Q.630.7 no. 614 C. & UNIVERSITY OF ILLINOIS LIBRARY AT URBANA-CHAMPAIGN ACES I AC. FAMILY CASH LIVING AND OTHER OUTLAYS AS RELATED TO GROSS CASH RECEIPTS For 48 Illinois Farm Families, 1938-1953 By Ruth Crawford Freeman and Ruth E. Deacon AGRIOULTUREUB^Y BULLETIN 614 SEP 2 6 1990 UNIVERSITY OF ILLINOIS CONTENTS TERMS AND PROCEDURES 4 VARIATIONS IN THE USE OF GROSS CASH RECEIPTS 7 FLUCTUATIONS FROM YEAR TO YEAR 25 HOW FAMILIES CAN APPLY THIS INFORMATION 27 REFERENCES 31 SUMMARY. ..31 This publication reports a study made cooperatively by the Department of Home Economics of the Illinois Agricultural Experiment Station and the Department of Economics of the Household and Household Management of the New York State College of Home Economics at Cornell University. The authors wish to acknowledge the cooperation, valu- able suggestions, and advice of the following: Dr. Mabel A. Rollins, Head of the Department of Economics of the House- hold and Household Management, Cornell University; Dr. Jean Warren, Professor of Economics of the Household and Household Management, Cornell University; members of the Department of Home Economics of the University of Illinois; and members of the Department of Agricultural Economics of the University of Illinois who summarized the farm-business records used in the study. Particular appreciation is due to the farm families who provided the records and the information about their use of income for sixteen years. Without them, the study would not have been possible. Urbana, Illinois July, 1957 FAMILY CASH LIVING AND OTHER OUTLAYS AS RELATED TO GROSS CASH RECEIPTS for 48 Illinois Farm Families 1938-1953 By RUTH CRAWFORD FREEMAN and RUTH E. DEACON* WE NEVER KNOW HOW MUCH WE HAVE TO SPEND IS 3. Common expression of farm homemakers when discussing their financial planning. In the past many homemakers could count on the poultry and egg money for family living expenses, but this has changed as farms have become more specialized. Many farms no longer keep poultry, and those that do may have it as a major enterprise, handled as a regular part of the farm business. As a result, family living expenditures must now come out of the current farm busi- ness receipts. Farm families and those who work with them have found it difficult to plan family cash living expenditures in relation to cur- rent income. Research has given information on how the com- ponents of family living expenditures are related to each other and to total family living expenditures, but the relationship of family living expenditures to gross cash receipts has remained less clear. Attempts have been made to relate family living expenditures to net income, but it has been difficult to obtain an accurate picture of the net income of farm families. For example, inventory adjust- ments, which are needed in calculating net income, are by their nature subject to considerable arbitrary judgment. This complica- tion presents more difficulties when income-expenditure compari- sons are attempted over a period of years. The use of net income for annual studies does have advantages when, for example, the general income level of farm families is compared with that of other families. Net income has not been a satisfactory basis for farm families in planning living expenditures. They do not appear to base this 'RUTH CRAWFORD FREEMAN, Associate Professor and Extension Specialist in Family Economics, University of Illinois ; RUTH E. DEACON, Associate Professor and Extension Specialist in Economics of the Household and Household Manage- ment, New York State College of Home Economics at Cornell University. 4 BULLETIN No. 614 [July, year's spending on last year's net income, and they cannot know this year's net income until after the decisions and the spending for farm expenses and other purposes have taken place. Families need a basis that will permit the same kind of consideration to be given to decisions about family living expenditures that is normally given to decisions about spending the other components of the total resources. Farm families want some measure for planning current spending for family living in relation to current receipts. More attention is at present being given to relating family liv- ing expenditures to the gross cash receipts of the farm. 1 An under- standing of such relationship may enable a family to improve its money management. This bulletin approaches family money management from the standpoint of gross cash receipts. It is based on the accounts kept by 48 Illinois farm families continuously for the sixteen years from 1938 to 1953. The bulletin analyzes the ways that these families allocated their gross cash receipts to farm expenses, investments, and family cash living. The information given here can be useful to farm and home development workers, extension specialists, and others who help farm families plan their money management. The method of analysis relating family cash living outlays to gross cash receipts can be applied by individual families to their own situation ; how this can be done is discussed in detail on pages 27 to 30. Families can use the data to compare their own allocations with those of similar families in the study, all of which were reasonably success- ful farm families. The data will also be of interest to those who want to see how one group of Illinois families reacted to changing economic conditions and to other variations. TERMS AND PROCEDURES Two general comparisons were made of the use of gross cash receipts. The dollar and percentage relationships of total farm expenses, total family cash living, and total investments to annual gross cash receipts over the sixteen years were studied. Also the degree of variation from year to year in each of these items was 1 Margaret G. Reid's leadership in the study of the relationship of living ex- penditures to gross income is recognized by the authors. 1957} FAMILY CASH LIVING AND OTHER OUTLAYS 5 studied, and the direction of change in gross cash receipts was compared with the direction of change in expenditures and invest- ments. These comparisons were made in four major ways: for the whole group of 48 families for all the 768 record-years and on the basis of type of farming, age of operator, and 4-year periods within the sixteen years. No division according to tenancy was made because for three- fourths of the 768 record-years the farms were operated by the families as full owners (411 record-years) or with an owner and tenant combination (167 record-years). The trend was toward increased ownership and toward operation of larger farms: Number of Average acres families per farm 1938 1953 1938 1953 Owner 22 32 257 276 Owner and tenant 13 10 268 321 Tenant 13 6 197 251 Three type-of-farming classifications were used livestock, grain, and general. These classifications were on the basis of the organization for the major source of income for the farm business ; there were variations, of course, within each classification. Live- stock farms had dairy, hog, or cattle operations or some combina- tion of them. On grain farms the major returns were from crops. General farms had a variety of enterprises as a source of income. Thirty of the farms were livestock farms, 9 were grain farms, and 9 were general. 