Measuring Household Wealth in the Panel Study of Income Dynamics: The Role of Retirement Assets

32 Pages Posted: 22 Oct 2019

See all articles by Daniel Cooper

Daniel Cooper

Federal Reserve Bank of Boston

Karen E. Dynan

Harvard University; Peterson Institute for International Economics

Hannah Rhodenhiser

Federal Reserve Banks - Federal Reserve Bank of Boston

Date Written: 2019-08-01

Abstract

While the Panel Study of Income Dynamics (PSID) has much to offer researchers studying household behavior, one limitation is that its summary measure of wealth is not as broad as those of other commonly used surveys, such as the Survey of Consumer Finances (SCF), because it does not include the value of defined-contribution (DC) pensions. This paper describes the pension data available in the PSID and shows how they can be used to create a more comprehensive picture of household finances. We then compare various measures derived from these data with their counterparts from the SCF. Along a number of dimensions, the PSID data line up fairly well. Notably, an augmented summary measure of PSID wealth that includes the value of DC pensions is considerably closer to the SCF summary measure than to the standard measure for the median household. We conclude by presenting several examples of research areas where using a broader measure of wealth might be important.

Keywords: household wealth, retirement assets, household survey data

JEL Classification: E21

Suggested Citation

Cooper, Daniel H. and Dynan, Karen E. and Rhodenhiser, Hannah, Measuring Household Wealth in the Panel Study of Income Dynamics: The Role of Retirement Assets (2019-08-01). FRB of Boston Working Paper No. 19-6. Available at SSRN: https://ssrn.com/abstract=3473093

Daniel H. Cooper (Contact Author)

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States
617-973-4220 (Phone)

Karen E. Dynan

Harvard University ( email )

Littauer Center
Cambridge, MA 02138
United States

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

HOME PAGE: http://https://piie.com/experts/senior-research-staff/karen-dynan

Hannah Rhodenhiser

Federal Reserve Banks - Federal Reserve Bank of Boston

600 Atlantic Avenue
Boston, MA 02210
United States

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