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What Do Survey Data Tell Us about U.S. Businesses?

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This paper examines the reliability of survey data for research on pass-through businesses activities. Passthrough businesses account for over half of all net income to businesses in the United States and most of the rise in top income shares. We examine all surveys that ask questions about these businesses and compare outcomes across surveys and with aggregated administrative data. We document large inconsistencies in business incomes, receipts, and number of returns. We highlight problems due to non-representative samples and measurement errors. Non-representativeness is reflected in undersampling of businesses, especially in categories of owners with low total incomes. Measurement errors arise because respondents do not refer to relevant documents when answering survey questions and also because some questions are framed in a manner that is confusing to respondents. Finally, we discuss measurement issues for statistics of interest, such as returns and valuations of ongoing private businesses, that are inherently latent and cannot be recovered using either survey or administrative data.

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  • Anmol Bhandari & Serdar Birinci & Ellen R. McGrattan & Kurt See, 2018. "What Do Survey Data Tell Us about U.S. Businesses?," Staff Report 568, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:568
    DOI: 10.21034/sr.568
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    Cited by:

    1. Tina Highfill & Richard Cao & Richard Schwinn & Richard Prisinzano & Danny Leung, 2020. "Measuring the Small Business Economy," BEA Working Papers 0173, Bureau of Economic Analysis.
    2. Anmol Bhandari & Serdar Birinci & Ellen R. McGrattan & Kurt See, 2020. "What Do Survey Data Tell Us about US Businesses?," American Economic Review: Insights, American Economic Association, vol. 2(4), pages 443-458, December.
    3. Heer, Burkhard & Trede, Mark, 2023. "Age-specific entrepreneurship and PAYG: Public pensions in Germany," Journal of Macroeconomics, Elsevier, vol. 75(C).
    4. Lena Anayi & Nicholas Bloom & Philip Bunn & Paul Mizen & Gregory Thwaites & Ivan Yotzov, 2022. "Firming up price inflation," POID Working Papers 058, Centre for Economic Performance, LSE.
    5. Matthew Smith & Owen Zidar & Eric Zwick, 2020. "Top Wealth in America: New Estimates and Implications for Taxing the Rich," Working Papers 264, Princeton University, Department of Economics, Center for Economic Policy Studies..
    6. Catherine, Sylvain, 2022. "Keeping options open: What motivates entrepreneurs?," Journal of Financial Economics, Elsevier, vol. 144(1), pages 1-21.
    7. Uribe-Terán, Carlos, 2021. "Higher taxes at the top? The role of tax avoidance," Journal of Economic Dynamics and Control, Elsevier, vol. 129(C).
    8. Corina Boar & Virgiliu Midrigan, 2020. "Efficient Redistribution," NBER Working Papers 27622, National Bureau of Economic Research, Inc.
    9. Madeira, Carlos & Margaretic, Paula, 2022. "The impact of financial literacy on the quality of self-reported financial information," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).

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    More about this item

    Keywords

    Intangibles; Survey data; Business taxes and valuation;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods

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