Income data quality issues in the CPS

Monthly Labor Review

Volumn 129, Issue 6, 2006, Pages 38-45

  Weinberg, Daniel H ^a  

^a U S CENSUS BUREAU   (United States)

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[No Author keywords available]

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EID: 33746116857     PISSN: 00981818     EISSN: 00981818     Source Type: Journal    
DOI: None     Document Type: Article

References (31)

1. Carmen DeNavas-Walt, Bernadette D. Proctor, and Cheryl Hill Lee, Income, Poverty, and Health Insurance Coverage in the United States: 2004, Current Population Reports, P60-229 (U.S. Census Bureau, August 2005).
2. Constance F. Citro and Robert T. Michael, eds., Measuring Poverty: A New Approach (Washington, dc, National Academy Press, 1995).
3. Robert E. Rector, Kirk A. Johnson, and Sarah E. Youssef, "The Extent of Material Hardship and Poverty in the United States," Review of Social Economy, vol. 57, no. 3, 1999, pp. 351-58.
4. Expert [Canberra] Group on Household Income Statistics, Guidelines for Income Distribution Statistics: Final Report of the International Expert [Canberra] Group on Household Income Statistics [to the United Nations Statistical Commission] (Ottawa, Canada, Statistics Canada, March 2001).
5. For an extended discussion of the rationale for including and excluding individual sources, see Expert [Canberra] Group, Guidelines for Income Distribution Statistics: Final Report and Timothy M. Smeeding and Daniel H. Weinberg, "Toward a Uniform Definition of Household Income," Review of Income and Wealth, series 47, no. 1, March 2001, pp. 1-24. The first version of the Smeeding-Weinberg article was written for the Group's deliberations.
6. Smeeding and Weinberg, "Toward a Uniform Definition of Household Income," 2001, identified 36 of the 106 potential income components as major (the components they recommend excluding entirely are not listed in exhibit 2).
7. John Ruser, Adrienne Pilot, and Charles Nelson, "Alternative Measures of Household Income: bea Personal Income, cps Money Income, and Beyond." Paper prepared for the Federal Economic Statistics Advisory Committee, November 2004, available on the Internet at www.bls.gov/bls/ fesacp1061104.pdf (visited June 12, 2006).
8. This paper notes that the Bureau of Economic Analysis (bea) estimates this nonmarket income to be $104 billion in 2001, or 1.4 percent of money income. For more information on bea adjustments for underreporting and nonmarket income, see Carol S. Carson, "The Underground Economy: An Introduction," Survey of Current Business, vol. 64 (May and July 1984), pp. 21-37 and 106-17;
9. J. Steven Landefeld and Barbara Fraumeni, "Measuring the New Economy," Survey of Current Business, vol. 81 (March 2001), pp. 23-40;
10. and Robert P. Parker, "Improved Adjustment for Misreporting of Tax Return Information Used to Estimate the National Estimate the National Income and Product Accounts, 1977," Survey of Current Business, vol. 64 (June 1984), pp. 17-25.
11. Lee Lillard, James P. Smith, and Finis Welch, "What Do We Really Know about Wages?" The Importance of Nonreporting and Census Imputation, The Journal of Political Economy, vol. 94, no. 3, part 1, June 1986, pp. 489-506.
12. Gordon Harris, "Assessing the Robustness of Income Distribution Estimates,"In International Expert [Canberra] Group on Household Income Statistics, Second Meeting on Household Income Statistics: Papers and Final Report (Voorburg, The Netherlands, Statistics Netherlands, May 1998), pp. 5-14.
13. Rector, Johnson, and Youssef, "The Extent of Material Hardship and Poverty in the United States," 1999.
14. Prior to 2000, the cps Annual Social and Economic Supplement was administered only in March and was often termed the "March supplement." See Marc I. Roemer, "A Rejoinder to Rector et al.'s The Extent of Material Hardship and Poverty in the United States," Review of Social Economy, vol. 59, no. 2, 2001, pp. 249-51.
15. Ruser, Pilot, and Nelson, "Alternative Measures of Household Income," 2004.
16. John Bound and Alan B. Krueger, "The Extent of Measurement Error in Longitudinal Earnings Data: Do Two Wrongs Make a Right?" Journal of Labor Economics, vol. 9, no. 1, 1991, pp. 1-24.
