Consensus Study Report
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This activity was supported by a contract between the National Academy of Sciences and The California Community Foundation, The William and Flora Hewlett Foundation (No. 2021-006760-GRA), National Academy of Sciences W. K. Kellogg Foundation Fund, Omidyar Network Services LLC, and the Alfred P. Sloan Foundation (No. G-2022-19394). Support of the work of the Committee on National Statistics is provided by a consortium of federal agencies through a grant from the National Science Foundation (No. 1560294) and several individual contracts. Any opinions, findings, conclusions, or recommendations expressed in this publication do not necessarily reflect the views of any organization or agency that provided support for the project.
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Suggested citation: National Academies of Sciences, Engineering, and Medicine. 2024. Creating an Integrated System of Data and Statistics on Household Income, Consumption, and Wealth: Time to Build. Washington, DC: National Academies Press. https://doi.org/10.17226/27333.
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COMMITTEE ON AN INTEGRATED SYSTEM OF U.S. HOUSEHOLD INCOME, WEALTH, AND CONSUMPTION DATA AND STATISTICS TO INFORM POLICY AND RESEARCH
TIMOTHY M. SMEEDING (Chair), Lee Rainwater Distinguished Professor of Public Affairs & Economics, University of Wisconsin-Madison
KATHARINE G. ABRAHAM, Distinguished University Professor of Economics and Survey Methodology, University of Maryland
WILLIAM A. DARITY, JR., Samuel DuBois Cook Distinguished Professor of Public Policy, Duke University
KAREN DYNAN, Professor of the Practice, Economics Department and Kennedy School of Government, Harvard University
JACOB W. FABER, Associate Professor of Sociology and Public Service, New York University
ROBERT E. HALL, Robert and Carole McNeil Joint Senior Fellow, Hoover Institution, and Professor of Economics, Stanford University
STEPHEN P. JENKINS, Professor of Economic and Social Policy, London School of Economics
DAMON JONES, Associate Professor, Harris School of Public Policy, University of Chicago
AMY B. O’HARA, Research Professor, McCourt School of Public Policy, Georgetown University
LUIGI PISTAFERRI, Professor of Economics, Stanford University
JOHN SABELHAUS, Non-Resident Senior Fellow, Brookings Institution
YAJUAN SI, Research Associate Professor, Institute for Social Research, University of Michigan
AMIR SUFI, Bruce Lindsay Distinguished Service Professor of Economics and Public Policy, University of Chicago
GABRIEL ZUCMAN, Professor of Economics, Paris School of Economics, and Associate Professor of Economics, University of California, Berkeley
JORRIT ZWIJNENBURG, Head of Section, Organisation for Economic Co-operation and Development
Study Staff
DAVID S. JOHNSON, Study Director
CONSTANCE F. CITRO, Senior Scholar
ALEX HENDERSON, Senior Program Assistant
CHRISTOPHER MACKIE, Senior Program Officer
Consultants
RACHEL CARPENTER, Indiana University
HELEN LEVY, University of Michigan
KOSALI SIMON, Indiana University
COMMITTEE ON NATIONAL STATISTICS
KATHARINE G. ABRAHAM, Department of Economics, University of Maryland, College Park
MICK P. COUPER, Institute for Social Research, University of Michigan
WILLIAM A. DARITY, JR., Sanford School of Public Policy, Duke University
DIANA FARRELL, JPMorgan Chase Institute
ROBERT GOERGE, Chapin Hall at the University of Chicago
ERICA L. GROSHEN, School of Industrial and Labor Relations, Cornell University
DANIEL E. HO, Stanford Law School, Stanford University
HILARY HOYNES, Goldman School of Public Policy, University of California, Berkeley
H.V. JAGADISH, Department of Electrical Engineering and Computer Science, University of Michigan
DANIEL KIFER, Department of Computer Science and Engineering, The Pennsylvania State University
SHARON LOHR, School of Mathematical and Statistical Sciences, Arizona State University (emerita)
NELA RICHARDSON, ADP Research Institute
C. MATTHEW SNIPP, School of the Humanities and Sciences, Stanford University
ELIZABETH A. STUART, Department of Mental Health, Johns Hopkins Bloomberg School of Public Health
MELISSA CHIU, Director
CONSTANCE F. CITRO, Senior Scholar
BRIAN HARRIS-KOJETIN, Senior Scholar
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Reviewers
This Consensus Study Report was reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise. The purpose of this independent review is to provide candid and critical comments that will assist the National Academies of Sciences, Engineering, and Medicine in making each published report as sound as possible and to ensure that it meets the institutional standards for quality, objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process.