1 The age of operator was considered in order to obtain infor- mation on the effect of the family cycle on expenditure and invest- ment relationships. The 30 livestock farms were divided into groups according to the age of the operator in 1938, the first year of the study. There were 11 families in the younger group (operator under 40 years of age in 1938), 10 in the middle age-group (oper- ator 40 to 49 years of age), and 9 in the older group (operator 50 or older). The place in the family cycle is further indicated in Table 1, where the number of children and other dependents is 1 Assistance in making type-of-farming classifications was obtained from Dr. L. J. Norton, head of the Department of Agricultural Economics at the University of Illinois until his death in 1956. 6 BULLETIN No. 614 [July, given for the 30 livestock farms. General farms and grain farms were too few to divide for similar age-of-operator comparisons. The four 4-year periods corresponded to periods of changes in average gross cash receipts. In the prewar period (1938-1941) gross cash receipts averaged less than $8,000 per family per year; in the war years (1942-1945) they were between $8,000 and $13,- 000; in the first postwar period (1946-1949) the averages were from $13,000 to $18,000, and in the second postwar period (1950- 1953) they ranged between $17,000 and $20,000. Gross cash receipts for any one year, as defined in this study, included gross farm income, labor earnings off the farm, earnings on investments, net borrowings, and gifts and inheritances. If a family spent more in a certain year than was covered by the current year's receipts, the past savings that were used were not included in this study as a part of gross cash receipts to balance the outgo. Farm expenses included all current expenditures for farm business operations, including interest payments and outlays for farm machinery and farm buildings. No inventory adjustments were attempted since the intent of the study was to record cash income and outgo transactions as they took place and to let the net Table 1. Number of Dependents on 30 Livestock Farms 1938-1953 (By four-year periods and by age of operator; each person counted once for each year of dependency) Number of children in different age-groups Other adults b Age of operator in 1938 and period Pre- school (1-5) Grade school (6-13) High school (14-17) College (18-22) Other' (over 22) Under 40 years (11 families) 1938-1941. . . . 34 40 40 45 40 39 31 16 6 5 3 8 17 23 20 23 23 22 13 8 5 3 1 4 12 13 15 22 20 23 7 4 5 3 1 1 7 3 6 7 10 4 1 2 1 1 5 6 1 1942-1945.. 38 1946-1949 15 1950-1953. 1 40 to 49 years (10 families) 1938-1941. 17 1942-1945. . 10 1946-1949 1950-1953.. 50 years and over (9 families) 1938-1941.. 1942-1945.. 1946-1949 1950-1953.. Most of these were living at home but were not dependent. b All dependent adults living at home other than husband, wife, and children. 7957] FAMILY CASH LIVING AND OTHER OUTLAYS 7 effects of these activities be reflected in cash operations in later years. Automobile, telephone, and electricity expenses were divided between the farm business and family living according to the families' decisions, usually half to each. Family cash living outlays were the cash expenditures for the family's purposes. An exception was major housing improve- ments, which were counted as investments. Investments included housing improvements, life insurance premiums, net principal payments over borrowings, bond and stock purchases, net increases in bank balances, and other investments. When the total of farm expenses, family cash living, income taxes, and investments exceeded gross cash receipts, the difference rep- resented the amount by which savings of previous years had to be used. Only slightly over $200,000, about 2 percent of the total gross cash receipts, was used in this way by the 48 families during the sixteen years. VARIATIONS IN THE USE OF GROSS CASH RECEIPTS A farm family decides after weighing alternatives how much of the gross cash receipts is needed for family living, for farm expenses, for necessary investments, and for income tax. The amounts that families choose to put into these categories are de- termined by their needs, interests, abilities, and commitments. Variations Among All 48 Families Average gross cash receipts per family were three and a half times as great in the high year as in the low year, ranging from $5,387 in 1938 to $19,445 in 1951 (Table 2). In the next two years they decreased about $1,000 each year. Both farm expenses and in- vestments were four and a half times as high in the highest year as in the lowest year, and family cash living outlays were three times as high. Although investments varied more widely than family living, the 16-year averages were about the same for the two. The coefficient of variation showed that variation was greatest for investments and least for family cash living (also see Table 5, page 15). When each of the three expenditure categories was re- BULLETIN No. 614 - sl n C n O n3 5 KS' S v^ OJD Cu C v- M-I .r ho o > . c<-> a C/J >* ^ . i-t *.H Q'g^ rtfS a 2 i sf s f a; C S. > 5i H.cS f-aS C rt ,rt 8.5 b -^ 6 8 U M (2 S I oooo oooo oooo oooo o oo t O > >oot5-< ~"rsTfoo >Ooorsoo j-oo^oo "O'-i'Ooo >oooo< . _ _ ioO>00^)> CSOOUTO OvoOiOOv ^OOOf) ~-i >O O ) to 10 t^ O cs *^ ^H 00 >O 00 O 00 t ) ^M PO O* 00 ^^ C OOOMOOO OOOOts O 00 & O f*}POCNO ^OIO^H O fi'-' O CM r-i ^H CS f-4 <*J a; -^ 1957} FAMILY CASH LIVING AND OTHER OUTLAYS 100 80 i 3 60 40 20 INCOME TAX v FARM EXPENSES: 1938 '39 41 '42 '43 '44 '45 '46 '47 '48 '49 '50 '51 '52 1953 Family cash living varied less percentagewise during the 16 years than either farm expenses or investments, particularly in the postwar years. (Fig. 1) lated to gross cash receipts, the correlation was highest for farm expenses and lowest for investments (see Table 5). Family cash living was more stable than farm expenses or investments percentagewise. The proportion of gross cash receipts spent for family cash living ranged from a high of 24 per- cent in 1939 to a low of 12 percent in 1943 (Fig. 1 and Table 2). On the basis of 4-year periods, the proportion was highest during the 1938-1941 period and lowest during the war years. During the last two periods the variation was only from 16 percent for 1946-1949 to 19 percent for 1950-1953. Variations in farm expenses and investments were much greater than for family living. The proportion of gross cash receipts used for farm expenses ranged from a low of 50 percent in 1943 to a high of 72 percent in 1951. Investments ranged from 10 to 31 percent. Both farm expenses and investments varied most during the 1946-1949 period and least during the 1950-1953 period. 