17. As cited in Bruce D. Meyer, and James X. Sullivan, "Measuring the Well-Being of the Poor Using Income and Consumption," National Bureau of Economic Research Working Paper 9760, June 2003, on the Internet at www.nber.org/papers/w9760 (visited June 12, 2006), p. 7.
18. See John Coder, and Lydia Scoon-Rogers, "Evaluating the Quality of Income Data Collected in the Annual Supplement to the March Current Population Survey and the Survey of Income and Program Participation" sipp, Working Paper 215 (U.S. Census Bureau, July 1996), on the Internet at www.sipp.census.gov/sipp/workpapr/wp2l5.pdf (visited on June 19, 2006).
19. See also Marc I. Roemer, "Assessing the Quality of the March Current Population Survey and the Survey of Income and Program Participation Income Estimates, 1990-1996, "Working Paper (U.S. Census Bureau, Housing and Household Economic Statistics Division, June 2000), on the Internet at www.hhes/www/income/assess1.pdf.
20. Marc I. Roemer, "Using Administrative Earnings Records to Assess Wage Data Quality in the March Current Population Survey and the Survey of Income and Program Participation," November 2002, on the Internet www.census.gov/hhes/www/income/asa2002.pdf (visited June 12, 2006).
21. For example, see Richard Bavier, "An Early Look at the Effects of Welfare Reform," Unpublished manuscript (Office of Management and Budget 1999, March)
22. and Wendell Primus, Lynette Rawlings, Kathy Larin, and Kathryn Porter, "The Initial Impacts of Welfare Reform on the Incomes of Single-Mother Families "Working Paper (Center on Budget and Policy Priorities, 1999);
23. as cited in Meyer and Sullivan, "Measuring the Well-Being of the Poor," 2003.
24. See for example, Robert W. Cleveland, Alternative Income Estimates in the United States: 2003, Current Population Reports, 60-228 (U.S. Census Bureau, June 2005).
25. See Sharon Stern, "Valuing Housing Subsidies: A Revised Method for Quantifying Benefits in a New Measure of Poverty" (U.S. Census Bureau, August 2000), on the Internet at www.census.gov/hhes/poverty/ povmeas/papers/jsm00.pdf (visited June 13, 2006)
26. and Sharon Stern, Valuing Housing Subsidies in a New Measure of Poverty: A Statistical Match of the American Housing Survey to the Current Population Survey" (U.S. Census Bureau, August 2000), on the Internet at www.census.gov/hhes/poverty/povmeas/papers/jsm00comp.pdf (visited June 13, 2006).
27. Because these medical programs are so large, determining a better measure of the value of medical benefits or a better way of accounting for the presence of adequate health insurance was a high priority of the National Academy of Sciences panel on poverty measurement. David Ellwood and Lawrence H. Summers argued that there is little theoretical foundation for including medical benefits as income, on the one hand, but then not adjusting income for other medical expenditures, such as insurance premium costs for those who must buy their own insurance and out-of-pocket expenditures for medical care, on the other. See Ellwood and Summers, Conference on the Measurement of Noncash Benefits. Proceedings, vol. 1 (U.S. Census Bureau, 1986). To treat all medical costs consistently, they concluded that it is preferable to exclude all medical care costs from income because: 1) there are large variations in medical need and more medical needs do not leave the individual better off; 2) medical benefits are not fungible, especially for the poor, and 3) there are many difficult measurement problems in trying to value medical benefits. Aaron, in the same volume, suggested (a suggestion he attributed to Gary Burtless), if a person was not poor on the basis of income, he could still be classified as poor if he did not have health insurance coverage. He argued that medical care is not fungible, so medical benefits should not be added to income.
28. This last approach was adopted by the National Academy of Sciences in its report on poverty measurement (Citro and Michael, eds., Measuring Poverty, 1995).
29. A revised model was implemented in 2004.
30. Citro and Michael, eds., Measuring Poverty, 1995.
31. Laura Wheaton, and Linda Giannarelli, "Underreporting of Means-Tested Transfer Programs in the March cps." In American Statistical Association, 2000 Proceedings of the Section on Government Statistics and Section on Social Statistics, 2000.