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June 2006, Vol. 129, No. 6
Income data quality issues in the CPS
Daniel H. Weinberg
How well does the official data source measure income and depict poverty in the United States? The current official poverty statistics published by the Census Bureau are based on money income data collected on the Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS). The Office of Management and Budget specifies an absolute poverty standard (the official poverty thresholds) that gauges poverty by family size and income.1 Over the years, several studies have suggested changes in the way poverty is measured. For example, a National Academy of Sciences panel, among others, has suggested both that the appropriate measure of resources to use in a poverty measure is broader than money income—more of a disposable income concept that takes account of noncash benefits and work expenses (including taxes)—and that the poverty thresholds ought to be revised (upward).2 Also, Robert Rector, Kirk A. Johnson, and Sarah E. Youssef, as well as other researchers, have suggested, based on comparisons to the National Income and Product Accounts (NIPA), that income is underreported on the CPS ASEC.3 Such under-reporting would suggest that the estimated poverty rate is too high.
Whether these suggestions to change the way poverty is measured are useful will ultimately depend on the ability of the available data sources to measure economic well-being appropriately. This article focuses on the quality of one of those data sources—the CPS ASEC. The examination is organized in three parts, which mirror the survey process—questionnaire design, data collection and preparation (including edits and imputation), and post-collection data processing (to enhance the dataset). Finally, the article proposes a set of research projects that could be used to remedy many of the deficiencies identified and at least encourage discussion among interested researchers.
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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.
Related BLS programs
Labor Force Statistics from the Current Population Survey
poverty measures: accounting for medical expenditures—Aug.
Experimental poverty measurement for the 1990s.—Mar. 1998.
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