Administrative Data Rulz, Survey Data Droolz!

People, did you know that the US uses the Current Population Survey (CPS) as the source for our official poverty and inequality statistics?

I did not.

And that was only one of many things I learned from the abstract of this fascinating new NBER working paper ,”Using Linked Survey and Administrative Data to Better Measure Income: Implications for Poverty, Program Effectiveness and Holes in the Safety Net”

I can’t find an ungated version of the piece, the gated one is here, and here is the abstract:

“We examine the consequences of underreporting of transfer programs for prototypical analyses of low-income populations using the Current Population Survey (CPS), the source of official poverty and inequality statistics. We link administrative data for food stamps, TANF, General Assistance, and subsidized housing from New York State to the CPS at the individual level. Program receipt in the CPS is missed for over one-third of housing assistance recipients, 40 percent of food stamp recipients and 60 percent of TANF and General Assistance recipients. Dollars of benefits are also undercounted for reporting recipients, particularly for TANF, General Assistance and housing assistance. We find that the survey data sharply understate the income of poor households. Underreporting in the survey data also greatly understates the effects of anti-poverty programs and changes our understanding of program targeting. Using the combined data rather than survey data alone, the poverty reducing effect of all programs together is nearly doubled while the effect of housing assistance is tripled. We also re-examine the coverage of the safety net, specifically the share of people without work or program receipt. Using the administrative measures of program receipt rather than the survey ones often reduces the share of single mothers falling through the safety net by one-half or more.”

A shorter version could be Administrative Data Rulz, Survey Data Droolz!

If these findings hold up under the peer review process, it’s a really big deal. Assistance is under-reported, poverty is over-reported and the safety net catches a lot more people that the official statistics report.

Hat tip to Scott Winship.