All four surveys clearly experience net underreporting of income.5 The very rough comparisons of aggregate incomes for the population as a whole suggest that the March CPS captures about 90 percent of the regular cash income estimated by independent sources (Bureau of the Census, 1989a: Table A2; 1992b: Table C-1) and that the CEX (Interview Survey) in turn captures about 90 percent of the income reported in the March CPS (Cutler and Katz, 1991: Table A2). Aggregate income amounts for SIPP and the March CPS are virtually the same (Jabine, King, and Petroni, 1990: Table 10.8): SIPP obtains higher reports of nonearnings income (by about 6%), but somewhat lower reports of earnings (by about 2%) compared with the March CPS. The assumption is that some people are reporting net rather than gross earnings to SIPP. If SIPP obtained as complete reporting of earnings as the March CPS, it would capture 1-2 additional percentage points of regular income.

In inferring from comparisons of poverty rates across the surveys, it appears that income underreporting at the lower end of the distribution is most problematic in the CEX, followed by the March CPS, with the PSID and SIPP obtaining more complete reporting. Thus, in the period 1984-1991, poverty rates based on before-tax cash income from the CEX were higher than the rates from the March CPS, which, in turn, were higher than those from SIPP (see Table 5-12). Duncan and Rodgers (1991) find that poverty rates in the PSID are below those in the March CPS and comparable to those in SIPP. Duncan, Smeeding, and Rodgers (1992: Table 1) consistently find a smaller percentage of families with incomes below $15,000 in the PSID than in the March CPS; the difference ranged from 0.4 to 3.0 percentage points in the period 1967-1988. (As noted above, PSID estimates of low-income families do not appear biased by differential attrition, although underrepresentation of Hispanics may account for some of the CPS-PSID difference.)

The evidence suggests that the greater the emphasis on income reporting in a survey, the lower is the estimated poverty rate. Thus, the less complete income reporting at the lower end of the distribution in the March CPS relative to SIPP is probably partly due to the fact that the March CPS is a supplement to a survey in which the major emphasis is on collecting monthly labor force information. Income reporting is probably particularly poor in the CEX Interview Survey also partly because the CEX is an expenditure survey, not an income survey. The secondary role of income data is evident in many aspects of the Interview Survey design and questionnaire content. Thus, income is asked for the preceding 12 months, rather than quarterly; only a few major income sources are asked separately for each adult member of the

5  

Net underreporting is a combination of underreports and overreports of income. For specific income types, classification errors also occur. Inferences of net underreporting, obtained from comparing survey estimates with those from the National Income and Product Accounts, other independent sources, or other surveys, must be made with care, as differences in definitions and processing procedures can affect the validity of the comparisons.



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