Income Data for Policy Analysis: A Comparative Assessment of Eight Surveys. Unrelated Subfamilies

12/23/2008

While the income data collected in the ACS compare relatively closely to the income data collected in the CPS, the ACS does not identify families among persons unrelated to the householder. That is, the ACS does not identify unrelated subfamilies (see Chapter III). All persons unrelated to the householder must be treated as unrelated (or secondary) individuals when calculating poverty rates with the ACS. As an unrelated individual, if a person’s own income is below the poverty threshold for a family of size one, then that individual will be considered as poor. This may result in some persons being classified as poor who would not be considered poor if their subfamily membership were taken into account. It may also result in some persons being classified as nonpoor when they would be considered poor as subfamily members.45 

TABLE V.4: COMPARISON OF THE CPS AND NHIS FAMILY CONCEPTS WITH RESPECT TO THE BOUNDARIES BETWEEN FAMILY INCOME QUINTILES:  MEPS
Quintile Boundaries NHIS MEPS
CPS Family NHIS Family Change CPS Family NHIS Family Change
 ( Percentile Value)20 %-ile 18,443 20,000 1,557 19,670 21,000 1,330
( Percentile Value)  40 %-ile 34,584 35,801 1,217 37,214 38,791 1,577
( Percentile Value)  60 %-ile 55,000 57,022 2,022 58,000 59,332 1,332
( Percentile Value)  80 %-ile 89,068 90,000 932 87,338 88,313 975

Source: Mathematica Policy Research, from tabulations of calendar year 2002 income from the 2003 NHIS and the 2002 Full-year Consolidated MEPS-HC.

We used the CPS to estimate the impact of the ACS treatment of unrelated subfamilies. Specifically, we assigned a poverty threshold to each member of an unrelated subfamily, reflecting a family size of one, and we used that person’s own total income to calculate a poverty ratio. We then compared the poverty class of each individual when calculated in this way to the poverty class obtained when membership in the unrelated subfamily was taken into account. Unrelated children under 15 are excluded from the universe for the calculation of official poverty rates, and they have been removed from our survey estimates (see Chapter III). However, they may be treated as poor for some policy applications, so we examine the impact of treating unrelated subfamily members as unrelated individuals with and without including children under 15 within the poverty universe.

Table V.5 presents a cross-classification of CPS unrelated subfamily member by their poverty class when their subfamily membership is taken into account (the row variable) and their poverty class when treated as an unrelated individuals (the column variable). Tabulations are presented for all persons, for children under 15, and for persons 15 and older. The key transitions and net results are summarized in Table V.6.

Overall, we find that if we retain all children under 15, then the impact of treating the 1.2 million unrelated subfamily members in the 2003 CPS as unrelated individuals is to increase the number of poor from 413.8 thousand to 812.3 thousand, or close to 400 thousand. If we remove from the universe the 571.7 thousand unrelated children under 15, all of whom would otherwise be counted as poor, then the number of poor persons drops to 240.6 thousand for an overall reduction of 173 thousand.

TABLE V.5

POVERTY CLASS OF UNRELATED SUBFAMILY MEMBERS BY POVERTY CLASS WHEN CLASSIFIED AS UNRELATED (SECONDARY) INDIVIDUALS: CPS
Age and Original Poverty Class New Poverty Class WhenTreated as an Unrelated Individual Total by Age and Original Poverty Class
Below100% 100% to< 200% 200% to< 400% 400%or More
(All Persons) 812,332 121,324 198,719 97,885 1,230,260
(All Persons)Below 100% 364,103 49,716 0 0 413,819
(All Persons)100% to < 200% 225,792 66,804 91,945 0 384,541
(All Persons)200% to < 400% 184,184 716 97,605 63,846 346,352
(All Persons)400% or more 38,253 4,088 9,169 34,038 85,548
Persons by Age
(Under 15) 571,745 0 0 0 571,745
(Under 15)Below 100% 218,611 0 0 0 218,611
(Under 15)100% to < 200% 173,450 0 0 0 173,450
(Under 15)200% to < 400% 152,565 0 0 0 152,565
(Under 15)400% or more 27,118 0 0 0 27,118
(15 and Older) 240,587 121,324 198,719 97,885 658,515
(15 and Older)Below 100% 145,491 49,716 0 0 195,207
(15 and Older)100% to < 200% 52,342 66,804 91,945 0 211,091
(15 and Older)200% to < 400% 31,619 716 97,605 63,846 193,787
(15 and Older)400% or more 11,135 4,088 9,169 34,038 58,430

Source: Mathematica Policy Research, from tabulations of poverty status in calendar year 2002 from the 2003 CPS ASEC supplement.

TABLE V.6: NET IMPACT OF RECLASSIFYING UNRELATED SUBFAMILY MEMBERS AS UNRELATED (SECONDARY) INDIVIDUALS, BY AGE:  CPS
Transition Status Under 15 15 and older Total
People who transition from:
Poor to nonpoor 0 49,716 49,716
Nonpoor to poor 353,134 95,096 448,230
People who remain:
Poor 218,611 145,491 364,103
Nonpoor 0 368,211 368,211
People who are:
Poor as subfamily members 218,611 195,207 413,819
Poor when defined as unrelated individuals 571,745 240,587 812,332
Net change in poor:
If unrelated children under 15 are included 353,134 45,380 398,514
If unrelated children under 15 are excluded -218,611 45,380 -173,231

Source:   Mathematica Policy Research, from tabulations of poverty status in calendar year 2002 from the 2003 CPS ASEC supplement

Given that unrelated children under 15 are excluded from the poverty universe for the ACS, our CPS simulation suggests the net effect of the ACS’s treating unrelated subfamily members as unrelated individuals is to reduce the estimated number of “officially” poor persons by about 173 thousand relative to what would be observed if unrelated subfamilies could be identified. This result obtains because more than three-quarters of the unrelated subfamily members who transition from nonpoor to poor when treated as unrelated individuals are children under 15, and they are not included in the official poverty universe. Furthermore, more than 200,000 children who would be classified as poor as members of unrelated subfamilies are dropped from the official poverty universe when they are treated as unrelated subfamily members. If, however, unrelated children under 15 are included in the poverty universe, as they would be for some policy analyses, then the net effect of the ACS’s treating unrelated subfamily members as unrelated individuals is to increase the number of poor by close to 400 thousand.

To make the ACS poverty estimates fully comparable to the CPS, then, we would need to add about 173 thousand to the ACS poor, given that we exclude unrelated children under 15 from the poverty universe. However, policy analysts who use the ACS for applications in which unrelated children under 15 are counted as poor would need to subtract about 400 thousand from their estimated number of poor persons in order to correct for the survey’s treatment of unrelated subfamily members as unrelated individuals.

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