10 BULLETIN No. 614 [July, The relative stability of family cash living outlays on a percentage basis meant that when a greater proportion was used for farm expenses, less was available for investments, and vice versa. The proportion allocated to family cash living declined as gross cash receipts increased. At the same time the tendency was for the proportion devoted to farm expenses to increase with higher gross cash receipts. No definite pattern appeared in the pro- portion allocated to investments. Of the 192 records in the 1938- 1941 period, only 8 had gross cash receipts of $14,000 and over, while 102 of 192 had such receipts in the 1950-1953 period (Table 3). Income taxes varied greatly among families. The range for total income taxes paid by any one family over the sixteen years was from $55 to $34,108. Fifteen of the 48 families paid more than $10,000 in income taxes over the entire period. The total for all families for all years was $362,764, or 3.7 percent of gross cash receipts. Table 3. Distribution of Gross Cash Receipts for Farm Expenses, Family Cash Living, and Total Investments, by Four-Year Periods and by Amount (Average of 48 livestock, grain, and general farms) Period Record- years Gross cash receipts Percent of gross cash receipts' Farm expenses Family cash living Total investments 63 Under 4,000 60 38 13 83 4,000- 7,999 65 23 14 1938-1941 38 8,000-13,999 60 15 26 7 14,000-21,999 71 12 16 1 22,000 and over 79 16 5 20 Under $4, 000 44 35 22 53 4,000- 7,999 55 25 21 1942-1945 70 8,000-13,999 55 16 25 34 14,000-21,999 63 11 24 15 22,000 and over 55 8 29 14 Under 4,000 41 44 16 30 4,000- 7,999 40 38 21 1946-1949 66 8,000-13,999 56 25 15 44 14,000-21,999 63 19 19 38 22,000 and over 69 10 17 11 Under $4,000 44 53 2 34 4,000- 7,999 44 39 16 1950-1953 45 8,000-13,999 61 26 12 51 14,000-21,999 61 19 16 51 22,000 and over 79 11 9 a May exceed or be less than 100 percent because of the use of past savings, income-tax payments, or other factors. 1957] FAMILY CASH LIVING AND OTHER OUTLAYS 11 Variations According to Type of Farming Gross cash receipts and farm expenses were greatest on live- stock farms. Although gross cash receipts for the sixteen years averaged highest on the livestock farms, the relative increase over the years was greatest on the general farms. Average receipts on general farms were 4J/2 times as high in the highest year as in the lowest ; on livestock farms they were 4 times as high in the highest year; and on grain farms they were 3 times as high. (See Table 4.) Farm expenses for the livestock farms averaged more than $10,000, twice as much as for the grain and general farms. Differ- ences in annual averages for farm expenses became more pro- nounced in the postwar years (Fig. 2). For livestock farms, farm expenses were 5 times as high in the highest year as in the lowest ; for general farms they were 4 ! /2 times as high ; and for grain farms 3 times. For both gross cash receipts and farm expenses, the coefficient of variation was considerably less for grain farms than for the other two types of farms (Table 5). Average outlays for family cash living were similar for the three types of farms. Families on general farms varied a little more than other families in their average annual spending for fam- ily cash living, from a low of $1,019 in 1938 to a high of $3,419 in 1951 (Fig. 2 and Table 4). The difference of $2,400 was $327 more than the difference for livestock farms, which were the most stable, varying from $1,228 in 1938 to $3,301 in 1949 (Table 4). Investments varied from year to year for all types of farms. The average amounts invested annually on the general farms were somewhat more stable than on either the livestock or the grain farms (Fig. 2). Investments on livestock farms averaged $2,493 annually in comparison with $1,822 on grain farms and $1,602 on general farms (Table 4). The coefficient of variation was higher on the general farms than on grain or livestock farms for both family cash living and investments, but strikingly so for investments (Table 5). This variability on general farms was influenced by an unusually large investment by one family and a relatively small sample. 12 BULLETIN No. 614 [July, SI !-* fM O'C -HOO OOOC OOOO -H X i/-. * ?jSj CNCN CN t^ NO ON ON CS PC CN CS i-i ONI/> O f! lOCNfO TJ< NO i-^ 10 ""> ** in in 00 00 ON IO 00 t^ VO fS CS O ON f*5 (S - -^ 00 C^ -*t -^ 00 00 00 IT) ro ^H CS 00 OOt^ NO^IT),- ONOfOO t~ ONO rt ^^ CSCSCN NtSCStN -H (M NO t^ ON^C^I t^ O ON I O ON O * O O t^ m oo o c I,-I , CS'tPOC 00 NO n_, NOONOOO NO gs la NO PO ON 00 (N NO NO NO ON ONCSNO CNON. -OOOO 00 PO -^ ro NO t ON ro 00 NO NOON NOOONOO OOOO'* *H NO PO Tt 00 -^ ON NO t- ONNONOOO CSI^"NOlo ^fl/ IONONOOO CN IO fO f*5 *** ON ^^ ON CN CO CN ON CD *j 4-, C i>. o .a OOONO POPTJ' OOONO CNfO^I NOI^OOON O CSfO ^('t'*'!' I/>U->UT/> ONO>ONO> O>ONONON .X OOO>O CNfl^lO ONONONON ONONONO* 1957} FAMILY CASH LIVING AND OTHER OUTLAYS 13 i x 0.2 SI g g'> fi . la 83 j2| sOsOO OOsOOs O Os JiOOO** CSfjT*"*' <"5 OM OsOO Os oooo o- CSCSf) CN )cs cs cs csm HO so so ) /) IO SO IO <*) t r^ oo Os oo /> Os e ) CS CS Os 49 C ** 00 CS IO t^. CS 0000 CSO O , soroOOsO f^ 00 OsoOt OO IOOO v-< ^ SOIO^IO ^OOlOOs t-"CSf^O OsCSt-"^ *O CS * '-"-ICN COCSCS CS 49 49 JH 49 49 U M 49 49 4) 49 bO rt t^.