Estimation of Households Income from Bracketed Income Survey Data
As far as data on personal income are highly confidential and sensible, it is a common practice to collect such information by asking people to classify their own earnings along a discrete scale of income “brackets”. This procedure provides an unbiased estimation of average income, under fairly general conditions, but it is well known that standard error of estimates increases with brackets size. On the other hand, people tend to underreport income, and this bias is likely to increase as brackets width gets smaller. Thus, an optimal bracket size can be generally identified, that insures a reduction of underreporting without increasing estimate variance too much. The paper presents an evaluation of brackets size effect on various procedures for estimating Italian households’ income. The first result is that the most reliable and robust procedures are those based on the extrapolation of income distribution in the upper open class by means of very simple functions. Secondly, reducing of the number of income brackets from the actual 22 to 5-7 seems to improve the accuracy of indicators for every procedure.
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- Frank A. Cowell & Fatemeh Mehta, 1982. "The Estimation and Interpolation of Inequality Measures," Review of Economic Studies, Oxford University Press, vol. 49(2), pages 273-290.
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"Bracketing effects in categorized survey questions and the measurement of economic quantities,"
Sonderforschungsbereich 504 Publications
02-35, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Winter, Joachim, 2002. "Bracketing effects in categorized survey questions and the measurement of economic quantities," Papers 02-35, Sonderforschungsbreich 504.
- Martelli, Bianca Maria, 1998.
"Le Inchieste Congiunturali dell'ISCO: aspetti metodologici; Chapter 1 of: Le inchieste dell'ISCO come strumento di analisi della congiuntura economica
[The ISCO short term surveys: methodological a," MPRA Paper 16331, University Library of Munich, Germany.
- D'Elia, Enrico, 1991.
"La quantificazione dei risultati dei sondaggi congiunturali: un confronto tra procedure
[Quantifying the results of tendency surveys: a comparison among different procedures]," MPRA Paper 16434, University Library of Munich, Germany.
- Nanak Kakwani, 1976. "On the Estimation of Income Inequality Measures from Grouped Observations," Review of Economic Studies, Oxford University Press, vol. 43(3), pages 483-492.
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