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Does How You Measure Income Make a Difference to Measuring Poverty? Evidence from the UK

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  • Kirstine Hansen
  • Dylan Kneale

    ()

Abstract

Income is regarded as one of the clearest indicators of socioeconomic status and wellbeing in the developed world and is highly correlated with a wide range of outcomes. Despite its importance, there remains an issue as to the best way to collect income as part of surveys. This paper examines differences in how income is collected in a nationally representative UK birth cohort, the Millennium Cohort Study, looking at variations by questions asked and by respondent characteristics before then examining the implications different methods of collecting and reporting income may have for measuring poverty. Results show that less than a third of respondents give consistent information on income between measurement tools. Using multiple questions is associated with a substantially lower response rate but this method generally results in a higher estimate of family income than using a single question. This is particularly true for certain groups of the population—those on means tested benefits, in self-employment and in part-time employment. Not surprisingly then in our analysis of poverty, using a single question produces an inflated proportion of families who could be classified as living in poverty and is less associated with other measures of financial deprivation than the more conservative poverty measure based on multiple questions. Copyright Springer Science+Business Media B.V. 2013

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File URL: http://hdl.handle.net/10.1007/s11205-011-9976-5
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Bibliographic Info

Article provided by Springer in its journal Social Indicators Research.

Volume (Year): 110 (2013)
Issue (Month): 3 (February)
Pages: 1119-1140

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Handle: RePEc:spr:soinre:v:110:y:2013:i:3:p:1119-1140

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Web page: http://www.springer.com/economics/journal/11135

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Related research

Keywords: Income; Survey design; Poverty; Measurement error;

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  1. Micklewright, John & Schnepf, Sylke V., 2007. "How Reliable Are Income Data Collected with a Single Question?," IZA Discussion Papers 3177, Institute for the Study of Labor (IZA).
  2. Claudia Biancotti & Giovanni D'Alessio & Andrea Neri, 2008. "Measurement Error In The Bank Of Italy'S Survey Of Household Income And Wealth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 466-493, 09.
  3. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July.
  4. Jörg-Peter Schräpler, 2006. "Explaining Income Nonresponse – A Case Study by means of the British Household Panel Study (BHPS)," Quality & Quantity: International Journal of Methodology, Springer, vol. 40(6), pages 1013-1036, December.
  5. Clarke, Philip M. & Fiebig, Denzil G. & Gerdtham, Ulf-G., 2008. "Optimal recall length in survey design," Journal of Health Economics, Elsevier, vol. 27(5), pages 1275-1284, September.
  6. Hansen, Kirstine & Machin, Stephen, 2002. " Spatial Crime Patterns and the Introduction of the UK Minimum Wage," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(0), pages 677-97, Supplemen.
  7. repec:ese:iserwp:2009-14 is not listed on IDEAS
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