Transcript Comments on ABS paper: The Sensitivity of Income

The Sensitivity of Income
Distribution Measures to Changes in
Survey Collection Tools and
Estimation Techniques in Australia
Leon Pietsch and Bob McColl, Australian Bureau of Statistics
Peter Saunders, Social Policy Research Centre, Univ of NSW
Presented by Annie Abello
National Centre for Social and Economic Modelling (NATSEM)
University of Canberra
29th General Conference
International Association for Research in Income and Wealth
Joensuu, Finland
22 August 2006
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Data

Income Distribution Survey (IDS)
series prior to mid-90s
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Survey of Income and Housing Costs
(SIHC) 1994-95 to 2002-03
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Survey of Income and Housing (SIH)
2003-04
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Scope of the paper
Case study 1
Consistency of time series SIHC data given
differences in survey coverage of social
assistance benefits
Case study 2
Comparability of IDS series to SIHC 1994-95
Case study 3
Comparability of SIHC series to SIH 2003-04
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Case study 1
Consistency of time series SIHC data
given differences in survey coverage of
social assistance benefits
Survey coverage of benefits:
total value of pensions and allowances paid
by government as reported in the SIHC /
total value of payments by government
4
Proportion of survey coverage of
social assistance benefits
85.9
86.2
84.0
82.9
81.2
78.2
1994-95
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1995-96
1996-97
1997-98
1999-00
2000-01
Investigating possible causes of
change in coverage
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Failed to collect information about a once-only
payment to seniors who had reached age-pension
age, in 2000-01
Overrepresentation of households with children
under 15 years of age
Major differences between surveys wrt weighting
and benchmarking procedures
Increasing SIH undercoverage of benefit
recipients is due to an increase in differential
coverage… could not be fixed by demographic
benchmarks alone… no obvious cause for such
an increase”
Solutions implemented
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The estimates for all years prior to 2000-01 were
recalculated using up to date demographic
benchmark data, and a consistent estimation and
weighting system for all years
Estimates for the once-only payment to seniors
were modelled and added to the 2000-01 SIH
For 1999-00 and 2000-01 a social assistance
benefit benchmark was added to bring the
coverage ratio to the more usual level
No significant effect on income
distribution measure
Discussion: Case 1
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Interesting topic
Notable
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Areas to look at
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Rigorous investigation to understand why survey
coverage of benefits had changed, despite no change in
the way the survey had been done
Transparency re issues, shortcomings
Re-issuance of corrected datasets (6 SIHCS)
Increased eligibility to Commonwealth Seniors Health
Card (CSHC) as govt. raised income limits in 1999-00
and 2001-01; did average value of benefits per person
decline in these two years?
Lower sample size in the 2000-01 SIHC; did SIHC
response rates improve/increase after 2000-01?
Case study 3
Comparability of SIHC series to 2003-04 SIH
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Changes made to the 2003-04 SIH
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Integrated SIH and HES; independent sample
(replaces previous practice of taking a sample
from households responding to the monthly
labour force survey)
Larger sample size
Computer-assisted interviewing
Additional income questions
Collected wealth data for the first time
Instrument wording changes re reported
dividends
”Not all movements in income distribution
measures such as the Gini coefficient can be
immediately explained in terms of real world
changes”
0.311
0.310
0.309
0.303
0.302
0.296
0.294
0.292
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94-95
95-96
96-97
97-98
99-00
00-01
02-03
03-04
Gini coefficient, varying the subsample
0.311
0.310
0.309
0.303
0.302
0.301
SIH subsample
0.294
Whole sample
0.290
HES subsample
0.296
0.292
94-95
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95-96
96-97
97-98
99-00
00-01
02-03
03-04
Gini coefficient, changes in survey
0.311
0.310
0.309
0.303
0.302
0.298
0.297
0.296
0.294
0.292
94-95
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95-96
96-97
97-98
99-00
00-01
02-03
03-04
Assume imp. credit is
reported in div.
Revert to old meth.
bus.& investmt Y
Original Gini coef.
Gini coefficient, changes in survey
+ real world changes
0.311
0.310
0.309
0.303
0.302
0.302
0.297
Change in bus. &
investmt income
0.294
Original Gini coef.
0.296
0.292
94-95
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95-96
96-97
97-98
99-00
00-01
02-03
Remove once-only
payment to familes and
carers
03-04
Conclusions
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There were substantial changes in income
inequality measures between 2002-03 and 2003-04
Adjusting income estimates (to retain constant
methodology for current year business and investment income + the
bring the Gini
coefficient up, but still leaves a large gap of
unexplained change in the inequality measures
“It appears that there has been no significant
change in income inequality from the mid 1990s
to 2003-04”
once-only payments to families and carers)
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Validation using STINMOD
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STINMOD: NATSEM’s static microsimulation
model of the Australian income tax and social
security systems
www.natsem.canberra.edu.au/products.JSP#STINMOD
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Current policy and policy changes
Used STINMOD versions 98A, 01B and 04A to
produce tables on the distribution of income by
decile for three points in time
Data points: 1997-98, 2001-02 and 2003-04
0.311
0.310
0.309
0.303
0.302
0.296
0.294
0.292
94-95
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95-96
96-97
97-98
99-00
00-01
02-03
03-04
Change in disposable income by
decile
0.20
2000-01 / 2002-03
1997-98 / 2003-04
0.15
0.10
0.05
0.00
One
Two
Three
Four
Five
Six
Income decile
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Seven
Eight
Nine
Ten
Comments and Discussion: Case 3
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Integrating the SIH and the HES; implications for time series
comparability of the SIH
Income inequality – the individual contribution (of changes in
methodology, real world changes) to change in total inequality
is not clearcut
STINMOD validates the general direction, but not the extent
of contribution to the change in income inequality
Commendable: ABS transparency re data issues
Important to balance data quality vs. time series
comparability
For the 2005-06 and future SIHs, helpful to include
alternative variables for comparability with previous years
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