^f*5*-H CSCSr*5fO Ov iOf*5 *O ^ OTfO*^-< OCSO*\O ^ CS PO C-J " " 00 10 ro O )U>^HO vO CSiOiO r^ioov^ 'OfSOOO OOOo cSTfrs^* roo^^OCT- OMioO CSI-*IO*-H ^ CSl-*O\iO tO OO\ 00 OsOsOsOs OsO-OsOs I > CU < aJ 'o OOOsQ" CSfl'tlO SOt^OOOs O CS5 W%*<* 'ti""' 't f"t mi/>ini/> OsOsOsOs OsOsOsOs OsOsOsOs OsOsOsOs S So (g u c > cd o < 3J O 14 BULLETIN No. 614 [July, $4,000 2,000 I 6,000 4,000 2,000 1 " 1 18,000 fe V 16,000 I w 14,000 12,000 o < g 10,000 B LJ 5 8,000 6,000 4,000 2,000 I I I I I I I I I I I I FAMILY CASH LIVING GENERAL- LIVESTOCK INVESTMENTS LIVESTOCK GRAIN FARM EXPENSES LIVESTOCK- 1938 "39 '40 '41 '42 '43 '44 '45 '45 '47 '43 '49 '50 51 52 1953 The average amount spent for family cash living on the three types of farms was similar over the 16 years. Investments fluctuated considerably, particularly during the war years; total variation was greatest for grain farms and least for general farms. For farm expenses the variation from the low to the high year was more than $14,000 for livestock farms, about $7,000 for general farms, and about $5,000 for grain farms; proportion- ately also, livestock farms showed the most change from the low to the high year and grain farms the least change. (Fig. 2) 1957} FAMILY CASH LIVING AND OTHER OUTLAYS 15 Table 5. Coefficients of Variation and Correlation Coefficients for Gross Cash Receipts and Each Expenditure and Investment Category Type of farm and Gross cash Farm Family cash Invest- age of operator receipts expenses living ments All 48 families Coefficient of variation 86 109 58 160 Correlation coefficient .93 .56 .44 Type of farming Livestock Coefficient of variation 81 100 56 134 Correlation coefficient .93 .53 .49 Grain Coefficient of variation 59 76 57 130 Correlation coefficient .85 .64 .45 General Coefficient of variation 85 103 65 296 Correlation coefficient .90 .78 .34 Age of operator, livestock farms Under 40 years in 1938 Coefficient of variation 77 88 59 121 Correlation coefficient .96 .68 .50 40-49 years in 1938 Coefficient of variation 69 86 49 171 Correlation coefficient .79 .51 .62 50 years or over in 1938 Coefficient of variation 83 116 55 113 Correlation coefficient .93 .22 .49 Grain farms showed greatest variation in proportions used for farm expenses, family cash living, and investments. This greater variation on grain farms was accompanied by a smaller relative increase in gross cash receipts than on general or live- stock farms, as mentioned earlier (Fig. 3). In the proportion of annual gross cash receipts that went to farm expenses, grain farms ranged from a low of 37 to a high of 70 percent, livestock farms ranged from 51 to 77 percent, and general farms ranged from 44 to 69 percent. Family cash living on grain farms ranged from 16 to 32 percent, on livestock farms it ranged from 11 to 21 percent, and on general farms it ranged from 20 to 33 percent. Investments on grain farms ranged from 6 to 41 percent, on livestock farms from 8 to 31 percent, and on general farms from 5 to 34 percent (Table 4). For the period as a whole the average percent of gross cash receipts used for farm expenses was highest for the livestock farms, and consequently the percentages for cash living and invest- ments were lowest on the same farms. That farm expenses and investments move in opposite directions while family cash living remains relatively stable is brought out in Fig. 5, which illustrates 16 BULLETIN No. 614 [My, GRAIN- FAMILY CASH LIVING I I I i I I I i I INVESTMENTS I i I GRAIN / GENERAL - FARM EXPENSES 1938 '39 '40 '41 '42 '43 '44 '45 '46 '47 '48 '49 '50 '51 '52 1953 The percent used for family cash living varied least on the livestock farms, where gross cash receipts were highest. The percent used for investments varied considerably for all types and was highest during the war years and immediately after. In all but the first three years the per- cent used for farm expenses was highest on the livestock farms. (Fig. 3) 1957] FAMILY CASH LIVING AND OTHER OUTLAYS 17 the variations in expenditures for three livestock- farm families over the sixteen years. The coefficient of correlation between gross cash receipts and the expenditure categories for each type of farming was highest for farm expenses and lowest for investments. The correlation coefficient for farm expenses and gross cash receipts was lower for grain farms than for the other two types of farms ; the correlation coefficient for family cash living was highest for general farms; the correlation coefficient for investments was lowest for general farms (Table 5). Variations According to Age of Operator These comparisons are limited to the thirty livestock farms, divided according to the age of the operators in 1938, of which 11 were under 40, 10 were from 40 to 49, and 9 were 50 or older. For the entire sixteen years, the younger group had higher average gross cash receipts, farm expenses, family cash living out- lays, and income taxes than either of the other two groups (Table 6). For the first five years, the older group was highest, but then the two younger groups gained relative to the older group, par- ticularly in the postwar years. In 1951 gross cash receipts and farm expenses were twice as high for the younger group as for each of the other two groups. For the younger group, gross cash receipts were 7 times as high in the highest year as in the lowest, and farm expenses were 8 times as high. For the middle age-group, receipts were 4 times as high and farm expenses 6 times as high. For the older group, both categories were 2 l /2 times as high in the highest year as in the lowest. Family cash living outlays were similar for the two groups in which the operators were 40 years of age or older in 1938; for both groups they were twice as high at the end of the period as at the beginning. For the under-40 group, they were four times as high at the end of the period as at the beginning, when they were somewhat below the average of the other two groups. In the younger group the average family cash living outlay showed an increase over the previous year in all but three years. 18 BULLETIN No. 614 [July, i >> rt ^ Sti O OO OOOO OOOO OOOO O O -* OOOO OOOO 'a 4-> 1 a v 'S3 ' p x g -i 5 Co ~-i ^> 05 S c ^^^^ ^ 000 1 OOOO $82 I M "S Ji 1 M c sal -<-H JL 1 u s (2= m mt^ CN ot^ S8SS ^ fa rt 5S5S oS22: 3,:S SK" K 5K oSS!