Statistical Matching and Uncertainty Analysis in Combining Household Income and Expenditure Data

39 Pages Posted: 8 Nov 2015

See all articles by Pier Luigi Conti

Pier Luigi Conti

University of Rome I

Daniela Marella

Università Roma Tre

Andrea Neri

Bank of Italy

Date Written: July 21, 2015

Abstract

The availability of microdata on both income and expenditure is highly recommended if one wants to assess the distributional consequences of policy changes. In Italy, the main sources used for estimating household income and expenditure are the Bank of Italy's Survey on Household Income and Wealth and the Italian National Institute of Statistics Household Budget Survey. However, there is no single data source containing information on both expenditure and income. The problem is generally overcome with statistical matching procedures based on the conditional independence (CIA) assumption. The aim of this paper is to present a method to combine information coming from different databases relaxing the CIA assumption. In particular we propose a method to combine household income and expenditure data under logical constraints regarding the average propensity to consume. We also propose an estimate of a plausible joint distribution function for household income and expenditure.

Keywords: statistical matching, uncertainty, matching error, iterative proportional fitting

JEL Classification: C15, C14, C42

Suggested Citation

Conti, Pier Luigi and Marella, Daniela and Neri, Andrea, Statistical Matching and Uncertainty Analysis in Combining Household Income and Expenditure Data (July 21, 2015). Bank of Italy Temi di Discussione (Working Paper) No. 1018. Available at SSRN: https://ssrn.com/abstract=2687084 or http://dx.doi.org/10.2139/ssrn.2687084

Pier Luigi Conti

University of Rome I ( email )

Rome
Italy

Daniela Marella

Università Roma Tre ( email )

Italy

Andrea Neri (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

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