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Using the American Community Survey: Benefits and Challenges
latest-year income amounts is likely to be much more pronounced for the ACS 3-year and 5-year period estimates compared with the 1-year period estimates. Yet for the county-level estimates of median income required by HUD, only one-fourth of counties will have 1-year period estimates available, and over 40 percent of counties will have only 5-year period estimates available.
Even when users find inflation-adjusted period income estimates to be reasonably satisfactory for an application, they may prefer adjustments that reflect variations in price changes, such as the use of different price indexes for different geographic areas. However, only limited data are available for this purpose (see Section 4-D.3).
Finally, in the special case of poverty estimates, the Census Bureau’s method for determining poverty status for families and their members does not require adjusting income amounts for inflation. This situation arises because the Census Bureau compares the income of a family (or unrelated individual) for a 12-month reporting period, not adjusted for inflation, to 12-month nominal dollar thresholds by family size and type for that same period. These thresholds are derived from a base-year threshold (1982) using the national CPI, as is done in the official poverty measure. The only difference from the official measure, which uses calendar-year thresholds, is that the threshold for each family is the average of the CPI-adjusted monthly thresholds for that family’s 12-month income reporting period. For a 5-year period estimate, then, the poverty rate is the average rate of everyone in the sample over the 5 years.
Housing For housing amounts, such as value, rent, utilities, property taxes, and others, the Census Bureau makes no inflation adjustments for the 1-year period estimates. When, however, the 1-year period estimates for housing amounts are cumulated over 3 or 5 years, the Census Bureau adjusts them for inflation by using the ratio of the annual average CPI value for the latest year of the period to the annual average CPI value for the year for which the amounts were reported.
The issues that can affect uses of the inflation-adjusted income amounts can also affect the inflation-adjusted housing amounts. The ACS 3-year and 5-year period estimates for rent, housing value, utilities, and other housing amounts expressed in dollars for the latest year are not the same as estimates for the latest year. Moreover, increases (or decreases) in housing amounts often differ across areas and by item—for example, housing values in recent years have increased much more than many other items in the national CPI and have increased much more in some areas than others.
Section 4-D.3 discusses several issues involved in adjusting ACS period estimates of income and housing amounts for inflation. A key question that needs to be resolved by discussion among users and the Census Bureau is