^ 00 tNPO O Expenses, -ivestock I u 2 S8 ** o " rt oor*5oom Ooot^m I oo-H-Hin < o>o ooomo -H t- 69 o> c * tN^ OOO CN O O OO CM 13 fa c ^ o "rt^S rt ** -l-l tN 69 69 oo^'' o ino -< V 69 M -O f~O O ^ o m*o in r^ *o o O Wl " 2 -J2 g .2* "C & a jag 1 >> SHi i li M ,Hrt,-, rt u ssr ,o " o X CU ^ p i Eg rQ <-<^H rtrttStS (NrOPOtO 3 (O -^i CS 00 *O f*5 00 00 CN in CS 00 fS Tt* i PO 00 00 O O ^ 00 00 ino^-Tt -^ oo oo o s CO IH I ^^^^ Jj * ooo m ll o| 9 1-s.l o *""* O t^ in -^ oo -^ oo o in ^H oo ^t* 1 D. fS t^POrJ" <*5 -<00 (N O*O Of- (N-H r-.in )istribution Inves o 5 " c ini/5ino -"Oinin 0*0000 ~* -^ CN *o o in ^t N 69 69 -m CN-H Annual I S3 o .... M c .... "5 o 1 10 ' rt .2 : : : : ^ > .... c .... c % H OOOO OOOO OOOO .... > c . . . . cu o JJ d : : ^ 2 8 S OOOO % OOOO-" OOOO CN r*5 -^t in OOOO 1957} FAMILY CASH LIVING AND OTHER OUTLAYS 19 3.2 C OOO 01OO OOOO 01 00> o oo oooo 800 o OOO OOC O OIO 0100 o oo -' i OOO o it of gross cash receipts mily Total In- T ish invest- come dng ments tax PC PC SO t "t 01OO "><*5O! 1 1 00 SOsO oooo so ^J< 00 t r*5 O 00 01 PO 01 Ol 010 01 "5 so Tf O W O) 00 so so Tf 10 o x o p >o OOO 1 f5 1 O E i2 - * s^p 0) IO t- O OO <*5 O 00 O tN ! & l ** *S O 3 PC 00 IO t-tOO 11 i S oS S3o- 00 01 so 01 00 t 00 to * 00 O 00 I IO IO tN 00 Ho I 3 5sS > V r on/5 so Ol u*5 O IO T*< t Ol Ol so so IO 0)00 00 'J* ^H 00 t~ 0) 01 * sOOOO O OOO so so ^J* so 0) 01PT) O) f5 t> 00 CO Ol 2 "o IH O oooo 49 00 t- 00 01 Of*50! IOt- 00 "5 O 00 oo PO oo IO t IO ^H too * "5 O OSO 01 OO S 1 t PO Jso m o H_c g I'M .5 O10) OsO-*o r^ Wi 1 oo 10 oo 0) IO 00 TO 0) PO 0) bJJ rt 'o (0 i* rt oior- 01 Ol /5 I/) t 0^0)^5 IO 0)SO O PO IO O Ol 0) ' 49 SOsO 10 01SO 10 il 3 fl> t^ OOO 10 so r 10 O) f*3 Ol Ol 0) OO 0) 0) "5 49 49 1 t^ Tjl 01 X, u s I/] u O , O 0) 00 "1 01 01 0)1*5 so r o i 10 r r OIO) 0) 01 01 Tt OSO SO t-O 01 y: PO 1 00 IO so fc o. 10OOO 01 fOOO r~ oim 10 SO 10 SO oor-t-so sOOOO O 01 O 00 IO r<5 t-5 so OSO so so sot ". t-O 49 al averages variation lal averages variation sor~ ooo * ft-1" O Ol <*} Average Range of anni Coefficient of xoo 1 - OOOO OOOO OOOO Average Range of anni Coefficient of 20 BULLETIN No. 614 [July, 30 20 40 30 u. o 20 a. 8 (9 ,:, 10 50 OR OVER FAMILY CASH LIVING I _ I _ i _ I UNDER 40 IN 1938- 80 1 i i I i i I UNDER 40 IN 1938 6 50 \\ T / ^ / \ ' \S ' ,j \sKJ /in_4Q VCARC m n y \ / ^S/ 40-49 YEARS OLD 20 10 FARM EXPENSES i I I i 1938 '39 40 '41 '42 '43 44 '45 '46 '47 '48 '49 '50 '51 '52 1953 The younger operators used a smaller percent of their gross cash receipts for family living; the middle age-group spent the highest percent in most years and also varied the most. All three age-groups varied considerably in the percent spent for investments. The younger operators spent a larger percent for farm expenses, but the percent fluctuated least. (Fig. 4) 1957] FAMILY CASH LIVING AND OTHER OUTLAYS 21 Investments for the entire period averaged somewhat higher for the older group than for the other two groups $2,724 for the older group compared with $2,222 for the middle age-group, which had the lowest average. Average investments varied consid- erably from year to year for all three groups. For all three groups, the coefficient of variation (Table 5) showed relatively less variation for family cash living outlays than for the other three categories. For the two younger groups, in- vestments had a higher coefficient of variation than gross cash receipts and farm expenses ; for the older group farm expenses had a slightly higher variation. The coefficients of variation for gross cash receipts, farm expenses, and family cash living were lower for the middle age-group and higher for investments than for the younger and older groups. The correlation coefficients show that farm expenses were more closely related to gross cash receipts than were family cash living or investments (Table 5). The coefficient of correlation for farm expenses and gross cash receipts was lower for the middle age- group than for the other groups. In the younger group, family cash living was more closely correlated with gross cash receipts than investments were. For the other two age-groups, the reverse was true, with the difference being particularly marked for the group 50 years of age and older in 1938. Farm expenses were higher and more stable, percentage- wise, for the younger group. The younger group ranged from 59 percent in the low year to 77 percent in the high year; the middle age-group ranged from 41 to 75 percent, and the older age- group ranged from 47 to 79 percent (Fig. 4 and Table 6). For the sixteen years, farm expenses for the younger group averaged 72 percent of the gross cash receipts; the other two groups averaged 62 percent. Family cash living varied most for the middle age-group. The range was from a low of 10 percent for the older group in 1943 to a high of 21 percent in 1949; the middle age-group ranged from 11 percent in 1943 to 29 percent in 1938 (Fig. 4). Investments were more stable for the younger group. The percent of gross cash receipts that went into investments for the younger group ranged only from 8 percent in the low year to 25 22 BULLETIN No. 614 [July, percent in the high year; the middle age-group ranged from 6 to 36 percent, and the older group ranged from 6 to 33 percent (Fig. 4). For the sixteen years, the younger group had the lowest per- centage in investments, averaging 13 percent, while the middle age- group (operators 40 to 49 years old) averaged 18 percent, and the older group averaged 20 percent. Again, the reverse relationship of farm expenses and investments is apparent. How three of these families, one from each age-group, divided their gross cash receipts is shown in Fig. 5. For each family, invest- How three of the families in the study used their gross receipts. (Fig. 5) Husband 25 years old in 1938, wife 24, no children. By 1953 there were three children 14, 12, and 9 years old. Husband a tenant-operator for five years, then in partnership with father on 560-acre livestock farm. Gross cash receipts ranged from $4,356 in 1939 to $67,709 in 1951. Family cash living ranged from $1,087 in 1938 to $5,361 in 1953; as percent of gross cash receipts, it ranged from 6 percent in 1941 to 13 percent in 1953. Farm expenses ranged from $2,662 (58 percent) in 1938 to $60,252 (89 percent) in 1951. Investments ranged from $91 (2 percent) in 1939 to $9,457 (14 percent) in 1952; for eight years the amount was 5 percent or less of gross cash receipts, and for eight years it ranged from 11 to 42 percent. The percent for investments was highest when that for farm expenses was lowest, and vice versa. Husband 40 years old in 1938, wife 39, and children 14, 16, and 17 (all married by 1953). In 1938 husband a tenant-operator on land owned by mother; in 1953 an owner-operator of the same 320 acres with a $30,000 mortgage on the land. Gross cash receipts ranged from $4,153 in 1939 to $38,194 in 1953. Family cash living ranged from $1,056 in 1939 to $5,446 in 1951 ; as percent of gross cash receipts it ranged from 8 in 1953 to 33 in 1948, with a median of 10 in the last five years. Farm expenses ranged from $1,969 in 1938 to $30,614 in 1953, and from 41 percent to 81 percent. Investments ranged from $128 (2 percent) in 1940 to $339 (9 percent) in 1953, and from 1 percent in five different years to 28 percent in 1938. Husband 50 years old in 1938, wife 47, daughter 20 (married in 1949 and a son born in 1952). Husband an owner-operator of 205 acres, paid for in previous twenty years; paid $7,200 for 180 additional acres from 1938 to 1953. Gross cash receipts ranged from $5,832 in 1938 to $18,310 in 1951. Family cash living ranged from $784 (13 percent) in 1938 to $2,872 (20 percent) in 1953; the highest percent was 22 in 1952, the median for the period was 14 percent. Farm expenses ranged from $4,992 in 1938 to $8,075 in 1951; as percent of gross cash receipts, they ranged from 31 in 1945 to 84 in 1938. Investments ranged from $91 (2 percent) in 1938 to the peak of $8,093 (70 percent) in 1944 and down to $1,394 (13 percent) in 1949. The average amount for the sixteen years was $3,900 or 35 per- cent of gross cash receipts. 