Income Data for Policy Analysis: A Comparative Assessment of Eight Surveys. The Distribution of Income

12/23/2008

The boundaries between quintiles (that is, the dollar values of the 20th, 40th, 60th, and 80th percentiles) are themselves informative about the distribution of total family income in each of the surveys. These percentile points are rather similar for the CPS, ACS, and MEPS, but the SIPP quintile boundaries start above the CPS and decline progressively from there (Table IV.2). The NHIS boundaries remain at 92 to 93 percent of the CPS values through the 60th percentile but then rise to nearly 98 percent for the 80th percentile.

The ratio of the 80th to the 20th percentile provides a measure of inequality across the income distribution. The higher the ratio, the more unequally family income is distributed. Given the similarity of their quintile values, the ratios for the CPS, ACS and MEPS are very similar as well. Ratios for the latter two surveys are 97 percent of the CPS ratio of 4.56. The SIPP ratio is much lower at 3.96 or 87 percent of the CPS ratio, reflecting the progressive decline of the SIPP quintiles relative to the CPS values. The NHIS ratio, however, is 6 percent higher than the CPS at 4.83 because the 80th percentile in the NHIS income distribution is relatively higher than the 20th percentile when compared to the CPS.

We obtain similar but more complex findings if we compare per capita income by quintile across the five surveys. Using the ratio of per capita incomes between the top and bottom quintiles as our measure of income dispersion, we find that ACS is just two percentage points below the CPS with a ratio of 7.44 versus 7.57 (Table IV.3). MEPS is now markedly lower with a ratio of 6.90 or 91 percent of the CPS value. SIPP continues to have the lowest ratio at 5.90 or only 78 percent of the CPS ratio. By contrast, the NHIS ratio of 8.34 is 10 percent above the CPS ratio.

TABLE IV.2

FAMILY INCOME QUINTILE BOUNDARIES: FIVE SURVEYS
Quintile Boundaries CPS ACS SIPP MEPS NHIS
Percentile Value
20 %-ile 20,000 20,191 20,672 19,670 18,443
40 %-ile 37,051 37,656 35,870 37,214 34,584
60 %-ile 59,133 58,453 54,328 58,000 55,000
80 %-ile 91,207 89,548 81,785 87,338 89,068
Ratio of 80th to 20th %-ile 4.56 4.44 3.96 4.44 4.83

 

FAMILY INCOME QUINTILE BOUNDARIES: FIVE SURVEYS(continued)
Quintile Boundaries CPS ACS SIPP MEPS NHIS
Percent of CPS
Percentile Value
20 %-ile 100.0 101.0 103.4 98.4 92.2
40 %-ile 100.0 101.6 96.8 100.4 93.3
60 %-ile 100.0 98.9 91.9 98.1 93.0
80 %-ile 100.0 98.2 89.7 95.8 97.7
Ratio of 80th to 20th %-ile 100.0 97.3 86.8 97.4 105.9

Source:   Mathematica Policy Research, from tabulations of calendar year 2002 income from the 2003 CPS ASEC supplement, the 2001 SIPP panel, the 2002 Full-year Consolidated MEPS-HC, and the NHIS, and prior 12 months income, inflation-adjusted to calendar year 2002, from the 2002 ACS.

Like aggregate income, per capita income in the top quintile is affected by outliers and topcoding, so we also calculated the ratio of per capita incomes between the fourth and lowest quintiles. Here the patterns are more similar to what we saw with the ratio of the 80th to the 20th percentile, yet there are notable differences. First, the NHIS ratio exceeds the CPS ratio by an even larger amount, being 16 percent higher at 4.55 versus 3.93 for the CPS. In all cases the NHIS results are driven by a very low per capita income in the bottom quintile (and a low 20th percentile). Large ratios result despite the fact that the upper quintiles and percentiles never match the CPS. The MEPS ratio is also higher than the CPS ratio in this case—by 4 percent. The ACS ratio is 99 percent of the CPS ratio, while the SIPP ratio is 85 percent of the CPS ratio.

Overall, then, we see somewhat greater inequality in the income distribution in the NHIS than the CPS and lower inequality in the SIPP. The ACS matches the CPS very closely while the estimates for MEPS show less, about the same, or more inequality than the CPS depending on the ratio we calculate.

View full report

Preview
Download

"report.pdf" (pdf, 4.33Mb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®