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The Future of the Survey of Income and Program Participation (1993)
Commission on Behavioral and Social Sciences and Education (CBASSE)

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Achieving SIPP's Goals In this chapter we amplify our views on SIPP's goals, indicating priority areas for research and development and the implications that we see for modifications or improvement to the survey content. Chapters 4-6 discuss, respectively, the implications for SIPP's design, data collection and pro- cessing, and data products. We also consider in this chapter the role of both the Current Population Survey (CPS) March income supplement and admin- istrative records in the achievement of SIPP's goals. IMPROVING DATA ON INCOME AND OTHER ECONOMIC RESOURCES Since at least the time of the Great Depression and World War II, a major goal of the federal statistical system has been to measure the economic resources of the population and of family and household units. There has been continuing keen interest in assessing how resources have changed over time for these units and in characterizing the distribution of economic re- sources in the population as a whole and for important subgroups. Resources are important to measure because they represent the potential ability of people and households to consume goods and services in order to attain a level of economic well-being. Conceptually, economists might agree that consumption should be examined directly as a measure of eco 43

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44 THE SURVEY OF INCOME AND PROGRAM PARTICIPATION nomic well-being. However, because of difficulties in measuring con- sumption and because many government programs provide cash payments (i.e., potential rather than actual consumption), the United States histon- cally has relied on measuring economic resources as a proxy for economic well-being. (Economists relate economic resources to consumption follow- ing the Haig-Simons accounting identity that defines flows of income as the sum of changes in net worth and current consumption; see Bradford, 1986.) For many years, the focus of official measures in the United States has been one component of economic resources, namely, regular cash income before taxes.2 Since the early 1980s, the Census Bureau has supported research on experimental income measures that subtract out most taxes (which represent a use of resources that makes them unavailable to support con- sumption) and that take account of other kinds of resources, including ma- jor types of in-kind benefits (Bureau of the Census, 1982, 1988b, 1990a, l990b, l991b). To date, the Census Bureau's work has not extended to the valuation of asset holdings (other than equity in one's house) or the contn- bution of nonmarket, nongove~nment resources (e.g., the value of home production or income from the underground economy).3 1As is always the case with attempting to assert a general point, there are exceptions. The first one is the difference between what a unit actually consumes and how it values it. The issue here is the utility from consumption and the attempt to make interpersonal comparisons of this utility through such devices as equivalence scales. However, equivalence scales are controversial enough, both conceptually and practically, that it does not seem useful to put forward the measurement of the utility of consumption as a goal for a federal statistical program such as SIPP. 2Anderson (1988:Ch. 7) documents the efforts in the 1930s to develop reliable measures of the unemployed population and people eligible for government assistance, which ultimately led to the CPS as a vehicle for collecting employment and income data. See Goldfield (1958) for a history of income data in the CPS and the decennial census through 1955 and Weluiak (1990) for an updated history of income questions in the CPS. With regard to more direct measures of consumption, the Bureau of Labor Statistics has a long history of conducting consumer expenditure surveys: major surveys were conducted in 1888-1891, 1901-1903, 1918-1919, 1935-1936, 1950, 1960-1961, and 1972-1973, and a con- tinuing Consumer Expenditure Survey (CEX) was initiated in 1979 (see Goldberg and Moye, 1985). The survey data have been used to study aspects of economic well-being, but their primary use has been to develop the market baskets that are the basis for the consumer price index. The current continuing CEX has a small sample size: 6,800 consumer units for, the quarterly interview survey component and 6,000 consumer units for the 2-week diary survey component. 3Currently, the Census Bureau publishes 14 experimental income measures in all. The taxes that are excluded from one or more of these measures are social security payroll taxes, federal and state individual income taxes, and property taxes on owner-occupied housing. The valua- tions of in-kind benefits that are included in one or more measures cover food stomps, school lunches, Medicaid, Medicare, employee health insurance premiums, and subsidized housing. Some of the measures include estimates for realized capital gains, and one measure includes the net imputed return on equity in owner-occupied housing.

