Income Data for Policy Analysis: A Comparative Assessment of Eight Surveys. Allocation rates by interview month

12/23/2008

With special tabulations of internal ACS data prepared by the Census Bureau, we were able to examine allocation rates in the 2003 survey by interview month. We undertook this assessment in order to determine if non-response to the income questions rose over the course of the calendar year, which might be indicative of respondents having increasing trouble with the concept of income over the past 12 months as they moved away from the prior calendar year. Instead, we found a surprising pattern that challenges long-held notions about the best time of year to ask survey respondents about their annual income.

For total income and for each of seven individual sources of income, the highest allocation rate occurs in or around the month of April, when tax returns are due to be filed (Table VI.11). Generally, the allocation rate in the peak month is one-third to one-half higher than in January, which has the lowest allocation rate for total income, wages and salaries, self-employment income, and interest and dividends and one of the lowest allocation rates for each of the other sources. The existence of a substantial peak around the month of April is true of nearly every income source, including Social Security income. For most of the income sources, allocation rates tend to stabilize in the second half of the year.

While this overall pattern is evident at all levels of relative income, it is weakest among persons below the poverty threshold and grows in strength with rising income (Table VI.12). Among persons in families above 400 percent of poverty, the 24 percent allocation rate in April is 7 percentage points higher than in January and 5 to 6 percentage points higher than in the months before March and after June. Further, in most months, allocation rates peak among persons between 100 and 200 percent of poverty and then decline as relative income rises. They decline least in the months of March through May.

TABLE VI.11

PERCENT OF INCOME ALLOCATED BY CALENDAR MONTH AND SOURCE: 2003 ACS
Month Total Income Wages & Salaries Self-Employ-ment Interest and Dividends Social Security SSI Welfare Retirement
Jan 18.5 15.2 19.2 14.0 17.0 17.2 15.9 14.6
Feb 19.0 15.6 20.9 19.5* 16.8 17.2 17.2 13.2
Mar 22.8* 19.1* 23.8* 22.3* 21.3* 18.5 17.0 19.6*
Apr 24.6* 20.9* 24.4* 25.1* 23.8* 17.1 19.5 21.5*
May 24.2* 21.3* 27.4* 19.3* 20.9* 18.4 19.1 17.9*
Jun 21.9* 18.6* 25.5* 19.0* 20.1* 17.6 25.8* 16.6*
Jul 19.6* 15.9 23.3* 15.9 17.7 14.6 16.1 14.6
Aug 20.5* 17.2* 23.7* 17.4* 16.6 16.0 20.3 13.1
Sep 19.4 15.8 22.4 14.2 17.5 15.8 11.2 13.9
Oct 19.6* 16.4* 20.8 14.1 16.3 14.9 14.3 14.7
Nov 19.7* 16.3* 22.7* 17.3 16.6 15.5 15.1 13.6
Dec 19.8* 16.6* 22.2 15.3 16.6 13.9* 16.1 13.5

Source:  U.S. Census Bureau, from the 2003 ACS. Note:  Three highest allocation rates for each source are indicated in bold.

*Statistically significant from January at the .05 level or greater.

TABLE VI.12

PERCENT OF INCOME ALLOCATED BY CALENDAR MONTH AND POVERTY RELATIVE: 2003 ACS POVERTY RELATIVE: 2003 ACS
Poverty Relative Based on Family Income
Month Under100% 100% to< 200% 200%to< 400% 400%or More Total
Jan 21.8 22.5 20.4 17.5 18.5
Feb 22.1 22.4 20.1 18.1 19.0
Mar 23.0 25.1* 23.1* 22.4* 22.8*
Apr 23.6 27.8* 24.5* 24.3* 24.6*
May 26.2* 26.1* 25.0* 23.7* 24.2*
Jun 22.4 25.3* 22.6* 21.2* 21.9*
Jul 23.4 24.1 20.9 18.7* 19.6*
Aug 23.3 23.3 21.3 19.9* 20.5*
Sep 21.3 22.5 21.0 18.6 19.4
Oct 23.4 23.6 20.7 18.7 19.6*
Nov 24.0 23.8 20.6 18.9* 19.7*
Dec 22.9 23.5 21.5 18.8* 19.8*

Source:   U.S. Census Bureau, from the 2003 ACS. Note:  Three highest allocation rates for each source are indicated in bold.

* Statistically significant from January at the .05 level or greater.

The same strengthening of the pattern with rising income is evident when respondents are classified by family income quintile (Table VI.13). This holds true even though allocation rates in every month decline with rising income through the fourth quintile. In every quintile April has the highest allocation rate, but the difference between April and the earliest months and second half of the year grows with rising income—at least until the fourth quintile. Allocation rates by month are nearly identical between the fourth and highest quintiles.

These findings suggest that while respondents may be best informed about their annual income when they are putting together their tax returns, they appear to be more sensitive to reporting what they know than at other times of the year. This produces a sharp reduction in response rates between the beginning of the year and the fourth month. The fact that this pattern is weakest among persons least likely to be filing tax returns (those below 100 percent of poverty) and among the sources of income held by persons who are least likely to be filing tax returns (SSI and welfare income) is consistent with the inference that the tax season induces sensitivity to reporting income in a federal survey. While strongly suggestive, however, these findings require further study to establish both the stability of the pattern over time and its origins.

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