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How the Census Bureau Measures Income and Poverty

Wed Sep 11 2013
David Johnson
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Note: This is an updated  version of a blog that ran last year. It provides important information on when to use statistics from the Current Population Survey and when to use them from the American Community Survey for income and poverty.

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Income, poverty and health insurance statistics  for 2012 from the Current Population Survey (CPS) will be released Tuesday, Sept. 17, 2013. One-year statistics from the 2012 American Community Survey (ACS) will be released on Thursday, Sept. 19, 2013.

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In all likelihood, the national statistics from these two sources will not be identical. Why not? Which is correct? Well, it’s complicated.

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The Current Population Survey serves as the nation’s primary source of statistics on labor force characteristics. A supplement to the survey provides the official annual statistics on the nation’s income and poverty levels as well as statistics on age, sex, race, marital status, educational attainment, employee benefits, work schedules, school enrollment, health insurance, noncash benefits and migration.

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The American Community Survey, on the other hand, is the only source of small-area statistics available on a wide range of important social and economic characteristics for all communities in the country. In addition to income, poverty and health insurance, other topics include education, language ability, the foreign-born, marital status, migration, homeownership, the cost and value of our homes and many more.

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Statistics from these two surveys differ for a number of reasons. First, income questions on the CPS are much more detailed than the summary questions asked on the ACS.

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Second, the reference periods for the two surveys are very different. The CPS asks respondents to report on their income in the previous calendar year. The ACS asks about income in the prior 12 months. Since the ACS is a continuous survey administered throughout the year, some respondents to the 2012 ACS (those who fill out the survey in January) are reporting income received between January 2011 and December 2011 while other respondents (those who fill out the survey in December) are reporting income received between December 2011 and November 2012.

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Third, for the CPS, trained interviewers administer the survey while people primarily respond to ACS questions over the Internet or by mail. (Trained interviewers follow-up with households who do not respond to the ACS online or by mail.)

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These differences often result in different national statistics for such key indicators as poverty, median income and inequality. Despite differences in the “levels” of these indicators, the trends over time tend to be very similar across the two surveys. The following graphs show median household income and poverty rates from the ACS compared with statistics from the CPS for previous years. The red line adjusts the CPS for the differences in reference periods.

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Many people contact us each year asking which estimate to use for a particular purpose. For national statistics, we recommend the CPS because it provides a consistent historical time series at the national level back, in some cases,  more than half a century. The CPS can also be used to look at limited state-level trends. However, because of the larger sample size and smaller sampling errors, we recommend using the ACS for subnational geographies.

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The next two charts show the volatility of the single year CPS ASEC statistics relative to the ACS statistics for two smaller states: Arkansas and Maryland. Since the CPS has a smaller sample size, you see more volatility in these smaller states.

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If you are interested in a longer time series for a small state than is available from the American Community Survey, we recommend using two- or three-year averages from the CPS ASEC.

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