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The “Missing Rich” in Household Surveys: Causes and Correction Approaches

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  • , Stone Center

    (The Graduate Center/CUNY)

  • Lustig, Nora
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. (Stone Center on Socio-Economic Inequality Working Paper)

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  • , Stone Center & Lustig, Nora, 2020. "The “Missing Rich” in Household Surveys: Causes and Correction Approaches," SocArXiv j23pn, Center for Open Science.
    • Handle: RePEc:osf:socarx:j23pn
    DOI: 10.31219/osf.io/j23pn
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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. Burdín, Gabriel & De Rosa, Mauricio & Vigorito, Andrea & Vilá, Joan, 2022. "Falling inequality and the growing capital income share: Reconciling divergent trends in survey and tax data," World Development, Elsevier, vol. 152(C).
    5. Mathias Silva, 2023. "Parametric models of income distributions integrating misreporting and non-response mechanisms," AMSE Working Papers 2311, Aix-Marseille School of Economics, France.
    6. Vladimir Hlasny, 2021. "Parametric representation of the top of income distributions: Options, historical evidence, and model selection," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1217-1256, September.
    7. Emmanuel Flachaire & Nora Lustig & Andrea Vigorito, 2023. "Underreporting of Top Incomes and Inequality: A Comparison of Correction Methods using Simulations and Linked Survey and Tax Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(4), pages 1033-1059, December.
    8. Pablo Gutiérrez Cubillos, 2022. "Gini and undercoverage at the upper tail: a simple approximation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(2), pages 443-471, April.
    9. 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.
    10. 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.
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    12. Bartels, Charlotte & Waldenström, Daniel, 2021. "Inequality and top incomes," GLO Discussion Paper Series 959, Global Labor Organization (GLO).
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    • 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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