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Are two cheap, noisy measures better than one expensive, accurate one?

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  • Martin Browning

    ()
    (Institute for Fiscal Studies and Nuffield College, Oxford)

  • Thomas Crossley

    ()
    (Institute for Fiscal Studies and University of Cambridge)

Abstract

1. Survey responses are always subject to measurement error. In general surveys (and especially longitudinal surveys), there are severe constraints on the time that can be spent eliciting a less noisy response for any target variable. In this paper we consider when it may be better to consider multiple noisy measures of the target measure rather than improving the reliability of a single measure. 2. The Kotlarski result states that if the measurement errors in two measures of the same target variable are mutually independent and independent of the true value then we can recover the entire distribution of the quantity of interest, up to location. 3. We consider designing surveys to deliver measurement error with desirable properties. This shifts the emphasis from reliability (the signal to noise ratio for any given measure) to the joint properties of the multiple measures. 4. To illustrate our ideas, we consider a concrete example: the measurement of consumption inequality. A small simulation study suggests that the approach we propose has promise. The next step in this research agenda is experiments in survey data collection.

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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W09/01.

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Date of creation: Jan 2009
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Handle: RePEc:ifs:ifsewp:09/01

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  1. Richard Blundell & Ian Preston, 1997. "Consumption, inequality and income uncertainty," IFS Working Papers W97/15, Institute for Fiscal Studies.
  2. Erich Battistin & Richard Blundell & Arthur Lewbel, 2009. "Why Is Consumption More Log Normal than Income? Gibrat's Law Revisited," Journal of Political Economy, University of Chicago Press, vol. 117(6), pages 1140-1154, December.
  3. Martin Browning & Thomas F. Crossley & Guglielmo Weber, 2002. "Asking Consumption Questions in General Purpose Surveys," Social and Economic Dimensions of an Aging Population Research Papers 77, McMaster University.
  4. Cutler, David M & Katz, Lawrence F, 1992. "Rising Inequality? Changes in the Distribution of Income and Consumption in the 1980's," American Economic Review, American Economic Association, vol. 82(2), pages 546-51, May.
  5. Richard Blundell & Luigi Pistaferri & Ian Preston, 2004. "Imputing consumption in the PSID using food demand estimates from the CEX," IFS Working Papers W04/27, Institute for Fiscal Studies.
  6. Martin Browning & Mette Gortz, 2006. "Spending time and money within the household," Economics Series Working Papers 288, University of Oxford, Department of Economics.
  7. Martin Browning & Thomas Crossley, 2009. "Are Two Cheap, Noisy Measures Better Than One Expensive, Accurate One?," American Economic Review, American Economic Association, vol. 99(2), pages 99-103, May.
  8. Skinner, Jonathan, 1987. "A superior measure of consumption from the panel study of income dynamics," Economics Letters, Elsevier, vol. 23(2), pages 213-216.
  9. Menno Pradhan, 2001. "Welfare Analysis with a Proxy Consumption Measure – Evidence from a Repeated Experiment in Indonesia," Tinbergen Institute Discussion Papers 01-092/2, Tinbergen Institute.
  10. Naeem Ahmed & Matthew Brzozowski & Thomas Crossley, 2006. "Measurement errors in recall food consumption data," IFS Working Papers W06/21, Institute for Fiscal Studies.
  11. Li, Tong & Vuong, Quang, 1998. "Nonparametric Estimation of the Measurement Error Model Using Multiple Indicators," Journal of Multivariate Analysis, Elsevier, vol. 65(2), pages 139-165, May.
  12. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
  13. Susanne M. Schennach, 2004. "Estimation of Nonlinear Models with Measurement Error," Econometrica, Econometric Society, vol. 72(1), pages 33-75, 01.
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Cited by:
  1. J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, vol. 102(2), pages 994-1028, April.
  2. Thomas F. Crossley & Joachim K. Winter, 2014. "Asking Households about Expenditures: What Have We Learned?," NBER Chapters, in: Improving the Measurement of Consumer Expenditures National Bureau of Economic Research, Inc.
  3. Orazio Attanasio & Erik Hurst & Luigi Pistaferri, 2014. "The Evolution of Income, Consumption, and Leisure Inequality in the US, 1980-2010," NBER Chapters, in: Improving the Measurement of Consumer Expenditures National Bureau of Economic Research, Inc.
  4. Susanne Schennach, 2012. "Measurement error in nonlinear models- a review," CeMMAP working papers CWP41/12, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  5. John Sabelhaus & David Johnson & Stephen Ash & David Swanson & Thesia Garner & John Greenlees & Steve Henderson, 2014. "Is the Consumer Expenditure Survey Representative by Income?," NBER Chapters, in: Improving the Measurement of Consumer Expenditures National Bureau of Economic Research, Inc.
  6. Tilottama Ghosh & Sharolyn J. Anderson & Christopher D. Elvidge & Paul C. Sutton, 2013. "Using Nighttime Satellite Imagery as a Proxy Measure of Human Well-Being," Sustainability, MDPI, Open Access Journal, vol. 5(12), pages 4988-5019, November.
  7. Corrado, L. & Weeks, M., 2010. "Identification Strategies in Survey Response Using Vignettes," Cambridge Working Papers in Economics 1031, Faculty of Economics, University of Cambridge.
  8. Martin Browning & Thomas Crossley, 2009. "Are Two Cheap, Noisy Measures Better Than One Expensive, Accurate One?," American Economic Review, American Economic Association, vol. 99(2), pages 99-103, May.
  9. John Sabelhaus & David Johnson & Stephen Ash & Thesia Garner & John Greenlees & Steve Henderson & David Swanson, 2012. "Is the Consumer Expenditure Survey representative by income?," Finance and Economics Discussion Series 2012-36, Board of Governors of the Federal Reserve System (U.S.).

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