Estimates of unreported asset income in the survey of consumer finances and the relative importance of social security benefits to the elderly

Social Security Bulletin

Volumn 67, Issue 2, 2007, Pages 47-53

  Fisher, T Lynn ^a  

^a SOCIAL SECURITY ADMINISTRATION   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

AGED; ARTICLE; ECONOMICS; GOVERNMENT; HUMAN; INCOME; INFORMATION PROCESSING; INTERPERSONAL COMMUNICATION; ORGANIZATION AND MANAGEMENT; SOCIAL SECURITY; UNITED STATES;

AGED; DATA COLLECTION; HUMANS; INCOME; OWNERSHIP; SOCIAL SECURITY; TRUTH DISCLOSURE; UNITED STATES; UNITED STATES SOCIAL SECURITY ADMINISTRATION;

EID: 44649174649     PISSN: 00377910     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (11)

1. See the Federal Reserve Board's tabulations of the 1989-2004 Survey of Consumer Finances at http://www.federalreserve.gov/pubs/oss/oss2/2004/ bulletin.tables.int.nominal.xls. The tabulations in Table 5 of that report indicate that the percentage of families holding any financial assets increased from 88.9 percent in 1989 to 93.8 percent in 2004.
2. Asset income in the Survey of Consumer Finances may have been reported as any of the following: interest; dividends; net gains or losses from the sale of stocks, bonds, or real estate; or net rent, trusts, or royalties. Asset income reported in Income of the Population 55 or Older does not include net gains or losses from the sale of stocks, bonds, or real estate.
3. All tabulations are weighted.
4. An aged unit consists of a nonmarried individual aged 65 or older or a married couple aged 65 or older. The age of the married couple is the age of the husband if he is 55 or older; otherwise, the age of the couple is that of the wife. The Survey of Consumer Finances, however, provides information on primary economic units (PEUs). A PEU contains the financially dominant person in the household and persons in the household who are financially interdependent with him or her; assets are reported for the PEU as a whole and not assigned to a specific person in the PEU. Most elderly PEUs consist solely of a married couple or nonmarried individual and as such can also be considered aged units. Approximately 10 percent of PEUs containing aged units 65 or older also contain other individuals in the household. These PEUs are excluded to prevent counting income from assets of nonaged individuals. Those omitted tended to have higher total income than the aged-only units.
5. These numbers and later estimates of reliance on gocial Security income are not directly comparable with those in Income of the Population Aged 55 or Older, which are derived from the Current Population Survey. Since the CPS reports data of all individuals in the household, noneconomically dominant units are represented in the CPS, while the Survey of Consumer Finances has only a few variables for members of a household who are not in the primary economic unit (PEU). The SCF generally reports higher median incomes for PEUs aged 65 or older than does the CPS for all aged units 65 or older.
6. Breakdowns of asset holdings in 1994 and 1997 are consistent with the general trend from 1991 through 2000 of increasing asset ownership by respondents with no reported asset income.
7. Arthur Kennickell, project director of the Survey of Consumer Finances, Isuggested "imputing" interest income from asset holdingsibsing market interest rates of return. He gives two reasons. First, the SCF is primarily concerned with the measurement of assets and liabilities, with measurement of income by source of secondary importance. Second, he cites Tom Juster's work on underreporting of asset income in the Health and Retirement Study (correspondence dated December 3, 2003).
8. Interest from checking accounts was not calculated because of variability in interest rates and required minimum balances for interest-bearing accounts. According to Bankrate.com, the average required minimum balance to avoid fees in October 2003 was approximately $2,258. Using $2,200 as the benchmark for whether checking accounts would accrue interest, the estimate of 75 percent of units receiving asset income in 1991 may be revised upward to 77 percent to reflect those respondents without estimated asset income who have more than the average minimum amount in their checking accounts. Likewise in 2000, the estimated percentage of units receiving asset income would increase from 77 percent to 80 percent.
9. These figures, were obtained by dividing the difference between the percentage of units with reported and imputed asset income receilit by the percentage of units with imputed or reported asset income receipt; for 1991, this was calculated as (75-61)/75.
10. All dollar estimates are in nominal dollars.
11. Although these administrative data would generally provide more accurate amounts of asset income received, they would not necessarily provide data on interest below. $10 or interest accrued on financial instruments taking longer than 1 year to mature. Further, these administrative data would not be able to be matched to all units in a survey.