We thank the following individuals for their review of this report:
Although the reviewers listed above provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations of this report nor did they see the final draft before its release. The review of this report was overseen by ARTHUR KENNICKELL, Federal Reserve System, retired and The Stone Center, CUNY, and KATHLEEN MULLAN HARRIS, University of North Carolina. They were responsible for making certain that an independent examination of this report was carried out in accordance with the standards of the National Academies and that all review comments were carefully considered. Responsibility for the final content rests entirely with the authoring committee and the National Academies.
Acknowledgments
This report, Creating an Integrated System of Data and Statistics on Household Income, Consumption, and Wealth: Time to Build, is the result of contributions from many colleagues, whom we thank for sharing their time and expertise. Much of the work on improving data and statistics on income, consumption, and wealth has been conducted and developed within the federal statistical system and with collaborations with academic researchers. We were lucky enough to be part of this improvement process. As such, we would like to thank the Russell Sage Foundation and the Washington Center for Equitable Growth for their sponsorship of our initial research (with other collaborators) into assembling data on income, consumption, and wealth for the same individuals. On behalf of the panel, we are extremely grateful to the various foundations for funding and making this report a reality—Spiegel Family Fund (with help from California Community Foundation), The Alfred P. Sloan Foundation, William and Flora Hewlett Foundation, Omidyar Network, and National Academy of Sciences W. K. Kellogg Foundation Fund.
The panel benefitted greatly from the multiple presentations provided during the seven virtual public meetings held on May 16, July 12, September 20, October 4, and October 25, 2022, and on January 30 and February 27, 2023. The panel had an excellent initial public meeting where three distinguished National Academies members presented their views on the importance of the panel’s work: Raj Chetty, Harvard University, Angus Deaton, Princeton University, and Emmanuel Saez, University of California, Berkeley. The panel was also grateful to hear from the federal agencies about their important and critical work they are already pursuing to
improve the measures of income, consumption, and wealth. These included Dennis Fixler and Marina Gindelsky, Bureau of Economic Analysis; Jonathan Rothbaum, Census Bureau; Thesia Garner and Adam Safir, Bureau of Labor Statistics; Jesse Bricker and Alice Volz, Federal Reserve Board; Bilal Habib, Congressional Budget Office; and Victoria Bryant, Statistics of Income Division, Internal Revenue Service.
At the following meeting, the panel heard about the new measures of income using Internal Revenue Service (IRS) data from Jeff Larrimore, Federal Reserve Board; Jacob Mortenson and David Splinter, Joint Committee on Taxation; Barry Johnson, Statistics of Income Division; the Comprehensive Income Dataset from Bruce Meyer, University of Chicago; the National Experimental Wellbeing Statistics from Jonathan Rothbaum, Census Bureau. It also heard about new efforts to estimate wealth from Eric Zwick, University of Chicago, and the construction of a method of accessing IRS data from Robert McClelland, Urban Institute. At one meeting, the panel heard about the innovative efforts at international statistical organizations, including presentations by Amanda Sinclair, Statistics Canada; Veli-Matti Tormalehto, Statistics Finland; Andrea Neri, Bank of Italy; and Arjan Bruil and Johan van Rooijen, Statistics Netherlands; and updates from Carla Kidd, Office of National Statistics, United Kingdom, and Meghan Stephens, The Treasury in New Zealand.
