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The ``missing rich'' in household surveys: causes and correction approaches

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  • Nora Lustig

    (Tulane University)

Abstract

This paper presents a survey of causes and correction approaches to address the ``missing rich'' problem in household surveys. ``Missing rich'' here is a catch-all term for the issues that affect the upper tail of the distribution of income: undercoverage, sparseness, unit and item nonresponse, underreporting and top coding. Upper tail issues can result in serious biases and imprecision of survey-based inequality measures. A number of correction approaches have been proposed. A main distinction is between those that rely on within-survey methods and those that combine survey data with information from external sources such as tax records, National Accounts, rich lists or other external information. Within each category, the methods can correct by replacing top incomes or increasing their weight (reweighting). Correction methods can be nonparametric and parametric. This survey aims to help researchers choose appropriate correction strategies and design robustness tests.

Suggested Citation

  • Nora Lustig, 2020. "The ``missing rich'' in household surveys: causes and correction approaches," Working Papers 520, ECINEQ, Society for the Study of Economic Inequality.
  • Handle: RePEc:inq:inqwps:ecineq2020-520
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    3. Advani, Arun, 2021. "Missing Incomes in the UK : Evidence and Policy Implications," The Warwick Economics Research Paper Series (TWERPS) 1364, University of Warwick, Department of Economics.
    4. Mathias Silva, 2023. "Parametric models of income distributions integrating misreporting and non-response mechanisms," AMSE Working Papers 2311, Aix-Marseille School of Economics, France.
    5. Susan Harkness, 2022. "Single Mothers’ Income in Twelve Rich Nations: Differences in Disadvantage across the Distribution," LIS Working papers 835, LIS Cross-National Data Center in Luxembourg.
    6. Kavonius, Ilja Kristian & Törmälehto, Veli-Matti, 2023. "Is property driving income distribution? – An analysis of the linkage between income and wealth in Finland, France and Spain," Journal of Comparative Economics, Elsevier, vol. 51(3), pages 858-879.
    7. Benjamin Ching & Tayla Forward & Oscar Parkyn, 2023. "Estimating the Distribution of Wealth in New Zealand," Treasury Working Paper Series 23/01, New Zealand Treasury.
    8. Tahnee Christelle Ooms, 2021. "Correcting the Underestimation of Capital Incomes in Inequality Indicators: with an Application to the UK, 1997–2016," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 157(3), pages 929-953, October.
    9. Leonardo Gasparini & Jessica Bracco, 2023. "Tres Décadas en Diez Gráficos: El Desarrollo Inclusivo en América Latina a la Luz de las Encuestas de Hogares," CEDLAS, Working Papers 0314, CEDLAS, Universidad Nacional de La Plata.
    10. Bartels, Charlotte & Waldenström, Daniel, 2021. "Inequality and top incomes," GLO Discussion Paper Series 959, Global Labor Organization (GLO).
    11. Ooms, Tahnee, 2021. "Correcting the underestimation of capital incomes in inequality indicators: with an application to the UK, 1997–2016," LSE Research Online Documents on Economics 108900, London School of Economics and Political Science, LSE Library.
    12. Masca, Simona-Gabriela & Chis, Diana-Maria, 2023. "Distributional implications of informal economy in the EU countries: Accounting for the spread of tax evasion benefits and cultural characteristics," Socio-Economic Planning Sciences, Elsevier, vol. 87(PB).

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    More about this item

    Keywords

    top incomes; inequality measures; nonresponse; underreporting; replacing and reweighting methods; imputation; poststratification; Pareto distribution; tax records.;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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