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ACHIEVING SIPP'S GOALS 45 We agree with Smeeding (1992) and others who argue that the Census Bureau should adopt a broad definition of economic resources to use as a guide for developing improved measures. We note that SIPP was originally designed and has been striving to achieve this goal. In comparison with the March CPS, SIPP's measures of many of the components of cash income (including returns to assets) and in-kind benefits are much more detailed, are obtained for more disaggregated time periods, and can be aggregated for a greater variety of economic units (individuals, households, families, and subunits eligible for such programs as AFDC and SSI). Tables 3-1 and 3-2 list nonasset and asset income sources collected in SIPP and for- what time periods information is obtained about recipiency and amounts for each source. Unlike the CPS, SIPP obtains direct measures of taxes and the value of asset holdings. In comparison with administrative records sources of in- come data (e.g., IRS tax returns), SIPP provides a wealth of relevant demo- graphic and socioeconomic detail for analysis. Also, SIPP includes close to the entire population, not just taxpayers or program beneficiaries, and close to all sources of income and other economic resources, not just those sub- ject to taxation or considered in the calculation of program benefits. SIPP has also attained a high level of quality in measures of many types of income and related variables (see further discussion in Citro, 1991; Jabine, King, and Petroni, 1990; Singh, Weidman, and Shapiro, 1988; Vaughan, 1988~. Rates of nonresponse to basic income and asset recipiency and labor force items were very low in the 1984-1986 SIPP panels; see Table 3-3. For example, fewer than 1.5 percent of respondents failed to say whether they received income from social security, unemployment compensation, or food stamps or whether they owned savings accounts or shares of stock. Nonresponse rates for income amounts were somewhat higher in the 1984-1986 panels: for example, 4-10 percent of recipients failed to provide income amounts from wages and salaries, social security, unemployment compensation, or food steps; and 14-17 percent failed to provide amounts of self-employ- ment salary or draw (Table 3-3~. In comparison with the March CPS income supplement, however, SIPP has achieved markedly reduced rates of nonresponse for amounts of virtu- ally all types of income. For example, about 8 percent of recipients of Supplemental Security Income (SSI) in the 1984 SIPP panel failed to pro- vide an amount compared with 20 percent in the March 1985 CPS (see Table 3-4; SIPP nonresponse percentages are shown on an average monthly basis for each quarter of 1984~. As another example, 7-9 percent of earners failed to provide an amount for wages and salaries in the 1985 SIPP panel compared with 17 percent in the March 1986 CPS; see Table 3-5. Overall, regular money income estimated for 1984 from the SIPP included 11 percent imputed values due to missing responses, while the corresponding figure from the March 1985 CPS was 20 percent imputed values; see Table 3-6.

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46 THE SURVEY OF INCOME AND PROGRAM PARTICIPATION TABLE 3-1 Nonasset Income Sources in SIPP Time Period Covered for Income Source Recipiency Amount Wages and salaries (before deductions, including tips, bonuses, overtime pay, commissions, and, for armed forces members, cash housing allowances and other special pay) Self-employment income (before deductions) Earned income tax credit Social security for self (or self and spouse, total before deductions) Social security for one's children U.S. government railroad retirement State unemployment compensation Supplemental unemployment benefits Other unemployment compensation (Trade Adjustment Act benefits, strike pay, other) Veterans' compensation or pensions Black lung payments Workers' compensation State temporary sickness or disability Employer or union temporary sickness Payments from own sickness, accident, or disability insurance policy Federal Supplemental Security Income State Supplemental Security Income Aid to Families with Dependent Children General assistance Indian, Cuban, or refugee assistance Foster child care payments Other welfare Child support payments Alimony payments Pension from company or union Federal civil service or other federal civilian pension U.S. military retirement pay National Guard or Reserve forces retirement State government pension Local government pension Income from paid-up life insurance policies or annuities Monthly Monthly Twice a panel Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Twice a panel Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly

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ACHIEVING SIPP'S GOALS TABLE 3-1 Continued 47 Time Period Covered for Income Source Recipiency Amount Estates and trusts Monthly Monthly Other payments for retirement, Monthly Monthly disability, or survivor Income assistance from charitable Monthly Monthly group Money from relatives or friends Monthly Monthly Lump-sum payments Monthly Monthly Income from roomers or boarders Monthly Monthly National Guard or Reserve pay Monthly Monthly Incidental or casual earnings Monthly Monthly Other cash income not included Monthly Monthly elsewhere Medicare Every 4 most N.A. Medicaid Monthly N.A. CHAMPUS health insurance Monthly N.A. CHAMPVA health insurance Monthly N.A. Military health insurance Monthly N.A. Current employer or union health Monthly N.A. insurance Former employer hearth insurance Monthly N.A. Other health insurance Monthly N.A. Food stamps Monthly Monthly WIC (women, infants, and children Monthly Monthlya nutrition program) Energy assistance Every 4 most 4-mot total School lunch Every 4 mos.b N.A. School breakfast Every 4 mos.b N.A. Public housing Twice a panel N.A. Subsidized housing Twice a panel N.A. G.I. Bill Monthly Monthly Other VA educational assistance Monthly Monthly College work study Every 4 most 12-mo. total Pell Grant Every 4 most 12-mo. total Supplemental Educational Every 4 most 12-mo. total Opportunity Grant National Direct Student Loan Every 4 most 12-mo. total Guaranteed student loan Every 4 most 12-mo. total JTPA training Every 4 most 12-mo. total Employer educational assistance Every 4 most 12-mo. total Fellowship/scholarship Every 4 most 12-mo. total Tuition reduction Every 12 most 12-mo. total Other educational financial aid Every 4 most 12-mo. total continued on next page

