National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: The Alternative of SIPP

« Previous: The March CPS
Suggested Citation:"The Alternative of SIPP." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 283
Suggested Citation:"The Alternative of SIPP." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 284

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EFFECTS OF THE PROPOSED POVERTY MEASURE 283 Indeed, the March CPS cannot be used to construct poverty measures for shorter (or longer) periods than a year. Moreover, the annual data it provides present a number of technical difficulties. In particular, family composition as defined in March may not reflect the composition during the income reference year, which can result in an erroneous assignment of poverty status. With regard to data quality, many income questions in the March CPS have high nonresponse rates: overall, 20 percent of estimated total income from the CPS represents imputed rather than reported values. There are other kinds of reporting errors as well. The problems with the March CPS are tractable in principle (e.g., more questions could be added or steps taken to improve quality). In practice, however, it would be difficult to effect further improvements because the March CPS is a supplement to the monthly labor force survey that is the basis of the nation's monthly unemployment statistics. The primary focus of the Bureau of Labor Statistics (BLS), which sponsors the monthly CPS, and the Census Bureau, which collects it, is to maintain and enhance the quality of the monthly labor force data. All of the supplements, including the March income supplement, are of secondary priority. One consequence is that fairly high nonresponse rates to the income supplement are tolerated so as not to reduce the likelihood that households will cooperate with the next month's employment questions. Also, the recent major redesign of the CPS, involving a new sample, revised questionnaire, and revised data collection and processing systems, focused on the main labor force component and not the supplements. The income supplement will benefit from some of the changes, such as the introduction of computer-assisted interviewing, but no special effort was made to revisit the questionnaire or other features of the income supplement itself. The Alternative of SIPP Recognizing the inherent limitations of the March CPS as long ago as the early-1970s, a federal interagency committee sponsored by the U.S. Office of Management and Budget proposed that a new income survey be fielded to improve the scope and quality of the information available on income and the effects of government assistance programs. This proposal ultimately led to the creation of SIPP, which began in 1983 (see Committee on National Statistics, 1989:Ch. 4). Currently, SIPP is designed as a longitudinal survey that follows the adult members of samples or "panels" of about 20,000 households. A new panel is introduced every February and followed over a period of 32 months, with interviews at 4-month intervals. The survey is scheduled for a major redesign beginning in 1996.22 22 See Appendix B for a detailed description of SIPP.

EFFECTS OF THE PROPOSED POVERTY MEASURE 284 SIPP has already made important contributions to knowledge about the dynamics of income receipt and program participation, health insurance coverage, asset holdings, and other topics related to material and other dimensions of well-being. SIPP has also made important strides toward obtaining higher quality income data than in the March CPS (e.g., nonresponse rates for many income sources are significantly lower), although there are still problems to overcome. With specific regard to poverty measurement, SIPP asks (or has asked) questions to obtain virtually all of the information needed to implement the proposed family resource definition. On the negative side, SIPP experienced significant start-up problems, including delays in release of data products and budget cuts that necessitated reductions in sample size and number of interviews. A panel of the Committee on National Statistics (CNSTAT) recently completed a thorough review and evaluation of SIPP, recommending changes to begin with the 1996 panel (Citro and Kalton, 1993). These changes, taken together, promise to significantly improve the usefulness of the survey for both longitudinal and cross-sectional analyses of income, program participation, and related topics. They include: • extending the length of each panel (i.e., each new sample of households whose members are followed over time) from 32 to 48 months; • following children as well as adult members of the households originally included in each panel, even if they move to other households; • introducing new panels every 2 years, so as to reduce the complexity of the survey (compared with the current design of introducing a new panel every year) and still maintain the ability to produce yearly time series for income, poverty, program participation, and other statistics; • enlarging the sample size of each panel so that about 55,000 households are available for cross-sectional estimates by combining two panels, compared with 38,000 under the current SIPP design (for fully funded panels) and 62,000 in the March CPS;23 and • making maximum use of the planned introduction of computer-assisted interviewing and database management system technology to improve data quality and timeliness. The CNSTAT Panel to Evaluate SIPP concluded that these changes would make it possible for SIPP to produce timely income statistics of high reliability. Noting the limited ability to make further improvements to the March CPS, the SIPP panel recommended that, over time, SIPP replace the March CPS for purposes of producing income, poverty, and related statistics.24 23 The CNSTAT SIPP panel believed that further expansion of sample size would be possible once planned improvements in data collection and processing are put into place. 24 The CPS would, of course, continue to include income items for use in labor force analyses.

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Each year's poverty figures are anxiously awaited by policymakers, analysts, and the media. Yet questions are increasing about the 30-year-old measure as social and economic conditions change.

In Measuring Poverty a distinguished panel provides policymakers with an up-to-date evaluation of:

  • Concepts and procedures for deriving the poverty threshold, including adjustments for different family circumstances.
  • Definitions of family resources.
  • Procedures for annual updates of poverty measures.

The volume explores specific issues underlying the poverty measure, analyzes the likely effects of any changes on poverty rates, and discusses the impact on eligibility for public benefits. In supporting its recommendations the panel provides insightful recognition of the political and social dimensions of this key economic indicator.

Measuring Poverty will be important to government officials, policy analysts, statisticians, economists, researchers, and others involved in virtually all poverty and social welfare issues.

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