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Does Encouraging Record Use for Financial Assets Improve Data Accuracy? Evidence from Administrative Data

Working Paper Number SEHSD-WP2017-34 & SIPP WP277
Jonathan Eggleston and Lori Reeder
Component ID: #ti1768298941

Introduction

Many surveys ask respondents to consult financial records in order to improve data accuracy. However, the assumption that record use reduces measurement error has not been tested yet with a large-scale comparison to administrative data. In this project, we compare interest, dividend, and rental income in the Survey of Income and Program Participation (SIPP) to administrative IRS 1040 tax data. Our results show that record use is associated with reducing the discrepancy between survey and administrative data by approximately 19 to 43 percent. The effects from records use persists even when controlling for various measures of respondent motivation and precision. In terms of potential costs from encouraging record use, we find that record users spend an extra 4.02 seconds for each asset question, on average, after controlling for their behavior in other parts of the SIPP interview. The extra time per question translates to a 2.6% increase in the total duration of the interview. Finally, we discuss the implications these results have for designing how to ask respondents to consult records and whether these record use requests are beneficial in household surveys.

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