Creating an Integrated System of Data and Statistics on Household Income, Consumption, and Wealth Time to Build (2024) / Chapter Skim
Currently Skimming:
2 Definitions and Conceptual Issues
2 Definitions and Conceptual Issues
Pages 59-114
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 60... ...
, in the chapter's annex, more details on a number of thorny measurement areas -- such as the treatment of health insurance and retirement benefits in estimates of income and wealth -- that arise when conceptualizing and generating ICW statistics. BASIC NOTIONS Household and Other Units In developing a system of data collection and dissemination capable of tracking the distribution of economic wellbeing across the U.S.
|
From page 62... ...
, whereas overall wellbeing is defined more broadly to include health and social contextual elements. It has been observed that that these dimensions of PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 64... ...
for "nationally representative estimates of how, where, and with whom Americans spend their time, and is the only federal survey providing data on the full range of nonmarket activities, from childcare to volunteering."a The ATUS serves as a crucial input into the regular aggregate estimates of time use produced PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 65... ...
. Primary time use in reading, music, and the arts has been shown countless times to be important to child development (Fiorini & Keane, 2014; Duncan & Murnane, 2011; Li & Guo, PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 66... ...
And what about the financial benefits of home ownership? In contrast to their younger counterparts, older families are more likely to own their homes and therefore benefit from implicit rental income -- they could rent out their homes to generate income or live in the house PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 67... ...
For some households, current-period income may portray an incomplete picture, particularly if their members are able to draw on previously earned income or nonwage sources to purchase goods and services. Another potential complication arises as some financial flows, such as governmentprovided health insurance, may not be valued by individual recipients at face value, meaning that, offered the equivalent amount in cash, they would choose to spend the money on different consumption items.
|
From page 69... ...
To summarize, while standard expenditure measures -- which emphasize purchases of goods and services provided in the market -- miss some household activities that contribute to economic wellbeing, as well as goods and services provided by the government, by other households, or by PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 71... ...
For example, suppose that a researcher has obtained, for each respondent, W-2 forms showing after-tax earnings and contributions to retirement plans, bank records reflecting interest received, deposits, and withdrawals at ATM's or otherwise; credit-card purchases, cash benefits, interest payments, and balances; and down payments, mortgage payments, and receipts from house sales net of mortgage repayment. Such information could produce the following examples: PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 72... ...
If the transfer was partly in-kind (e.g., parents paid $1,000 per month for the child's rent expenses directly to her landlord and deposited $250 per month in the child's account for her other spending needs) , then the child's consumption would be substantially PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 73... ...
Some agencies check the identities for users and publish the discrepancies, and some correct the data where possible. Publication of the statistical discrepancy between the national income and product accounts -- the difference between gross domestic income and gross domestic product -- is a PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 75... ...
Traditional data collections, including those done PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 78... ...
These definitions include an income measure comparable to the national accounts, a measure of adjusted disposable income comparable to the OECD measure (including retirement distributions and in-kind transfers) , a measure of consumption similar to personal consumption expenditures, and a measure of wealth consistent with the financial accounts that is similar to the definition used in the regular publication for the Survey of Consumer Finances but which also adds the value of defined benefit pension wealth.
|
From page 81... ...
. In the national accounts, both realized and unrealized capital gains are reflected only in the capital accounts and not reflected as part of personal income.
|
From page 82... ...
Conclusion 2-6: Just as there are tailored definitions of income, consumption, and wealth to serve various research and policy purposes, the construction of conceptually complicated components, such as retirement income, health insurance benefits, capital 41 See Canberra (2011)
|
From page 83... ...
Similarly, a 65-year-old with Medicare is surely better off than an uninsured but otherwise identical 64-year-old. As suggested in the CBO measure of after-tax and transfer income, and OECD measures of adjusted disposable income, total health benefits from employer provided health insurance and government-provided health benefits are included at their full cost.
|
From page 84... ...
. The CBO definition of after-taxes-and-transfers income including realized capital gains is useful, even if it does not completely satisfy the budget identity or aggregate to the national accounts.
|
From page 85... ...
+ + Realized capital gains + + + Unrealized Capital Gains Imputed rent for homeowners + + + + Imputed service flows from durables PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 87... ...
+ + + + + nonfarm housing Mortgage interest + Rental value of farm dwellings + + + + + + Group housing (institutional + settings) Household utilities + + + + + + PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 90... ...
However, it does not include detailed information on PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 91... ...
44 https://www.bls.gov/cex/pce_compare_0203.pdf PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 93... ...
In the SCF (first column of the table) , which is the source of the most detailed information on wealth in the United States, unrealized capital gains typically enter the calculation of net worth through their inclusion in the potential liquidation value of a given asset (i.e., how much the household would 46 https://www.bls.gov/cex/consumption-home.htm PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 95... ...
But such a measure omits what may be seen as an insurance value of possible future accruals and time PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 96... ...
. 48 For generating retirement income, there are four primary types of inflows to consider: employer contributions, employee and household contributions, interest and dividends earned, and capital gains on retirement accounts.
|
From page 98... ...
disposable income, which better reflects the resources PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 100... ...
As itemized in Table 2-1A, the BEA's disposable income concept includes the value of employer-provided health insurance, plus a value for government-provided Medicare, LIHEAP, and a range of other safety net programs. As discussed in greater detail later in the report, a range of options exist valuing in-kind benefits.
|
From page 101... ...
51 The health insurance example is also sufficiently complex to illustrate the main issues that arise when valuing in-kind benefits more generally. Estimating the Value of Health Insurance Benefits for Income Calculations Health care, and health insurance as a means for obtaining it, is a fundamental element of people's wellbeing.
|
From page 102... ...
. The focus of this section is on how to attribute health insurance benefits in estimates of income or resources available to families, as opposed to how to value consumption of health care PREPUBLICATION COPY, UNCORRECTED PROOFS
|
From page 103... ...
Options for Valuing Health Insurance Benefits in Income Estimates As recommended above, and following the suggestions in Levy (2023) and Carpenter and Simon (2023)
|
From page 104... ...
concepts of disposable personal income also include health insurance benefits, even if health care is covered by national health care schemes (see Table 2.1)
|
From page 106... ...
applied the concept in their development of a Full-Income Poverty Measure, which incorporates a value of health insurance equal to full market costs (estimated as the average premiums for employer-provided health insurance) which is then incorporated to estimates of post-tax, post-transfer income.
|
From page 108... ...
. An argument that has been raised in opposition to equating the cost of all health insurance benefits with cash income has to do with inefficiencies in health care provision, which have the effect of transferring resources from plan beneficiaries to hospital executives, pharma companies, and some doctors.
|
From page 109... ...
and using different alphas for different insurance coverages. To understand the impact of health insurance in determining economic wellbeing it would be useful to provide the impacts on inequality of including Medicaid, Medicare, and Veteran's Health Care, along with ESI.
|
From page 110... ...
Ideally, for some purposes, it would be useful to have the capacity to count unrealized capital gains and losses. Treatment of Imputed Rent for Homeowners Another challenging definitional question when constructing ICW statistics is how to think about the value of owner-occupied housing as a resource to households and, indeed, as a consumption item.
|
From page 112... ...
For establishing thresholds in the Census Bureau's Supplemental Poverty Measure, mortgage payment cost estimates include both interest and principal components. However, most economists would agree that the interest-only portion of mortgage payments represents a more accurate depiction of user cost since payments to 65 https://www.bls.gov/cex/consumption-home.htm PREPUBLICATION COPY, UNCORRECTED PROOFS
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.