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Evan Horowitz

Where does your money go?

What do folks in Massachusetts do with their money? They save a little and spend a lot.

About 85 cents of every dollar people earn in Massachusetts gets spent on something, according to new data from the US Commerce Department. That is a bit higher than the national average, but there are states, including Oregon and Maine, where people spend more than 90 cents of every dollar.

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What are we spending all this money on? Housing is a big chunk of it. That alone makes up about 18 percent of all consumer spending in the state. But health care is an even bigger piece at 18.6 percent.

No other single category cracks 10 percent. But if you combine what Massachusetts consumers spend at restaurants with what they spend in grocery stores, total spending on food would likely reach double digits (the fact that BEA combines restaurant spending with hotel spending makes it hard to know for sure).

How does this compare with other states? At 18.6 percent, the amount of spending going to health care is higher in Massachusetts than in 40 other states. But the fact that 18 percent goes to housing merely puts us in the middle of the pack. In many states across the Northeast housing makes up more than 20 percent of consumer spending. That is true of Maryland, New Jersey, Connecticut, and Rhode Island.

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How has spending changed over time? Not as much as you might think. The biggest change is that while we spend more on health care, we are spending less on goods. Back in 1997, nearly 5 percent of spending went to clothing and footwear. Today it’s under 3 percent. The share of spending on cars, too, has dropped from 4 percent to 2.8 percent.

This shift from goods to services is not unique to Massachusetts. It is part of a broader transformation of the US economy.

Are these numbers good or bad? One reason experts are concerned about the rise of health care costs is because every dollar we spend on health care is a dollar we don’t have for other, potentially more productive, things, whether it is high-quality child care, new technology, or savings.

What makes consumer spending information useful is that it does not just tell us what we are spending our money on, it helps us think about whether we are spending it wisely.

Evan Horowitz digs through data to find information that illuminates the policy issues facing Massachusetts and the US. He can be reached at evan.horowitz@globe.com. Follow him on Twitter @GlobeHorowitz.
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