1957} FAMILY CASH LIVING AND OTHER OUTLAYS 23 ments and farm expenses moved in opposite directions, percentage- wise. The youngest family had the greatest stability in family cash living, and the family in the middle age-group varied the most. 100 80 60 40 20 100 80 60 40 OPERATOR 51 YEARS OLD IN 1938 FARM EXPENSES ' FAMILY CASH LIVING I I I I I I I i OPERATOR 40 YEARS OLD IN 1938 20 100 80 60 40 20 OPERATOR 25 YEARS OLD IN 1938 if i 1938 '39 '40 41 '42 43 '44 '45 '46 '47 '48 '49 '50 '51 '52 1953 Fig. 5. (See opposite page for explanation) 24 BULLETIN No. 614 [July, 2 \O CS >O **5 -^ CS \Tt 4 1/5 t^ l/> IO O 00 O t-.Tj>^ 'OOO'J 1 vO^-^O O^O-* S u u U a ^ _ r^ ^ M rOCSI)tS CStS^tS a t^> o O ^ t^. -^H oo ^ 00 O es m -^ 't f*5 C o S rt esot^ o*t~'C ooio io o>ooooo p CJ * < M C _ ~ f*^ 00 i^^^*^O *^- O CS *O ^ t^ ^ IO (\1 (s] *H ^H cs CS PO ^^ f*5 f^ CM rN CS CM fN ^* r^ t>- 1/5 1/> vO ^** O O 00 PO <*3 10 00 M< 00 00 O O CM O **> O\ ^^ O f*5 in 00 t^ 00 CMCN'"* Tj"3"> rOrOf^tN ^ CM CM ^ r^t^io f^O-nio *OCN^O\ VOCNO CO ^^ 00 00 00 CS Ov ^* O\ O CM O PO ** PO CMfJCS Nf>rO'!j' ^rtOOvO t~r^fj>t^ 6* : S? lOfi'* >OOOt^oO OO>Oir> o O 1 g I- 1 : a 3 o d v - *9 CS >S | a T3 WtOO >O-iOOO t^OM^lT) I^-HOO C CN CS CS PC <*} CN CS CS f*5 CM CS CS P*5 -^ ^H 1 OS 3 S > '> 'arm expe cJ R OO-OfO OOOCMO OCSUT* CNCMt^.^ S fCOO -y ' rt Jo i* >'e c I ^ o^o cs r^ o o --" o ^H tr> t^ o o g CM CM cs c^c^i Ci^^CiCJ- CJ-C^G-G- 3 s -"-'~- ' ~~ c cMO.t~ mo*co OOCM'*-H *& *O 10 f*> cs t~CMio looomo* csinwo* o> rot^ 3 rt jfe 1 a 1 8 g rtCM fOfO-HCM rOuT^CM UT*CO^ 9 1 8 CMt5c5 'l'CMCM <)fOCMCM ") f^ CM ~ o I > * ss cash r CMO"* 00 O> CM\O f- <*)CS\O CM^OO >OmCM ulfOOlO O^t^CM 4 j O - e B CM CO CM r^rOCMTt ^TC-^'CO 69 1 rCvOCS 1^ t^ro T)I O O r- >O t^ OO fO 4 J ! LJ 3 3 X O\O CMf^^lO VOt^OOOv O CM<*5 ^9-* *<*** -*-ir> O O C^ OOOO ON O O O O* O* ON O* 1957] FAMILY CASH LIVING AND OTHER OUTLAYS 25 FLUCTUATIONS FROM YEAR TO YEAR Outlays for family cash living fluctuated less than the other categories. In all years the average dollar change in family cash living from the previous year was less than the changes in gross cash receipts, farm expenses, and total investments. Average year-to-year increases or decreases in family cash living were less than $1,000 for each of the sixteen years. In the other categories, increases or decreases were less than $1,000 for no more than two years. (See Table 7.) Amount of fluctuation in family cash living increased over the years. The proportion of record-years in which the change in living expenses from the previous year was less than $100 de- creased from 30 percent in the 1939-1941 period (14 percent were decreases and 16 percent increases) to 10 percent in the 1950-1953 period (Table 8). The proportion of record-years when changes in either direction were $500 or more increased from 25 percent for the 1939-1941 period to 54 percent in the 1950-1953 period. The proportion of record-years that showed increases in family cash living over the previous year rose during the 4-year periods until 1949, reflecting the general rise in prices during that time. The proportion declined during the next period, from 70 percent Table 8. Amount of Annual Fluctuation in Family Cash Living Amount of change Decreases Increases 1939-41 1942-45 1946-49 1950-53 1939-41 1942-45 1946-49 1950-53 Less than $100 Perce 14 :nt of total records years in period 765 16 654 9 826 9 355 7 414 2 315 5 202 4 025 1 031 1 001 1 102 1 012 1 022 001 126 35 30 51 57 Number 69 60 101 82 $373 $585 $792 $320 14 11 10 6 6 4 3 3 2 3 2 1 65 123 $393 6 4 7 7 6 5 5 2 5 2 5 7 1 3 5 70 132 $775 5 5 4 4 4 2 3 4 3 2 4 3 2 4 49 91 $805 $100-199 5 200-299 6 300-399 5 400-499 2 500-599 . . 7 600-699 1 700-799 . . 1 800-899 900-999 1 1,000-1,199. . 1 1 ,200-1,399. 1,400-1,599 1,600-1,799 1 , 800 and over All changes 43 Record-years of change . . Average change 62 $285 26 BULLETIN No. 614 [July, Table 9. Relation of Annual Fluctuations in Farm Expenses, Family Cash Living, and Total Investments to Fluctuations in Gross Cash Receipts Outlays Direction of annual Fluctuations in outlays fluctuations in gross in the direction of cash receipts gross cash receipts Decreases Increases Decreases Increases 1939-1941 (number of record-years) (percent of record-years) 52 92 63 66 59 70 76 68 68 74 72 59 72 52 60 72 64 64 Family cash living 46 65 1942-1945 , 68 124 Farm expenses 56 43 Total investments. . . , ... 81 1946-1949 70 122 60 Family cash living 37 Total investments ... 79 1950-1953 94 98 Farm expenses 73 Family cash living 57 65 All record-years 284 436 Farm expenses 64 47 Total investments... 72 There were 48 fewer years in this period since no comparisons could be made with the previous year for 1938. showing increases in 1946-1949 to 49 percent in 1950-1953, indi- cating the pressure for adjustments in family cash living in the latter period. During these two postwar periods, for the record- years that showed decreases in family cash living, the change was from an average decrease of $585 annually in 1946-1949 to a greater decrease of $792 in 1950-1953. Fluctuations in Outlays Related to Gross Cash Receipts The relative stability of family cash living is also shown by comparing the direction of annual fluctuation in gross cash receipts with the direction of change in family cash living, farm expenses, and total investments (Table 9). The direction of change in gross cash receipts from year to year was predominantly upward during the first twelve years, when about two-thirds of the record-years in each 4-year period showed increases. In the 1950-1953 period, however, only about half of the record-years showed increases. 