The panel also heard about novel uses of commercial data from Brian Bucks, Consumer Financial Protection Bureau; John Friedman, Brown University; Stephen Hansen, Imperial College; Matthew Shapiro, University of Michigan; and Chris Wheat, JPMorgan Chase Institute. The panel learned about efforts and challenges to create and use blended data from Mary Ann Bates, California Cradle to Career; Ron Borzekowski, Yale University; David Brown, Census Bureau; Abie Flaxman, University of Washington; Able Kho, Northwestern University; and Jerry Reiter, Duke University. Finally, the panel discussed the treatment of retirement income with Bill Gale, Brookings Institution; Olivia Mitchell, University of Pennsylvania; Jim Poterba, Massachusetts Institute of Technology and National Bureau of Economic Research; and Laura Quinby, Boston College. The panel also benefited from three experts who wrote commissioned papers on the treatment of health insurance: Helen Levy, University of Michigan; and Kosali Simon and Rachel Carpenter, Indiana University. We also thank the numerous audience members during these public meetings for their informative questions and discussions, and comments via Zoom chat.
The panel could not have conducted its work without the capable staff at the National Academies of Sciences, Engineering, and Medicine: Melissa Chiu, director of the Committee on National Statistics, provided invaluable support throughout the panel’s activities. Connie Citro and Christopher Mackie, with their extensive experience working with panels and drafting
reports, provided insightful comments that improved the report. Alex Henderson ensured the smooth operation of the workshop and other panel activities and assisted with report production. Kirsten Sampson-Snyder and Bea Porter organized the review process; and Marc DeFrancis’s thorough editing improved the readability and accessibility of the report. We thank all of them for their contributions and assistance.
Finally, we thank our colleagues on the panel. We appreciate your diligence and expertise in examining the difficult issues raised in this study. Your shared wisdom and generosity of time brought innovative ideas to the discussions and produced this report. It was a great pleasure to work with you all. Thank you.
Timothy M. Smeeding, Chair
David S. Johnson, Study Director
Panel on an Integrated System of Household Income, Consumption, and Wealth Data and Statistics to Inform Policy and Research
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Contents
HOW (AND WHY) CURRENT MEASURES ARE CONFUSING
THE WHO, WHAT, WHERE, WHEN, WHY, AND HOW OF MEASURING ICW DISTRIBUTIONS
What: The Choice of Income, Consumption, and Wealth Concepts
When: Adjusting Resources Over Time
Where: How Are Measures Adjusted for Differences in Geographic Location?
How: Which Dataset and Summary Statistic?
Why: The Purpose of the Measure
IMPORTANT RESEARCH QUESTIONS USING ICW
Measuring Disparities in Economic Wellbeing
U.S. AND INTERNATIONAL INITIATIVES TO IMPROVE ICW DATA AND STATISTICS
ANNEX 1-1: MEASURING AND INTERPRETING INEQUALITY STATISTICS
ANNEX 1-2: ECONOMIC WELLBEING AND THE NATIONAL INCOME AND PRODUCT ACCOUNTS
2 Definitions and Conceptual Issues
THE RELATIONSHIP OF INCOME, CONSUMPTION AND WEALTH TO ECONOMIC WELLBEING
INCOME, CONSUMPTION, SAVING, AND WEALTH LINKAGES
Sources and Uses of Cash in the Household
Conclusions About Definitions and Identities
Consumption and Consumption Expenditures
ANNEX TO CHAPTER 2: DIFFICULT DEFINITIONAL AREAS IN ICW MEASUREMENT
3 Statistics for Policy and Public Understanding
ESTABLISHED ESTIMATES AND RECOMMENDATIONS FOR IMPROVEMENTS
Established Series on Household Expenditures, Income, and Wealth
Other Statistical Estimates of Expenditures, Income, and Wealth
Joint Distributions of Household Income, Consumption, and Wealth
FEATURES OF NEW AND IMPROVED ESTABLISHED STATISTICS
DETAILED ESTIMATES FOR COMPONENTS, GROUPS, AND GEOGRAPHY
Classification by Economic Levels and Distributional Measures
4 Data Requirements and Criteria
RELEVANCE AND OTHER QUALITY ATTRIBUTES
Survey Errors from Nonresponse and Misreporting
Errors in Administrative Records
INTEGRATION PROJECTS: THE UNITED STATES
INTEGRATED DATA INFRASTRUCTURES: OTHER COUNTRIES
5 Data Solutions, Methods, and Options
WHAT COULD BE ACCOMPLISHED WITH AVAILABLE DATA?
