Survey Estimates of Wealth: A Comparative Analysis and Review of the Survey of Income and Program Participation*

Article excerpt

The Office of Research, Evaluation, and Statistics (ORES) within the Social Security Administration (SSA) relies on data from the Census Bureau's Survey of Income and Program Participation (SIPP) for a variety of applications. Data on wealth are important in these applications. Earlier comparisons of SIPP estimates of wealth with those from other surveys-namely, the Survey of Consumer Finances (SCF) and the Panel Study of Income Dynamics (PSID)-identified a number of shortcomings in the SIPP data. These shortcomings mostly affected the survey's estimates of high-income families and the types of assets that such families hold disproportionately. More recently, however, SIPP estimates of median wealth have shown little change over a period of time when the SCF has shown a marked increase. This has raised concern that continued use of SIPP data for ORES applications may require some form of adjustment of the wealth data, if not their outright replacement by one or more other sources. This report compares SIPP estimates of wealth with estimates developed from the SCF and the PSID, seeks to attribute the observed disparities to differences in survey design and implementation, explores ways to improve the quality of the SIPP estimates for the most relevant subpopulations, and presents recommendations regarding both the use and production of SIPP wealth data.

Comparative Estimates of Wealth

Each of the three surveys is ultimately intended to represent the entire noninstitutionalized population, but each collects data from a different unit of observation. The SCF collects its most detailed data on the "primary economic unit," which includes the economically dominant individual or couple and all others who are financially dependent. The SCF collects very limited data on the collective remaining individuals in the household. The SIPP collects wealth data from each adult member (15 and older) of the sample household. With these data it is possible to construct alternative units of analysis. We constructed SIPP family units that mimic the SCF primary economic unit. The PSID collects data from families, using a concept of economic dependence like the SCF to determine which related persons living together constitute a family. To produce PSID wealth estimates for a universe that matches that of the SCF and SIPP, we limited the PSID families to those that were likely to include the household head. Most of the estimates presented in this report are from the 1998 SCF, the 1999 PSID, and wave 9 of the 1996 SIPP panel, which has a reference period covering late 1998 and early 1999.

Overall Wealth

Wealth, or net worth, is defined as total assets less total liabilities. The SIPP estimate of aggregate net worth, at $14.4 trillion, is just under half of the SCF estimate of $29.1 trillion and 60 percent of the PSID estimate. The SIPP estimate of median net worth, $48,000, is two-thirds of the SCF median of $71,800 and 74 percent of the PSID median.

With the detail captured in the SIPP and the SCF, it is possible to separate assets from liabilities. The SIPP estimate of aggregate assets is 55 percent of the SCF estimate of $34.1 trillion, but its estimate of aggregate liabilities is 90 percent of the SCF estimate of $5.0 trillion. The SIPP estimate of median assets is 83 percent of the SCF median of $116,500 while its estimate of median liabilities is 97 percent of the SCF median of $11,900. By estimating liabilities so much better than assets, the SIPP reduces its estimate of net worth significantly.

Wealthy Families

Wealth is highly concentrated. Estimates from the SCF indicate that the wealthiest one percent of families own a third of all wealth in the United States. The SIPP's estimate of aggregate assets is much weaker than its estimate of median assets because the SIPP underestimates both the number of wealthy families and their average wealth. The SIPP's use of topcoding contributes to this shortfall by removing assets from wealthy sample members. …