1957] FAMILY CASH LIVING AND OTHER OUTLAYS 27 The amount of fluctuation was greater for increases than for decreases. In each of the four periods, for more than half of the record-years that showed a decrease, the decrease was less than 20 percent. More than half of the record-years showing an increase, on the other hand, had an increase of more than 20 percent. Declines in family cash living outlays corresponded less often with declines in gross cash receipts than did farm ex- penses and total investments. Declines in total investments were most closely related to declines in gross cash receipts, and farm expenses were next. Family cash living outlays decreased least often when gross cash receipts decreased ; in each of the three 4-year periods to 1949, less than half of the record-years in which gross cash receipts declined showed family cash living moving in the same direction. In the 1950-1953 period, when there were propor- tionately more record-years of decreases in gross cash receipts than in the earlier periods, family cash living outlays declined in 57 per- cent of the record-years in which gross cash receipts decreased. Increases in family cash living tended to correspond with increases in gross cash receipts. For the four 4-year periods, farm expenses increased in 66 to 76 percent of the record-years in which gross cash receipts increased. Total investments were some- what less inclined to increase with increases in gross cash receipts, the range being 59 to 70 percent for the four periods. In each of the periods, family cash living increased in more than half of the record-years when gross cash receipts increased, the range being 52 to 72 percent. Considering all of the record-years in which gross cash receipts increased, both total investments and family cash liv- ing increased in 64 percent of the cases. HOW FAMILIES CAN APPLY THIS INFORMATION Farm families can use the information in this bulletin in at least two ways. Those who work with the families on money manage- ment and on farm and home development can show how family living expenditures and investments can be planned by relating them to gross cash receipts in the way done in this study. The fam- ilies can then compare what they are planning to do with what similar families in this study did. 28 BULLETIN No. 614 [July, Following the method used in this study The approach used here relating family cash living to gross cash receipts can easily be applied by farm families. It is more directly related to the way their spending takes place than is a comparison between living expenses and net income. Once a family arrives at a reasonable percentage relationship for family living expenses, this percentage can be applied to the cash receipts of the farm business as they are received. 1 This enables a family that has an irregular income, as most farm families do, to plan ahead, because it has a rough measure of the amount that will be available for family living throughout the year. Families should, of course, use this method with judgment. Sometimes it will not be practical to take the entire amount from an income check ; at other times, more may be taken. But over the year, these variations can balance out to approximately the amount planned on. Families who have complete financial records can arrive at the percent they have been spending for family living rather easily. All they need to do is to divide their annual cash living expenditures by their gross cash receipts for the same year. To obtain a reasonable percentage, the figure should be calculated for several different years, and these percentages compared. In this way, families will be better able to take into account recent trends in their spending, including the effect of unusual demands. Families who do not have complete records can probably find a usable percentage by using their recent income-tax reports. These reports will show gross cash receipts and farm business expendi- tures; the families will probably be able to estimate fairly closely what their investments were. The amount that is left after subtract- ing investments and farm expenses from gross cash receipts will be approximately what was spent for family living during that year. Again, it is better to make comparisons for several years in order to obtain a more realistic percentage. 1 Of course, no part of the cash receipts from the sale of crops or animals on which a lien was placed in order to get a production credit loan can be considered for family living. But since the money was allocated for farm business expense, the portion of gross cash receipts used to pay off the loan would represent part of the over-all proportion of gross cash receipts for farm expenses. 1957] FAMILY CASH LIVING AND OTHER OUTLAYS 29 Families should not assume that what they have spent in the past is necessarily what they should plan to spend in the future. They may want to raise their present level of living, which would suggest raising the percentage figure unless an increase in income is anticipated. It may be that the figure should be lowered to reduce family living expenditures, although the percent spent for family living tends to remain stable and there is particular resistance to lowering it. Comparing an individual family figure with those for families in the study After arriving at a figure that shows what percent of their in- come they have been spending for family living, most Illinois fam- ilies may find it helpful to compare the figure with the figures for similar families. 1 The data for the 48 families in this study (repre- senting 768 record-years) offer a chance for such comparison. This does not mean that other families should spend what these families spent, for families differ greatly in their desires and goals. In comparing the figure for an individual family with those in the study, certain considerations discussed earlier in this bulletin and summarized below should be kept in mind. They may introduce questions or ideas that are as useful to the families in clarifying their own situations as are the actual figures in the tables. They may also explain why the percent an individual family has been spending for family living differs from the percent for similar families in this study. Type of farm. The percent of gross cash receipts spent for family living by the families in the study varied according to the type of farm. Although livestock farms spent somewhat more in dollars, the proportion was the lowest, about 15 percent; grain farms and general farms averaged about 25 percent. Age of operator. The data in this study indicate that the percent spent for family living tends to be lower for younger oper- ators, partly because the gross cash receipts are higher than for 1 Families in states where the living and farming situations are different than in Illinois should consider those differences in using these figures as a basis of comparison. 