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48 TABLE 3-1 Continued THE SURVEY OF INCOME AND PROGRAM PARTICIPATION NOTES: Information that is available by month or every 4 months is obtained in the core interviews; information that is available twice a panel or every 12 months is obtained in topical modules. The 1990 panel is used as the basis for the table entnes. Major differences between the 1990 and earlier panels include: The 1984 panel included a topical module (in wave 6) on employee fringe benefits, includ- ing health insurance, life insurance, use of company vehicle, expense account, meals, and lodging; Military health insurance coverage was not directly ascertained prior to the 1990 panel; The earned income tax credit was not ascertained prior to the 1990 panel; Prior to the 1987 panel, residence in public or subsidized housing was ascertained only at the initial visit; and Separate types of educational assistance were not identified in the 1984 panel, but the total amount of such assistance was ascertained every 4 months. aAmounts of WIC vouchers are imputed by the Census Bureau from information supplied by the U.S. Department of Agnculture. bRecipiency information includes whether school lunch or breakfast was free, reduced pnce, or full pnce. N.A., Not applicable or not available. SIPP has also obtained more complete reporting of many types of in- come than has the March CPS when aggregate amounts from the two sur- veys are measured against independent sources. For example, average monthly food stamp benefits by quarter reported in the 1984 SIPP panel amounted to 83-90 percent of the corresponding quarterly totals from independent sources, whereas total food stamp benefits in 1983 from the March 1984 CPS amounted to only 71 percent of the annual total from independent sources. Similarly, average monthly SSI benefits by quarter from the 1984 SIPP panel averaged 90-99 percent of the quarterly totals from independent sources, whereas total SSI benefits in 1983 from the March 1984 CPS amounted to only 85 percent of the annual total from independent sources; see Table 3-7. At the same time, SIPP's success in measuring each and every one of the components of cash and in-kind income and asset holdings has not been complete. Some measures are subject to appreciable error: for example, average monthly Aid to Families with Dependent Children (AFDC) benefits by quarter from the 1984 SIPP panel averaged only 76-86 percent of the quarterly totals from independent sources. These figures are not a marked improvement over the March 1984 CPS, for which the total AFDC benefits in 1983 amounted to 76 percent of the annual total from independent sources (Table 3-7~. Comparisons of SIPP aggregates with independent sources for another income type-state unemployment compensation show widely varying rates of completeness by quarter (from 107 percent of the independent total in the third quarter of 1983 to only 73 percent in the third quarter of 1985~; see Table 3-8.

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ACHIEVING SIPP'S GOALS TABLE 3-2 Assets and Asset Income Sources in SIPP 49 Time Penod Covered for Asset Ownership Income Amount Value Interest-beanug bank accounts Joint with spouse Regular passbook savings accounts Every 4 most Money market deposit accounts Every 4 most combined combined Certificates of deposit Every 4 most 4-mot total value twice Interest-earning checking accounts Every 4 most a panela Own Regular passbook savings accounts Every 4 most] Money market deposit accounts Every 4 most combined combined Certificates of deposit Every 4 most 4-mot total value twice Interest-earning checking accounts Every 4 most a panela Other interest-earning assets Joint with spouse Money market funds Every 4 most ~ U.S. government securities Every 4 most combined combined Municipal or corporate bonds Every 4 most 4-mot total value twice Other interest-earning assets Every 4 mos.J a panela Own Money market funds Every 4 most ~ U.S. government securities Every 4 most ~combined combined Municipal or corporate bonds Every 4 most ~4-mot total value twice Other interest-earning assets Every 4 most, a panela Stocks or mutual fund shares Jointly held with spouse Every 4 most 4-mot total Twice a (cash and reinvested dividends panelb separately; value and debt or margin account separately) Own (cash and reinvested dividends separately; value and debt or margin account separately) Rental property Jointly held with spouse (gross and net rent separately; market value and principal owed on mortgage separately) Own property (gross and net rent separately; market value and principal owed on mortgage separately) Held with others (share of net rent; market value, principal, share of net equity separately) Mortgages Jointly held with spouse Every 4 most demo. total Twice a panelb Every 4 most demo. total Twice a panel Every 4 most 4-mot total Twice a panel Every 4 most 4-mot total Twice a panel Every 4 most 4-mot total Once a panel continued on next page

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so THE SURVEY OF INCOME AND PROGRAM PARTICIPATION TABLE 3-2 Assets and Asset Income Sources in SIPP Time Period Covered for Asset Ownership Income Amount Value Mortgages coned Own Other mortages Royalties Other financial investments U.S. Savings blonds Checking accounts (no interest) Joint with spouse Own Debt owed on store or credit cards Joint with spouse Own Debt owed on bank or credit union loans (except car and home equity) Joint with spouse Own Any other debt (e.g., medical bills) Joint with spouse Own Individual Retirement AccountsC KEOGH accountsC 401K accountsC Life insurance (including employer) Employer life insurance separately Own home Mortgages, equity, market value Mortgage/rent payments, utilities Vacation/second home Cars/vans/trucks (details on year/make/model and debt owed for individual vehicles) Recreational vehicles (market value, debt owed) Own business Debt owed against own business Capital gains Every 4 most Once a panel Every 4 most l Every 4 most J Every 4 most Twice a panel Twice a panel Once a panel Once a panel Once a panel Once a panel Once a panel Once a panel Twice a panel Twice a panel Twice a panel Twice a panel Once a panel Once a panel Once a panel Twice a panel Twice a panel Twice a panel Monthly Once a panel Twice a panel 4-mot total N.A. combined 4-mot total N.A. N.A. N.A. N.A. N.A. N.A. N.A. Once a panel Once a panel N.A. Twice a panel Twice a panel Twice a panel Twice a panel Once a panel Once a panel Once a panel Once a panel N.A. Once a panel N.A. Once a panel Twice a panel Twice a panel Twice a panel Twice a panel N.A. Once a panel N.A. Twice a panel N.A. Once a panel N.A. N.A. N.A. N.A. Monthly N.A. N.A. Once a panel Once a panel Twice a panel Twice a panel Twice a panel Once a panel Once a panel Twice a panel NOTES: The 1990 panel is used as the basis for the table entries. Major differences between the 1990 and earlier panels include: In the 1984-1986 panels, values for almost all assets and liabilities were obtained twice a panel, because the asset and liabilities and real estate and vehicle topical modules were gener- ally asked twice a panel (see Table 3-13). Subsequently, these modules were asked only once a panel; however, selected assets were also asked about in the program eligibility set of modules. Prior to the 1990 panel, the annual income round-up topical module obtained recipiency and calendar-year income amounts separately for each interest and dividend-bearing asset (e.g., money market deposit accounts, municipal bonds, etc.).

