The Under-Reporting of Transfers in Household Surveys: Its Nature and Consequences
NBER Retirement Research Center Paper No. NB 08-12
Issued in September 2008
Benefit receipt in major household surveys is often under-reported. In recent years, as many as half of the dollars received through Food Stamps, Temporary Assistance for Needy Families (TANF) and Workers' Compensation has not been reported in the Current Population Survey (CPS). High rates of understatement are found for many other government transfer programs and in datasets such as the Survey of Income and Program Participation (SIPP) and the Panel Study of Income Dynamics (PSID). These datasets are among our most important for analyzing incomes and their distribution as well as transfer receipt. Thus, this understatement has major implications for our understanding of the economic circumstances of the population and the working of government programs. We provide estimates of the extent of transfer underreporting for the main transfer programs and the major nationally representative household surveys. We obtain estimates by comparing weighted totals reported by households for these programs with those published by government agencies. Our results show sharp differences across programs and surveys as well as over time. These differences are informative as to the relative importance of the various reasons for under-reporting. The estimates indicate the magnitude of bias in existing estimates and can also be used to adjust estimated program effects on incomes and estimates of program take-up.
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