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Presented by Annie Abello National Centre for Social and Economic Modelling (NATSEM)

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

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Presented by Annie Abello National Centre for Social and Economic Modelling (NATSEM)

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  1. The Sensitivity of Income Distribution Measures to Changes in Survey Collection Tools and Estimation Techniques in AustraliaLeon Pietsch and Bob McColl, Australian Bureau of StatisticsPeter 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

  2. Data • Income Distribution Survey (IDS) series prior to mid-90s • Survey of Income and Housing Costs (SIHC) 1994-95 to 2002-03 • Survey of Income and Housing (SIH) 2003-04

  3. 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

  4. 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

  5. Proportion of survey coverage of social assistance benefits

  6. Investigating possible causes of change in coverage • 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”

  7. Solutions implemented • 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

  8. Discussion: Case 1 • Interesting topic • Notable • 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) • Areas to look at • 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?

  9. Case study 3Comparability of SIHC series to 2003-04 SIH

  10. Changes made to the 2003-04 SIH • 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

  11. ”Not all movements in income distribution measures such as the Gini coefficient can be immediately explained in terms of real world changes”

  12. Gini coefficient, varying the subsample

  13. Gini coefficient, changes in survey

  14. Gini coefficient, changes in survey + real world changes

  15. Conclusions • 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 once-only payments to families and carers)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”

  16. Validation using STINMOD • STINMOD: NATSEM’s static microsimulation model of the Australian income tax and social security systems www.natsem.canberra.edu.au/products.JSP#STINMOD • 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

  17. Data points: 1997-98, 2001-02 and 2003-04

  18. Change in disposable income by decile

  19. Comments and Discussion: Case 3 • 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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