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ACHIEVING SIPP'S GOALS TABLE 3-2 Continued 51 aAsset value is asked every 4 months for those respondents who do not know the amount of interest received. bDebt or margin account on stocks is ascertained only once a panel. CInformation on IRA and KEOGH accounts is obtained in the annual income round-up (asked in waves S and 8 in the 1990 panel), which ascertains contributions and earnings in the preceding calendar year, and in the asset and liabilities (wave 4) and program eligibility (wave 7) modules, which ascertain total market value. Information about contributions to 401K accounts is asked in the annual income roundup (waves 5 and 8), while information about total value is asked in the retirement expectations module (wave 4). N.A., Not applicable or not available. TABLE 3-3 Nonresponse Rates for Selected SIPP Core Items, by Panel Question 1984 1985 1986 Labor Force Activity Identification of weeks absent without pay 0.1a 0.1 Identification of weeks with a job or lousiness 2.22.0 2.5 Presence of weeks looking or on layoff 1.01.3 2.0 Identification of weeks looking or on layoff 3.22.4 2.9 Income Recipiency or Asset Ownership Social security 0.60.6 1.0 Unemployment compensation 0.10.1 0.2 Food stoops 0.30.4 0.5 Savings accounts 1.00.9 0.9 Shares of stock 1.31.4 1.5 Income Amounts Hourly wage rate 9.510.4 10.8 Monthly wage and salary 6.27.2 8.4 Self-employment salary or draw 14.016.9 14.6 Social security 8.S9.5 10.0 Unemployment compensation 9.19.7 9.9 Food stamps 3.64.1 4.4 Interest 34.629.8 30.8 (24.2)b(28.9)b (30.2)b Dividends 9.410.5 9.4 (30,7)C(30,5)C (29.1)C aLess than .05 percent bFigure in parentheses is the nonresponse rate on balance in the account. This question was asked of people with savings acccounts who did not provide an estimate of the amount of interest received (e.g., the 34.6% in the 1984 panel). CFigure in parentheses is the nonresponse rate for dividends credited to accounts. SOURCE: Jabine, King, and Petroni (1990:Table 5.5).

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80 THE SURVEY OF INCOME AND PROGRAM PARTICIPATION It is also important that SIPP keep up with policy trends and changes in established programs. Two of the most notable today are the increased use of the income tax system to provide benefits to poor and near-poor working families with children and the renewed focus on services in such programs as AFDC for example, training, employment, and child care services that are intended to help improve the skills and employability of welfare recipi- ents and, over time, move them away from long-term dependency on cash assistance. Hence, it is important that SIPP develop mechanisms to track programs that may become a more important source of economic resources in the future and to keep abreast of program developments. The use of topical modules for these purposes seems a particularly promising approach. Recommendation Recommendation 3-4: Priorities for improved measures of pro- gram participation and eligibility from SIPP should include im- proving the range and frequency of information needed to de- termine eligibility for major assistance programs and providing adequate measures of spells of both eligibility and participa- tion. SIPP should also keep up to date with respect to newly important programs and program changes. TOPICAL MODULES The use of SIPP as a vehicle to respond to social welfare policy concerns in areas that are related to the survey's core subjects is an important goal. Indeed, the data from topical modules have proven very popular with a wide range of users; see Table 3-13 for a listing of topical modules included in SIPP panels to date. Nonetheless, the topical modules must necessarily play a supporting rather than a dominant role in the overall SIPP program. We support the continued availability of open, or variable, topical mod- ules in each panel so that federal agencies that have responsibilities for social welfare policy planning and analysis can insert questions of current interest.37 For this component to be most useful, it is critically important that SIPP respond in a timely and flexible manner to agency needs. Hence, we encourage the Census Bureau to do everything possible to streamline procedures for eliciting input from federal agencies and reaching decisions that best accommodate what may often be conflicting agency priorities. 37Fixed modules also play an important role, namely, collecting data on the core subjects of SIPP that do not need to be asked in every interview (e.g., asset holdings).