Population and Characteristics
Household Balance Sheet Components
WHAT COULD BE ACCOMPLISHED USING PUBLICLY ACCESSIBLE DATA?
WHAT COULD BE ACCOMPLISHED USING A NEW PANEL WITH ADMINISTRATIVE DATA LINKAGES?
HOW CAN DISTRIBUTIONAL ICW DATA BE MADE MORE TIMELY?
WHAT CAN BE DONE IN TERMS OF SMALL AREA DATASETS?
MEASURING THE HARD-TO-MEASURE INCOME COMPONENTS
Employer-Provided and Public Health Insurance
Imputed Rent on Owner-Occupied Housing
6 Governance, Legal, and Privacy Issues
POTENTIAL DATA SOURCES: LEGAL AND PRIVACY ISSUES
DATA LINKAGES: GOVERNANCE AND PRIVACY ISSUES
Protecting Privacy of Linked Data
ACCESS TO ICW PRODUCTS FOR DATA USERS
LEARNING FROM INTERNATIONAL PEERS
ROADMAP FOR MAKING PROGRESS ON ICW DATA AND PRODUCTS
Appendix A: List of Conclusions and Recommendations
Boxes, Figures, and Tables
BOXES
1-1 Early Efforts to Measure Income, Consumption, and Wealth
2-1 The Role of Time Use in Economic Wellbeing
3-1 Defining Established Statistics
3-2 Accommodating Programs that Use Estimates of Money Income for Eligibility
3-3 Alternative Definitions of Racial Categories and Use of Skin Tone
4-2A Continuing Projects on Estimating U.S. Household/Family Income Distributions
4-2C One-Time Data Integration Projects on Income, Consumption, and Wealth
5-1 Measuring Transfers Across and Within Generations
5-2 Who Is Included in the Tax Data?
5-3 Creating a Coordinating Entity
5-4 Case Study: The Understanding America Study (UAS)
6-2 Other Variables That May Be Useful for ICW Data Infrastructure
FIGURES
1-1 Trends in personal income and household income, 1979–2022
1-2 Trends in inequality using various income measures, Gini index, 1979–2022
1-3 Percent share of income for the top 1% using various measures, 1979–2022
1-4 Inequality using income, consumption, and wealth, Gini indexes, 1968–2017
1-A Sample distribution of income
1-B Sample Lorenz curve, income shares by ventile group
2A-1 Composition of income, population age 55 and beyond
2A-2 Equivalized private and final income, by quintile
2A-3 Income at various percentiles, with and without health insurance benefits
3-1 Percentage share of personal, household, and disposable income by household decile group, 2021
3-2A Median and mean wealth, 2022, by age
3-2B Mean wealth by race/ethnicity, 1989–2019
4-1 Unit response rates to selected household surveys conducted by the U.S. Census Bureau, 1984–2019
5-1A Data infrastructure for ICW using Master Address File as a base (or spine)
5-1B Data infrastructure for ICW using IRS data as a base (or spine)
6-1 The three phases for the implementation of ICW data and statistics
TABLES
2-1A Established Definitions of Income
2-1B Established Definitions of Consumption
2-1C Established Definitions of Wealth
3-2 Examples of Units of Analysis Applied to Living Situations
4-5 Error Components of Multiple Data Sources and Linked Datasets
4-6 Integrated Income, Consumption, and Wealth Dataset Projects (USA)
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Acronyms and Abbreviations
ACS |
American Community Survey |
AFDC/TANF |
Aid to Families with Dependent Children/Temporary Assistance for Needy Families |
AGI |
adjusted gross income |
API |
Application Programming Interface |
ATUS |
American Time Use Survey |
BEA |
Bureau of Economic Analysis |
BLS |
Bureau of Labor Statistics |
CBO |
Congressional Budget Office |
