How Reliable are Income Data Collected with a Single Question?

33 Pages Posted: 4 Dec 2007

See all articles by John Micklewright

John Micklewright

Institute of Education; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Sylke V. Schnepf

University of Southampton - Southampton Statistical Sciences Research Institute (S3RI); IZA Institute of Labor Economics

Date Written: November 2007

Abstract

Income is an important correlate for numerous phenomena in the social sciences. But many surveys collect data with just a single question covering all forms of income. This raises issues of quality, and these are heightened when individuals are asked about the household total rather than own income alone. Data are typically banded, implying a loss of information. We investigate the reliability of "single-question" data using the ONS Omnibus and British Social Attitudes (BSA) surveys as examples. We first compare the distributions of income in these surveys individual income in the Omnibus and household income in the BSA with those in two other much larger UK surveys that measure income in much greater detail. Second, we investigate an implication of restricting the single question to individual income and interviewing only one adult per household: total income in respondents' households is unobserved. We therefore examine the relationship between individual and household income in one of the comparator surveys. Third, after imposing bands on comparator survey data, we measure the information loss from banding with Generalized Entropy indices. We then assess its impact on the use of income as a covariate. Disaggregation by gender proves fruitful in much of the analysis.

Keywords: income data, banding, information loss, Omnibus survey, British Social Attitudes survey

JEL Classification: D31, C8

Suggested Citation

Micklewright, John and Schnepf, Sylke V., How Reliable are Income Data Collected with a Single Question? (November 2007). IZA Discussion Paper No. 3177. Available at SSRN: https://ssrn.com/abstract=1047981

John Micklewright (Contact Author)

Institute of Education ( email )

20 Bedford Way
London, WC1H 0AL
United Kingdom

HOME PAGE: http://www.ioe.ac.uk/staff/QSSE/QSSE_30.html

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Sylke V. Schnepf

University of Southampton - Southampton Statistical Sciences Research Institute (S3RI) ( email )

Southampton SO17 1BJ
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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