Another Plea for Caution When Using Survey Income Data From the Far-Left Tail

Excerpt

As an original reviewer of Brady and Parolin’s article (published in this issue of Demography), I expressed concerns about measurement error given that the study relies on extreme outliers in the distribution of survey income. Recognizing the importance of this issue, the editorial team at Demography invited me to share these concerns in a comment. In my comment (published in this issue of Demography), I highlight evidence from a growing literature indicating that income is significantly underreported in household surveys. This underreporting is evident across many surveys in the United States and internationally, has worsened noticeably over time, and appears to be most problematic for values at the very bottom of the reported income distribution. Given this evidence, one should be very cautious about drawing strong conclusions based only on data from extremely low values of income reported in surveys. In their response to my comment, Brady and Parolin argue that the concerns I raise are not problematic for their analyses. They also present results from additional robustness exercises intended to address measurement error concerns and argue that these results confirm their conclusions. …