C-CPI-U |
chained Consumer Price Index for All Urban Consumers |
CE |
Consumer Expenditure Survey |
CEP |
U.S. Commission on Evidence-Based Policymaking |
CES |
Current Employment Statistics |
CID |
Comprehensive Income Dataset |
CNSTAT |
Committee on National Statistics |
CPI |
Consumer Price Index |
CPI-U |
Consumer Price Index for All Urban Consumers |
CPI-U-RS |
Consumer Price Index Research Series |
CPS |
Current Population Survey |
CPS-ASEC |
Annual Social and Economic Supplement to the Current Population Survey |
CU |
consumer unit |
CV |
coefficient of variation |
DB |
defined benefits |
DC |
defined contributions |
DER |
Social Security Detailed Earnings Records |
DFA |
Distributional Financial Accounts |
DINA |
Distributional National Accounts |
EIP |
economic impact payments |
EITC |
Earned Income Tax Credit |
FA |
financial accounts |
FICA |
Federal Insurance Contributions Act (payroll tax) |
FNS |
Food and Nutrition Service |
FRB |
Board of Governors of the Federal Reserve Board |
FSRDC |
Federal Statistical Research Data Center |
GAO |
Government Accountability Office |
GDI |
gross domestic income |
GDP |
gross domestic product |
GE |
generalized entropy indices |
HFST |
Household Financial Statistics Transformation |
HI |
Health Insurance |
HRS |
Health and Retirement Study |
ICW |
income, consumption, and wealth |
IDDA |
Income Distributions and Dynamics in America |
IDI |
integrated data infrastructure |
IRA |
individual retirement account |
IRS |
Internal Revenue Service |
LEHD |
Longitudinal Employer-Household Dynamics |
LIHEAP |
Low Income Home Energy Assistance Program |
MAF |
Master Address File |
MAF-ARF |
Master Address File Auxiliary Reference File |
MOVS |
Mobility, Opportunity, and Volatility Study |
NBER |
National Bureau of Economic Research |
NEWS |
National Experimental Wellbeing Statistics |
NIH |
National Institutes of Health |
NIPA |
National Income and Product Accounts |
NIS |
National Immigrant Survey |
NPISH |
non-profit institutions serving households |
NSDS |
National Secure Data Service |
NSDS-D |
National Secure Data Service-Demonstration Project |
NSLP |
National School Lunch Program |
OECD |
Organisation for Economic Co-operation and Development |
OMB |
Office of Management and Budget |
OPM |
official poverty measure |
PCE |
personal consumption expenditures |
PEU |
primary economic unit |
PI |
personal income |
PIK |
Protected Identification Key |
PPM |
principal poverty measure |
PSID |
Panel Study of Income Dynamics |
PUMS |
public-use microdata sample |
QCEW |
Quarterly Census of Employment and Wages |
SAP |
Standard Application Process |
SCF |
Survey of Consumer Finances |
SER |
Summary Earnings Record |
SIPP |
Survey of Income and Program Participation |
SNA |
System of National Accounts |
SNAP |
Supplemental Nutrition Assistance Program |
SOI |
Statistics of Income Division (of the Internal Revenue Service) |
SPM |
supplemental poverty measure |
SSA |
Social Security Administration |
SSD |
System of Social-Statistical Datasets |
SSN |
Social Security Number |
TANF |
Temporary Assistance for Needy Families |
UAS |
Understanding America Study |
USDA |
United States Department of Agriculture |
WIC |
Special Supplemental Nutrition Program for Women, Infants, and Children |
WID |
World Income Database |
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