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ACHIEVING SIPP,S GOALS TABLE 3-13 Topical Modules in SIPP, 1984-1990 Panels 81 Panel and Wave Topic 1984 1985 1986 1987 1988 1989 1990 Total number of wavesa 9 8 7 7 6 3 8 Annual income 6,9 5,8 5 5 5 5,8 and retirement accounts Income taxes 6,9 5,8 5 5 5 5,8 Child care 5 6 3,6 3,6 3,6 3 3 Child support 5 6 3,6 3,6 3,6 3 - 3,6 Support for nonhousehold 5,8 4,6 3,6 3,6 3,6 3 3,6 members Disability status of 3 6 3 6 3,6 3 3,6 childrenb Functional limitations 3 6 3 3,6 and disabilityb Use of health careb 3 6c 3c 6c 3,6 3 3,6 Home health care 6 6 3 Long-term care Educational financing 6,9 5,8 5 5 5 and enrollment Eligibility for selected major programs Selected financial assets (see also wealth) 7 4 7 Dependent care costs (see also child care) 7 4 7 Medical care expenses 7 4 7 Shelter costs 4 6 3,7 4 7 Real estate and vehicles (see also wealth) 7 4 7 Work disability (see also functional 7 4 7 limitations) Energy usage 4 6 3 Personal history Education and training 2 2 2 2 2 Education and work 3 Employment 2 2 2 2 2 Family background 2 2 2 Fertility 8 4 2 2 2 2 2 Household relationships 8 4 2 2 2 2 2 Marital status 8 4 2 2 2 2 2 Migration 8 4 2 2 2 2 2 Recipiencyd 5 2 2 2 2 2 Work disability 2 2 2 2 2 Wealth Assets and liabilities 4,7 3,7 4,7 4 4 Real estate property 7 3,7 4,7 4 4 and vehicles Pension plan coverage 4,7e 7 4,7e 4 and retirement expectations 5,8 continued on next page

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82 TABLE 3-13 Continued THE SURVEY OF INCOME AND PROGRAM PARTICIPATION Panel and Wave Topic 1984 1985 1986 1987 1988 1989 1990 Work expenses Work schedule Employee benefits Job offers Job training Spells outside the work force s,8 4 6 6 of ~ 6 3 6 3,6 3 , 6 NOTES: Question content for many of the modules (e.g., child care, disability) differs across panels. The 1991 panel has the same modules as the 1990 panel, with the following exceptions: the program eligibility set of modules moves from wave 7 to wave 4; the wealth set of modules moves from wave 4 to wave 7; and wave 6 includes a new module on extended measures of well-being (see text). The wave 6 modules included in 1990 (e.g., child support) are not included in the 1991 panel. The 1992 panel has the following changes from the 1991 panel: the employment and recipiency history modules move from wave 2 to wave 1; the program eligibility set of mod- ules moves from wave 4 to wave 7; the wealth set of modules moves from wave 7 to wave 4; and the extended measures of well-being module is part of wave 3 (and the only module in that wave) What modules will be included in wave 6 is not yet decided. Generally, "variable" topical modules (those determined by the current needs of federal agencies) are included in waves 3 and 6, while "fixed" modules (e.g., annual income and retirement accounts, income taxes, educational financing and enrollment, and the program eligibility, personal history, and wealth sets of modules) appear in other waves (see Committee on National Statistics, 1989:Tables 2-2, 2-3, for identification of fixed versus variable topical modules in the 1984-1990 panels). aThe number of waves in each panel differs due to budget cuts. Also, only two of four rotation groups in the 1984 panel received 9 waves; the other two groups received 8 waves. Also, one rotation group in each of the 1985 and 1986 panels received one fewer wave than the other three groups. bDisability and health care-related modules have different names across panels. CIncludes single question on overall health status. dRecipiency history in 1984 panel covers food stamps, AFDC, and SSI only; in subsequent panels it covers most government programs, with varying detail. eExcludes characteristics of job from which retired; also, pension plan coverage in the second administration of the module is asked only for people who changed jobs or became newly employed since the first administration of the module. includes reservation wage.

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ACHIEVING SIPP'S GOALS 83 The Census Bureau should also obtain suggestions from academic re- searchers and other nonfederal users of SIPP data for questionnaire content to include in topical modules. Improvements in policy analysis that can sup- port more informed government policy making ultimately rest on advances in social science research knowledge. Hence, SIPP can serve a useful purpose by offering the opportunity for researchers, as well as agency policy analysts and program planners, to contribute to the specification of variable topical modules (see Chapter 8 for discussion of input mechanisms).38 In addition, the Census Bureau should use topical modules as a compo- nent of its research and development program to enhance the survey's core measures on economic resources and programs. Dedicating a topical mod- ule in each panel for use by Census Bureau analysts (with input from out- side experts) offers one low-cost way for the survey to keep up to date with trends in the composition of income and the mix of programs and to be innovative in providing information that expands knowledge of well-being and program-related behavior. Some questions that are first asked in topical modules may subsequently move into the recurring core part of the inter- view; other questions may not be appropriate for the core but may nonethe- less provide important analytical information. Our recommendation to in- crease the length of SIPP panels and maintain the 4-month reference period (see Chapter 4) will make it possible to include topical modules for this purpose without sacrificing existing modules. Thus, under our proposed design of 12 interviews per panel, one pos- sible sequencing of topical modules that leaves room for a Census Bureau module in addition to variable modules for policy needs is as follows: wave 1, recipiency and employment history wave 2, other personal history modules wave 3, wealth modules wave 4, open wave 5, annual income and taxes wave 6, open wave 7, open wave 8, annual income and taxes wave 9, wealth modules wave 10, open wave 11, annual income and taxes wave 12, open This scheme obtains personal history information early in the life of a panel, provides measures of balance sheets twice per panel and measures of 38We note that Statistics Canada is designing a new longitudinal Survey of Labour and Income Dynamics for which the agency has invited academic researchers to specify the content of topical modules. The researchers are responsible for obtaining funding for the modules.

