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Measuring Poverty: A New Approach (1995)

Chapter: Other Sources of Error

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Suggested Citation:"Other Sources of Error." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 417
Suggested Citation:"Other Sources of Error." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 418

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APPENDIX B 417 do not take low-income or receipt of program benefits into account in imputing program-related variables. Doyle and Dalrymple (1987) found that the imputation of income in the 1984 SIPP panel for households reporting receipt of food stamps produced a larger proportion of such households with high monthly incomes that would make them ineligible for Food Stamp Program benefits than households that reported both their cash income and food stamps. Allin and Doyle (1990) compared program participants from the 1984 SIPP panel whom they simulated to be eligible for food stamp benefits with participants whom they simulated to be ineligible because of excessive incomes or asset holdings: they found that only 5 percent of the eligible participants but 28 percent of the ineligible participants had some or all income or asset values imputed. Coder (1992b), in an exact match of the 1990 SIPP panel with IRS records for married couples with earnings, found results similar to the 1986 CPS-IRS exact-match study reported above. Records with imputations for SIPP earnings contributed significantly to the overall underestimate of wages and salaries in the SIPP in comparison with the IRS tax returns. Thus, while mean SIPP earnings in cases with no imputations were 94 percent of mean IRS earnings, mean SIPP earnings in cases with imputations were only 85 percent of mean IRS earnings. Also, while 88 percent of cases with no imputations had SIPP earnings within 1 decile of IRS earnings, only 75 percent of cases with imputations were in this close agreement. Other Sources of Error A number of other error sources have been identified in the March CPS and SIPP, particularly with regard to poverty and related income statistics, although no definitive results are available on their effects. The CPS, like other surveys with a rotation group design, is subject to rotation group bias, in that respondents who are newer to the survey give different responses than do respondents who have been in the survey for a longer period. For example, the unemployment rate estimated for households in the incoming CPS rotation group each month is 7 percent higher than the average for all eight rotation groups (Bailar, 1989: Table 6). There has been no analysis of how rotation group bias might affect poverty and income estimates from the March supplement. Reporting errors, as distinct from nonresponse, are also a potential problem. Very few record checks that compare survey reports with independent sources (e.g., tax or program records) for the same people have been conducted for the March CPS. Coder (1991) conducted such a record-check study in his 1986 exact-match CPS-IRS analysis. He noted that the net CPS aggregate underestimate of 2-3 percent masked widespread over- and underreporting of amounts and that the imputation procedures did little to correct

APPENDIX B 418 the bias from nonresponse. Despite these errors, the CPS distribution of earnings was very similar to that derived from the IRS. The most serious error problems were concentrated at the bottom and top of the distribution. Estimates of poverty and income from the March CPS are affected by the fact that the sample comprises persons present at the March interview who are asked about income in the preceding calendar year. Thus, income from people who died during the year or otherwise left the survey universe is missed entirely (this is not true for SIPP). Also, family composition is measured as of the March following the income reference year, and no information is obtained about intrayear changes in composition. For example, two people found to be married as of March will be classified as a married couple for the entire income reference year and assigned the combined income of both spouses for that year. However, this treatment is misleading, with regard to classification both by family type and by income level, if, in fact, the couple's marriage took place after the start of the income year. The limited available evidence suggests that annual poverty rates in the CPS may be biased upwards to some extent by the mismatch of family composition and income (see Czajka and Citro, 1982; Williams, 1987; see also Lamas, Tin, and Eargle, 1994). In SIPP, researchers have looked at the equivalent of rotation group bias, namely time-in-sample or conditioning effects. As a panel progresses, respondents may acquire new knowledge that affects their behavior: for example, they may apply for benefits from government assistance programs as a direct consequence of learning about such programs from the survey. They may also gain experience with the questionnaire that leads them to give either less accurate or more accurate answers than in earlier interviews. However, studies conducted with SIPP to date suggest that conditioning effects are scattered and of limited effect (see, e.g., Pennell and Lepkowski, 1992). Some record-check studies have been conducted with SIPP, including the 1990 SIPP-IRS exact match (Coder, 1992b). Marquis and Moore (1990a, 1990b) carried out a record-check study that matched SIPP records in four states from the first two waves of the 1984 panel with records from eight state and federal programs (AFDC, food stamps, unemployment insurance, worker's compensation, federal civil service retirement, Social Security, SSI, and veterans' pensions and compensation). The results showed negatively biased participation rates for most programs: that is, net underreporting of participation, although there were overreports as well as underreports. For most programs, there appeared to be relatively little bias in reporting of benefit amounts for those who correctly reported their participation. In one state, a large proportion of AFDC recipients incorrectly reported their benefits as general assistance. One problem identified in SIPP and other longitudinal surveys is the "seam" phenomenon, in which respondents are more likely to report changes

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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:

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  • Definitions of family resources.
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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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