Integration of Micro and Macro Data on Consumer Income and Expenditures

Clinton P. McCully

This chapter is a preliminary draft unless otherwise noted. It may not have been subjected to the formal review process of the NBER. This page will be updated as the chapter is revised.

Chapter in forthcoming NBER book Measuring Economic Sustainability and Progress, Dale W. Jorgenson, J. Steven Landefeld, and Paul Schreyer, editors
Conference held August 6-8, 2012
Forthcoming from University of Chicago Press
in NBER Book Series Studies in Income and Wealth

Macro estimates of household income and expenditures from the Bureau of Economic Analysis measure aggregate and per capita averages, but provide no information on the distribution of income, which is important in the measurement of economic well-being. Micro estimates of household income and expenditures have information on income distribution and other household breakdowns, but are confined to the measurement of cash income and direct household expenditures, and suffer from problems of non-reporting, underreporting, and underrepresentation of high-income households. Integrated estimates of household income and expenditures provide estimates of income distribution consistent with the more accurate and broadly-defined macro values, which include third-party payments, such as those by employers and government for health care, and account for the effects of income taxes. Integrated estimates of household disposable income show a lesser degree of income inequality than do micro estimates from the Current Population Survey Annual Social and Economic Supplement, largely because of the inclusion of in-kind government social benefits, primarily for health care, that disproportionately benefit lower-income households, and of the exclusion from income of personal income taxes, which are paid disproportionately by high-income households. Changes between 2006 and 2010 show a small narrowing in income discrepancies, reflecting declines in self-employment and property income of the top quintile and increases in government social benefits and lower taxes for the lowest quintile.

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This paper was revised on February 11, 2013

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