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84 THE SURVEY OF INCOME AND PROGRAM PARTICIPATION income and taxes on an annual basis, and leaves five modules open. An assumption of this scheme is that program eligibility information is asked in the core interview. If, for some reason, this does not prove possible, then it would be important to obtain eligibility measures on at least an annual basis. This could be done by administering the program eligibility modules in waves 6 and 12 and also including selected eligibility questions in waves 3 and 9 39 Such a scheme would leave open 3 topical modules, or one more per panel than under the current design. In developing topical modules on subjects that are of interest for social welfare policy, it is important to keep in mind that SIPP is primarily a survey about income and programs. The temptation to add great detail to the questionnaire on topics that are not central to the core should be re- sisted. There are, and should continue to be, other surveys that focus on such topics as long-term care, educational attainment, and job characteris- tics. SIPP cannot and should not attempt to duplicate the detail in these special surveys. Yet SIPP should also not exclude topics just because they are the focus of other surveys. SIPP's great advantage is that it constitutes a continuing series of panel surveys with a core of demographic and socioeconomic variables that are relevant for many types of analysis. Hence, SIPP can support initial research (with a rich set of explanatory variables) on a topic for which a special survey is subsequently developed; provide a useful time series (in the case of a topic that is covered in more than one panel); and, because its samples are nationally representative, serve to anchor and ex- tend the analysis for special surveys that are limited to specific population groups. For all these uses, it is important that the Census Bureau work closely with analysts in other federal agencies to ensure comparability in basic questions and concepts between SIPP and other surveys. Recommendahon 3-5: The topical module component of SIPP should continued and be strengthened by: · obtaining input from both government agencies and the so cial science research community about topics related to SIPP's core goals to consider for modules; · streamlining the content development process so that timely information can be collected on emerging policy and research issues; and · using some topical modules as a means for the Census Bureau's analysis staff to conduct research on expanded and alternative measures of income and programs. 39The wealth modules scheduled for these waves already include many of the program eligibility questions; it would simply be necessary to add the non-asset-related items (i.e., expenses and disability see Table 3-13).

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ACHIEVING SIPP'S GOALS 85 SIPP AND THE MARCH CPS The Census Bureau's plan for improving income statistics (reviewed in Chapter 2) states that the March CPS will remain the primary source for annual income and poverty estimates. Certainly, many users are comfort- able with the March CPS annual reports and data files, finding attractive their large sample size, timely release (within 5-6 months of data collec- tion), and relative ease of use. Although we agree that the March CPS provides a very important his- toncal time series that should and will continue for the foreseeable future, SIPP was launched to improve the depth, breadth, and quality of income and related statistics for the United States. SIPP provides more detail than the March CPS on economic resources, broadly defined, including informa- tion on assets and a greater number of in-kind assistance programs. SIPP has already made important gains in data quality relative to the March CPS: for example, it obtains more complete reporting of most income sources (although there is still room for further gains). The monthly info~ation in SIPP makes possible the construction of improved measures of annual in- come and poverty that include income from people who left the universe during the year (e.g., because they died or moved abroad) and that more accurately represent family composition than is possible with the March CPS. In addition to annual statistics, SIPP supports intrayear and multiyear measures, which are important to better understand economic well-being and the role of government assistance programs. Until now, it has not been possible for SIPP to serve as the primary source of the nation's income statistics because of such problems as small sample size and lack of timeliness. However, with the redesign that we propose, SIPP would provide adequate sample sizes for both longitudinal and cross-sectional measures, particularly for the low-income population. Moreover, technological developments in data collection and processing- specifically, the use of computer-assisted interviewing and an improved database management system (see Chapter 5) would make it possible to process SIPP data on as timely a basis as the March CPS and make the SIPP data files more accessible.40 Hence, we urge the Census Bureau to set a target date-perhaps the year 2000, certainly no later than the year 2005 for the data from SIPP to be of sufficient reliability, quality, and timeliness to be used instead of the March CPS data as the basis for annual (and other) measures of income and poverty. Obviously, the changeover should take place gradually. In this 40The use of computer-assisted interviewing may also effect cost savings that permit a further increase in the SIPP sample size. This increase could be useful for the production of detailed income and poverty statistics and also for analyses of participation in many smaller programs.

