a questionwhich was obviously
crucialto any comparison.
The point of view which had the author'sfullest sympathywas that of the speakerwho said
that he had spent too much time workingon this subject.
Mr. NICHOLSONlater repliedin writingas follows:

ProfessorAllen had comparedthe differencebetweenthe total expenditureof childlessfamilies
and that of familieshavingone child with the estimatedexpenditureof 17s. (average)on the child.
Table 2 shows that the averagefamily with one child spent only 3s. 6d. more than the average
childlesscouple. Comparingthe upperquartiles,the differenceis about 2s. 6d., and at the lower
quartilethe differenceis 5s. 9d. It is not only possiblebut certainthat the extra money available
to families with one child was less than the amounts spent on the child. The same holds for
familieswith two or threechildren; indeed,the formerhad no moremoneyavailablethanfamilies
with one child, while the latteractuallyhad less (see Table2).
I was interestedin Professor Allen's remarksabout the use of equivalencescales. These
scales are based on relative needs, as determined(partly) by nutritionalexperts, and it is not
surprisingthat they should differfrom the figuresI obtained,which reflectthe actual behaviour
of the families. Spendinghabits are seldom determinedby physicalrequirementsalone. This,
I think, is one of the reasonswhy equivalencescales are quite inappropriatefor analysingfigures
of famnily expenditure.
As to whetherthereis any bias in the figuresbecauseall the familiesin the samplemade weekly
returnsof expenditureon clothing,it is only possible to speculate. Theremay, of course, be bias
in any figures which are based, as all these working-classbudgets were, on voluntaryreturns.

418 Discussiont on Mr. Nicholson'sPaper [Part IV,
But it is impossible to know whether the voluntary method introduces any serious distortion
until we know what the truefiguresare.
I also enjoyedhearingthe highly sophisticatedviews of Mr. Lyle. It would be very nice if we
could find a form of equationwhichwould explainthe differencesbetweenthe expenditurefigures
of families of differentsize. But I am somewhatdoubtfulwhetherthe form of equation which
he suggestedwould fit the observationsverywell. Mr. Lyle found that childrenappearedto have
no curvature,and I do not like the idea of putting them into straightjackets.
Mr. Kemsleyaskedfor a subdivisionof the estimatedexpenditure,attributableto the children,
on sundries. The reasons against doing this are carefullyexplainedin the paper. Estimatesof
the amountsspent, on behalfof the children,on particularitems are boundto be unreliable; and I
emphasizedthat if the total expenditureon the item in questionis small the estimateis likely to
have a very wide marginof error. The queerresultfor tobacco is not at all surprising. For it is
well known that the amounts spent on drink and tobacco, shown in these budgets, are quite
untrustworthy.
Lastly, here are the figures,which the Ministryof Labour have kindly supplied,showing the
averageages of the children. In families with one child, the averageage of the child was 5*3
years. In families with two children,the averageage of the younger child was 3 2, and of the
elder child 6-8. The differencesin age, even allowing for possible economiesof scale, can hardly
explain why the extra child, in familieswith two children,appearsto consumemuch less than the
single child.
As a result of the ballot taken duringthe meetingthe candidatesnamed below were elected
Fellows of the Society:
WilliamBrass. JamesJoseph McErlain.
JamesCedricDavies. JamesFergusonMitchell.
WilliamR. S. Doll. John Murdoch.
John LeonardDuff. Paul Schiller.
T. W. Fazakerley. N. P. Srivastava.
Joan WinifredFloyd. RaghavendraR. Umarji.
ThomasAlfredHumphreys. Denis Weaver.
Ronald ArthurJackson. EdwardVictor Whillock.
WilliamLeofricKesteven.


Cuadratic Nicholdson

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Cuadratic Nicholdson

Uploaded by

Copyright:

Available Formats

Variations in Working Class Family Expenditure

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

Journal of the Royal Statistical Society

Part I.-THE GENERALPATrERNOF FAMILYEXPENDITURE

Appendix I: Regression Lines for Family Expenditure . . . . 388

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

1. Variations in Total Family Expenditure

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

Average Weekly Expenditure in Different Regions

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

2. Analysis of Family Expenditure by Means of Regression Lines: Introduction

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

t With the exceptionsmentionedin Appendix III.

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

For reasonswhichwill soon becomeclear,the analysisis simplifiedif a similartype of equation

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

shows only a slight increase,while expenditureon sundriesshows a markeddecline. We find,

TotalExpenditure 72s. 8d. per week

TotalExpenditure= 100s.per week

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

4. "Necessities" and "Luxuries"

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

5. Income Elasticities of Demand

Since N is a function of Y, we may expect to obtain differentvalues at differentlevels of total

Hence when N = 1, 0 = 0. When N > 1, 0 is positive; and when N < 1, 0 is negative.

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

6. Food, Rent and Income

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

Hence we should find, on the assumptionsmentioned,that:

Partial Correlation of Expenditure on Food and Rent, with Respect to

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

case, have beenjustifiedin assuminga curvilinearrelationshipbetweenErand Y,and we assumed,

"I wish you wouldn't squeeze so," said the

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

Y, = a, + b1X + c,X2 . . . . . . (2)

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

y1 = Y- Yo= aI-ao + (b--bo) X + (cl-co) x2 . . (4)

Using y2 to denote the amount spent on the second child, we have:

Y2 = Y2- Y1= a2-a, + (b2-b1) X + (C2-c CX2 X * (5)

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

K2 = 12 + m2X + n2X2 . . . . . (8)

k2=K2-K1 = 12-11 + (M2-ml) X + (n2-n,) X2 . . * (10)

These equationsenable us to estimatek, and k2 for differentvalues of X. The actual figuresof

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

Yl = xlJ + PJX + yX2 . . . . . .(12)

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

3. The Results Obtained

This content downloaded from 185.44.78.123 on Wed, 11 Jun 2014 05:50:06 AM

Yo = 201 8 + 6 5426Xa - 0070925X2 . . . . (i)

Y, = 232 2 + 7-4438Xa - 0096226Xa2 * * * (ii)

Hence we obtain the following equations for y1 and Y2:

Yi = 30 4 + *9012xa - *0025301Xa2 . . . (iv)

Y2= 84-4 - *8167xa + 0035819X . . (v)

Yo = 192-4 + 6 6844Xa - 0074934x(L2 . . . . (vi)

Y, 294-3 + 7 0352x(a . . . . (viii)

Y2 = 26X3 + 2092x, . . . . . . . (x)

and the values of Y1 and Y2 when Xa a = 115 3 are:

K1= - 15 3 + 9437xa - 0021616Xa2 * (xii)

Yi = 30 4 + 9012xa - 0025301Xa2 . . . (iv)

Y2 =- 485 + 21187Xb . . . . (xxv)