30 BULLETIN No. 614 [July, older operators. The average amount used for family living tended to decline with the higher age-of-operator groups. Amount of gross cash receipts. Families with high gross receipts are likely to spend a lower percent for family living than other families. In a period of rising income a family may reduce the percentage but not the dollars spent for family living. The 192 record-years studied for the 1950-1953 period show that the per- cent ranged from 39 or more for families with incomes under $8,000 to 19 or less for those with incomes of $14,000 or more. Economic situation. In periods of higher economic activity and higher gross cash receipts, the percent spent for family living tended to be lower. A family needs to consider differences in the economic situation when comparing its average figure with those for families in the study. Year-to-year fluctuations. Since family cash living expendi- tures are made up of a number of different items, they can be ex- pected to fluctuate somewhat from year to year. The information obtained from these 48 families indicates that fluctuations in the annual total are relatively small for most families. This may mean that families make adjustments in some categories to compensate for changes in others. A major outlay, of course, could not be ab- sorbed in this way and would require other arrangements. Relating family cash living and other outlays An attempt has been made here to relate family cash living out- lays to the over-all financial situation of farm families. Because the percentage of gross income spent on family living remains rela- tively stable, it provides families with a basis for planning their future spending. By also finding out what proportions of gross cash receipts are used for farm expenses and for investments, a family can obtain a more complete picture of how its resources are being distributed. But because these two categories are more variable, it is not sug- gested that they be used as a basis for planning. Relationships among the individual items within the three broad classifications family cash living, farm expenses, and investments will need to be analyzed before the total management possibilities can be evaluated. 1957] FAMILY CASH LIVING AND OTHER OUTLAYS 31 REFERENCES COCHRANE, W. W., and GRIGG, MARY D. The changing composition of family budgets for selected groups of corn belt farmers, 1940-42. U. S. Dept. Agr. Bur. Agr. Econ. 107p. 1946. CORRELL, MYRTLE GUNSELMAN. Farm incomes and living costs for certain Kansas farm families. Kans. Agr. Exp. Sta. Bui. 327:28-34. 1945. DEACON, RUTH E. Study of methods for the analysis of family financial adjust- ments from year to year. Cornell Univ. Agr. Exp. Sta. Memoir 347. 40p. 1955. FREEMAN, RUTH CRAWFORD. Spending and saving patterns of Illinois farm families from 1933 to 1950. 111. Agr. Exp. Sta. Bui. 592. 46p. 1955. FREEMAN, RUTH CRAWFORD, and BANE, LITA. Saving and spending patterns. Amer. Econ. Rev. 34:343-350. 1944. HEADY, E. O., BOCK, W. S., and PETERSON, G. A. Interdependence between the farm business and the farm household with implications on economic efficiency. Iowa Agr. Exp. Sta. Res. Bui. 398:384-428. 1953. HOLADAY, HELEN LUCILE. Expenditure patterns of selected Iowa farm families keeping home accounts, 1940-49. Unpublished master's thesis, Iowa State Col- lege. 1952. MACK, RUTH P. The direction of change in income and the consumption function. Rev. Econ. and Statis. 30:239-258. 1948. REID, MARGARET G. Effect of income concept upon expenditure curves of farm families. Natl. Bur. Econ. Res., Studies in Income and Wealth. 15:133-174. 1952. REID, MARGARET G., and DUNSING, MARILYN. Effect of variability of incomes on level of income-expenditure curves of farm families. Rev. Econ. and Statis. 38:90-95. 1956. SUMMARY Accounts kept by 48 Illinois farm families continuously from 1938 to 1953 were analyzed to see how the families allocated their gross cash receipts to farm expenses, investments, and family cash living. Average expenditures for family cash living were relatively stable, varying considerably less than farm expenses and invest- ments both in dollars and percentage. The coefficient of variation was also less for family cash living than for the other categories. Farm expenses varied much more in annual dollar averages than investments did, but the coefficient of variation was higher for in- vestments than for farm expenses. Thirty of the farms were livestock farms, 9 were grain farms, and 9 were general farms. The livestock farms had higher average gross cash receipts, higher average expenditures for both farm and home, and higher average investments than the grain or general 32 BULLETIN No. 614 farms over the 16 years. The coefficient of variation for farm ex- penses was lower for the grain farms than for the other two types, as was also the coefficient of correlation between gross cash receipts and farm expenses. The coefficient of correlation for family cash living was lower for livestock farms than for grain or general farms. The livestock farms with operators under 40 years of age in 1938 had higher gross cash receipts and higher average expendi- tures for both farm and home over the 16 years than farms with operators 40 to 49 years of age in 1938 and farms with operators 50 or over. On the livestock farms with younger operators, the pro- portion of gross cash receipts used for farm expenses was higher and fluctuated less from year to year than on the farms with older operators. For the 48 families, family cash living represented about 20 percent of gross cash receipts more on grain and general farms and less on livestock farms, more when gross cash receipts were relatively low and less when they were high. As gross cash receipts increased, the proportion going to farm expenses increased. The proportion allocated to investments was not as clearly related to increases in gross cash receipts as were the proportions going to family cash living and farm expenses. The proportion allocated to family cash living tended to remain relatively stable from year to year while farm expenses and investments shifted up and down in opposite directions. The stability of family cash living was also brought out by the fact that the degree of fluctuation from year to year was consider- ably less for family cash living than for farm expenses or invest- ments. Family cash living was somewhat less responsive to increases in gross cash receipts than were farm expenses and investments, but considerably less responsive to decreases in gross cash receipts. Farm expenses tended to have the closest relationship to increases in gross cash receipts, and investments tended to correspond most closely to decreases in gross cash receipts. UNIVERSITY OF ILLINOIS-URBANA 30112018394913