Measurement error and imputation of consumption in survey data
We study how estimators used to impute consumption in survey data are inconsistent due to measurement error in consumption. Previous research suggests instrumenting consumption to overcome this problem. We show that, if additional regressors are present, then instrumenting consumption may still produce inconsistent estimators. This inconsistency arises from the correlation between additional regressors and measurement error. We propose an additional condition to be satisfied by the instrument that reduces measurement error bias. This condition is directly observable in the data. We apply our findings by revisiting recent research that imputes consumption data from the CEX to the PSID.
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- Erich Battistin & Raffale Miniaci & Guglielmo Weber, 2000.
"What do we learn from recall consumption data?,"
IFS Working Papers
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- Erich Battistin & Mario Padula, 2010.
"Survey Instruments and the Reports of Consumption Expenditures: Evidence from the Consumer Expenditure Surveys,"
CSEF Working Papers
259, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Battistin, Erich & Padula, Mario, 2010. "Survey Instruments and the Reports of Consumption Expenditures: Evidence from the Consumer Expenditure Surveys," CEPR Discussion Papers 8051, C.E.P.R. Discussion Papers.
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