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86 TlIE SURVEY OF INCOME AND PROGRAM PARTICIPATION regard, we support the Census Bureau's plans to include supplementary SIPP data in the March CPS P-60 report series as an important way to accustom users to SIPP. In addition, we propose an expanded program of cross-sectional reports from SIPP in the P-70 series (see Chapter 6) that would be issued alongside the CPS reports for some years. Once a suffi- cient time series is built up under the new SIPP design and it has proven possible to release the data on a timely basis, it will be appropriate to replace the current P-60 series with the SIPP P-70 reports on income and poverty. At that time, it will also be appropriate to determine the extent to which the income data on the March CPS can be scaled back. The CPS should always include some information on income, which is an important variable for analyzing the labor force data that are the principal focus of that sur- vey.4~ However, the decision on the level of income detail to include should be made on the basis of labor force analysis needs, not on the basis of the requirements for national income statisiics.42 Our recommendation that the Census Bureau set a target date for turn- ing to SIPP as the basis for income and related measures has implications for the concept of an integrated income statistics system as outlined in Chapter 2. The Census Bureau originally suggested the use of administra- tive records to correct SIPP estimates and then the use of corrected SIPP estimates from earlier years to adjust March CPS estimates. We support increased use of administrative records to improve and enhance SIPP mea- sures related to income and programs (see the next section). However, we agree with the Census Bureau's latest position that the goal of using admin- istrative records to correct income estimates for reporting errors in SIPP must be viewed as a long-term and not a short-term objective, as there are many methodological as well as procedural hurdles to overcome. Moreover, if SIPP is to be the prime income survey, it does not make sense for the Census Bureau to use scarce resources to develop extensive SIPP-based adjustments to March CPS measures. Furthermore, we believe SIPP should receive priority over the March CPS for major investments designed to improve measures of income and program participation. For example, resources for administrative record-check studies or for improved income imputation procedures should be devoted to SIPP, not the March CPS. Of course, where improved procedures can readily be implemented for both surveys, that should be done. 41The information that is collected in the March CPS income supplement on prior-year work experience is also important for analyses of the CPS labor force data. 42A reduction in income detail may also ease the data collection burden for the labor force information that is the prime focus of the CPS. At present, interviewers accept relatively high nonresponse rates to the income supplement so as not to increase the chances that a household will refuse to answer the next month's labor force questions (see Citro, 1991).

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ACHIEVING SIPP'S GOALS 87 Given that there will be a period before data from the redesigned SIPP are available and a longer period in which SIPP and March CPS income measures are both produced, we favor work that will help users understand differences between SIPP and CPS and implement their own adjustments for their own purposes. Thus, we are very supportive of the Census Bureau's plan to conduct a major comparative study of the 1990 SIPP panel and the March 1991 CPS. We also support incremental improvements to the March CPS. In this regard, we point to a recent Committee on National Statistics panel study (Citro and Hanushek, 1991a) that evaluated microsimulation models for social welfare programs: it concluded (Ch. 5) that the March CPS will remain for some time the database of choice for many of these models because of its large sample size and timeliness. The report sug- gested some modifications to the March CPS (e.g., a few additional ques- tions) that could improve its usefulness for social welfare policy analysis and modeling and, in particular, make it easier for users to develop SIPP- based imputations and adjustments to the March CPS data. Recommendation 3-6: SIPP should become, over time, the pri- mary source of the nation's income statistics in place of the March CPS income supplement. SIPP should receive priority for major investments to develop improved income measures. As there will necessarily be a transition period during which SIPP and CPS income statistics are both published, every effort should be made to increase user understanding of differences and similarities and to effect incremental improvements as ap- propriate in both surveys. SIPP AND ADMINISTRATIVE RECORDS Operating agencies at all levels of government, corporations, and other or- ganizations regularly generate large volumes of administrative records about individuals (e.g., taxpayers, program beneficiaries, employees) and indi- vidual transactions (e.g., payments, eligibility redeterminations). These records can provide a wealth of useful information for statistical purposes, both on a stand-alone basis (i.e., analysis that is limited to the records themselves, such as tabulations of tax returns) and, more powerfully, through linkages with household survey data. Such linkages can provide supplemental data at low marginal cost as well as a means to validate and improve the quality of survey responses. The widespread adoption of computerized systems of record-keeping has greatly enhanced the potential utility of administrative records for statistical research and analysis purposes in recent years. Not all statistical programs can benefit. For some, no records exist

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88 THE SURVEY OF INCOME AND PROGRAM PARTICIPATION with which to validate or supplement survey reports by individuals of many types of behavior; for others, relevant records exist but are very difficult and costly to access. In general, there are drawbacks to the use of adminis- trative records, including: · differences in content, format, and recording medium across agen- cies, even for the same program (e.g., not all states have computerized records for such programs as AFDC and Medicaid); · the fact that content (and format) may change without consideration of the needs of statistical analysis (e.g., frequent changes in tax laws have meant that IRS records do not contain consistent information year-to-year for such items as deductible expenses); · different rules, regulations, and procedures across organizations with regard to access to their records for analytical purposes; and · finally, heightened public concern about protecting the confidential- ity of individual replies that has led statistical agencies to take a very strict view about the use of data files that link administrative and survey informa- tion by outside researchers. Yet despite the difficulties of accessing and using administrative records, statistical programs for which relevant records exist cannot ignore their potential to enhance data quality and scope at reasonable cost. SIPP is particularly well positioned to exploit administrative records because of its focus on income and program participation, for which many relevant public and private record systems exist. We see several ways in which administrative records may be of great benefit to SIPP. The first is to match administrative records with SIPP cases in order to obtain additional data items and to extend the available information for each case backwards and forwards in time. For example, social security earnings histories could be appended to each SIPP record for years prior to and including the time covered by the survey. Such data would be very useful for projecting expected future social security benefits and also for studying the lifetime work experiences for various population groups. Also, earnings data could continue to be added for subsequent years to support such analyses as the work efforts of SIPP respondents who experienced a spell of welfare participation. Social security benefit infor- mation could similarly be added for SIPP respondents who were nearing retirement age at the end of a panel's life. In addition to operational problems that affect any use of administrative records (e.g., records may not be available on a timely basis or may not exist in computerized form), the chief difficulty in seeking to augment SIPP records with administrative data concerns access to the resulting linked files. Historically, the Census Bureau has not been willing to release linked files to outside researchers because of concerns about protection of confi

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ACHIEVING SIPP,S GOALS 89 dentiality. (Indeed, the file of linked social security and survey data for the 1984 SIPP panel that the Census Bureau prepared for the Social Security Administration [SSA] was made available only to SSA analysts under strict conditions of use.) A panel of the Committee on National Statistics is nearing completion of a study of confidentiality and data access, and its report may suggest ways for the Census Bureau (and other agencies) to provide access to linked files. The second possible type of use for administrative records in SIPP is as the basis for multiple-frame samples for SIPP panels, that is, area probabil- ity samples of households together with cases that are drawn from one or more type of administrative record (e.g., program records, tax records, or employer records). Every case in the multiple-frame sample would be ad- ministered the SIPP questionnaire; in addition, the cases drawn from the administrative framers) could have appended data items from the particular type of administrative record (provided the access problems referred to above could be worked out). Multiple-frame samples can be an efficient way to oversample selected population groups for analysis purposes (e.g., program recipients) if the relevant records are readily accessible.43 We discuss the benefits of this approach for oversampling low-income population groups in SIPP in Chapter 4. We also discuss operational and technical difficulties that can make it difficult to develop multiple-frame samples and produce timely analysis files. We suggest that the cost-effec- tive use of a multiple-frame approach for SIPP will generally require the active cooperation and support of an agency that is interested in adding a component to the SIPP sample that is drawn from its records. Finally, administrative record-check studies can be a very important means of evaluating and improving the quality of survey information. Such studies can lead to improved wording of questions, improved imputation methods for survey nonresponse, and even adjustments to survey responses for reporting errors. Because record-check studies use administrative data for evaluative and methodological research, they can be restricted to use within a statistical agency and hence do not pose the same degree of con- cern about protection of confidentiality.44 Full record-check studies involve matching administrative with survey records after completion of data collection in the survey. Such studies look for matches in the administrative records for all survey records. They can 43It would be difficult at present to develop a national multiple-frame sample for such state- administered programs as AFDC, given the lack of good computerized record systems in many states. 44Such use need not be limited to the agency staff. Other researchers may be able to work with the data under special on-site arrangements: for example, the Census Bureau has allowed researchers to work with confidential data at the agency as special sworn employees.

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go THE SURVEY OF INCOME AND PROGRAM PARTICIPATION thus identify "false positives," that is, people who erroneously report par- ticipation in a program (or receipt of a fringe benefit), as well as "false negatives," that is, people who fail to report their participation, and hence can estimate the net extent of underreporting (or overreporiing) of an in- come type or program benefit. The match of the first two waves of the 1984 SIPP panel with records for eight federal and state assistance pro- grams was a study of this type (see Marquis and Moore, 1989, 1990a, 1990b). As another example, Census Bureau staff in the Housing and Household Economic Statistics Division (HHES) are currently conducting matches of IRS records with the 1990 SIPP panel as part of their work to evaluate income data in SIPP and the March CPS and to develop a model for esti- mating after-tax income from SIPP.45 Forward record-check studies involve selecting samples from adminis- trative records and giving the selected individuals the survey interviews. Such studies are more limited than full record checks in that they do not pennit false negatives to be identified; however, forward record checks can be earned out on a more timely basis because there is no need to match administrative and survey records. We support the work that is under way by the HHES staff to match administrative records with the 1990 SIPP panel for research and develop- ment purposes. We also recommend (see Chapter 7) the use of small-scale forward record-check studies (e.g., with records from selected states for such programs as AFDC, SSI, and food stamps) in the implementation of several elements of the SIPP redesign for example, in helping to deter- mine improved wording for important questionnaire items and improved methods to treat nonresponse. Overall, we strongly support an increased role for administrative records in the SIPP program. However, there are many operational and technical problems, in addition to concerns about confidentiality, that impede their ready use, and we do not think that there can be fast progress toward such goals as using administrative records to adjust SIPP responses for reporting errors. Nonetheless, we urge the Census Bureau to seek innovative ways for SIPP to benefit from the extensive information that is available on income and programs from administrative record sources. 45We noted earlier the significant benefits that could accrue to SIPP from working with the Statistics of Income Division staff on ways to develop high-quality tax information for SIPP while at the same time reducing the burden of the tax module in the current questionnaire.

Representative terms from entire chapter:

monthly monthly