Poverty

Description of Income and Poverty Data Sources

The Census Bureau reports income and poverty estimates from several major national household surveys and programs:

• Annual Social and Economic Supplement to the Current Population Survey (CPS-ASEC)
• American Community Survey (ACS)
• Survey of Income and Program Participation (SIPP)
• Census 2000 Long Form
• Small Area Income and Poverty Estimates Program (SAIPE)

Each of these surveys differs from the others in some ways, such as the length and detail of its questionnaire, the number of households included (sample size), and the methodology used to collect and process the data. The Small Area Income and Poverty Estimates program uses data from a variety of sources, to create statistical models to produce income and poverty estimates. It is important to understand that different surveys and methods, which are designed to meet different needs, may produce different results. This document is intended to assist data users in selecting the data source most appropriate for their application.

HIGHLIGHTS

Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS)  CPS homepage

Because of its detailed questionnaire, the CPS ASEC is the source of timely official national estimates of poverty levels and rates and of widely used estimates of household income and individual earnings, as well as the distribution of that income. The CPS ASEC provides a consistent historical time series beginning in 1959 at the national level and can also be used to look at state-level trends and differences (through multi-year averages) going back to1980. However, the relatively large sampling errors of state-level estimates for smaller states somewhat limit their usefulness. (Background on CPS ASEC)

American Community Survey (ACS)  ACS homepage

Starting in 2006, the ACS releases annual subnational estimates of income and poverty for all places, counties, and metropolitan areas with a population of at least 65,000 as well as the nation and the states. The sample size of this survey is about 2.9 million addresses per year, making the ACS exceptionally useful for subnational analyses. Three-year period estimates are available for areas and subpopulations as small as 20,000. Starting in December 2010, five-year period estimates are available for census tracts/block groups and for small subgroups of the population. ACS estimates are updated every year. Because of its large sample size, estimates from the fully implemented ACS provide the best survey-based state level income and poverty estimates. Time series trend data will be available for all geographic areas, and for small population subgroups, beginning with the 2006 ACS for geographic areas with population of 65,000 or more. (Background on ACS)

Survey of Income and Program Participation (SIPP)  SIPP homepage

The Survey of Income and Program Participation (SIPP), a longitudinal survey, is most useful for understanding the dynamics of income and poverty (changes in income and poverty status for the same households over time, typically 3 to 4 years) and for examining the nature and frequency of poverty spells. Unlike the ACS and CPS ASEC, the SIPP also permits researchers to look at estimates of income and poverty for periods more than or less than one year. (Background on SIPP)

Census 2000 long form

The best measure of change between 1990 and 2000 for subnational areas and for subpopulations are the comparisons of Census 2000 long form estimates with those from the 1990 Census long form. Since the ACS eliminated the need for a long form, the 2010 census will not provide income and poverty estimates. For small areas and subpopulations, ACS multiyear estimates are available for comparison to Census 2000 and earlier. ACS 5-year data products provide data at the census tract level which can be compared “with caution” to earlier decennial census estimates. (We suggest that comparisons focus on the direction of change, e.g. whether poverty rates went up or down, rather than the magnitude of changes).  (Background on Census 2000 long form)

Small Area Income and Poverty Estimates (SAIPE) program  SAIPE homepage

The SAIPE program produces single-year estimates of median household income and poverty for states and all counties, as well as population and poverty estimates for school districts. Since SAIPE estimates combine ACS data with administrative and other data, SAIPE estimates generally have lower variance than ACS estimates but are released later because they incorporate ACS data in the models. For counties and school districts, particularly those with populations below 65,000, the SAIPE program provides the most accurate subnational estimates of poverty. For counties, SAIPE generally provides the best single year estimates of median household income. (Background on SAIPE)

BACKGROUND

The Annual Social and Economic Supplement to the Current Population Survey (CPS ASEC) is designed to give annual, calendar-year, national estimates of income and official poverty numbers and rates. It is, nonetheless, used for many other purposes, including the allocation of federal funding.

The CPS is primarily a labor force survey, not an income survey, and is conducted every month by the Census Bureau for the Bureau of Labor Statistics using Computer-Assisted Telephone Interviewing (CATI) and Computer-Assisted Personal Interviewing (CAPI). The Basic CPS is used to calculate the monthly unemployment rate estimates. Supplements are added in most months; the ASEC is conducted in February, March, and April with a sample of about 100,000 addresses per year. The questionnaire asks about income from more than 50 sources and records up to 27 different income amounts, including receipt of numerous noncash benefits, such as Supplemental Nutrition Assistance (formerly known as the food stamp program), subsidized school lunches, and housing assistance.

The American Community Survey (ACS), replaced the decennial census long-form sample questionnaire. The ACS offers broad, comprehensive information on social, economic, and housing data and is designed to provide this information at many levels of geography. During the 2000-2004 testing program, the ACS collected income data for a much larger sample than the CPS ASEC (about 800,000 addresses per year). Beginning in 2005, the ACS sample size grew to about 2.9 million addresses annually. As with the decennial census long form, the ACS relies heavily on paper questionnaires completed by respondents and returned to the Census Bureau by mail. These answers (or data) are collected on a rolling basis every month throughout the year, and the questionnaire asks about income received in the previous 12 months. For example, those interviewed in January 2010 were asked about income received in the January to December 2009 period, and those interviewed in December 2009 were asked about the December 2008 to November 2009 period.

There are many differences between the ACS and the CPS ASEC. Some of the most significant are:

• The ACS uses an up-to-date sampling frame (the Census Bureau’s Master Address File updated by using the U.S. Postal Service’s Delivery Sequence File and targeted address canvassing). The CPS ASEC uses the Census 2000 sampling frame (updated with new construction since April 2000). Evaluations by separate updating operations are underway, but overall coverage for the ACS and the CPS ASEC appear to be comparable.
• The ACS data collection methodology is substantially different from the CPS ASEC, as the CPS ASEC is conducted by interviewers via CATI or CAPI. In contrast, the ACS uses a self-response mail-out/mail-back questionnaire, followed by CATI or CAPI follow-up conducted by interviewers. Additionally, the ACS, like the decennial long form, is mandatory, and therefore response at the unit and item level is higher in the ACS than the CPS ASEC.
• The income questions in the ACS cover the major income sources, while the CPS ASEC income questions are much more detailed and provide a more comprehensive coverage of all potential income sources.
• The time period for ACS income estimates is different than the time period used by the CPS ASEC and Census 2000. The latter two surveys use the previous calendar year as the reference period while the ACS asks about income in the previous twelve months.
• Until 2006 the ACS had excluded group quarters from its sampling frame, slightly affecting the estimates of income and poverty, as some people in the poverty universe are in noninstitutional group quarters, such as those in group homes and shelters. The ACS began including both institutional and noninstitutional group quarters in its sampling frame starting in January 2006 while the CPS ASEC includes only noninstitutional group quarters.

Data on income and poverty are also released periodically from the Survey of Income and Program Participation (SIPP), a longitudinal survey designed to track changes in income over time for the same households. The SIPP is conducted in 4-month intervals, or waves, using CAI (Computer Assisted Interviews) either in person or via telephone. Interviewers return to the same household (not housing unit) and attempt to follow people interviewed in the first wave even if they move. Each wave contains the same set of core questions about the last 4 months, or reference period, and a set of topical questions that vary from wave to wave. About 65,500 addresses were in the initial sample for the SIPP 2008 Panel. The 2004 Panel had 12 waves and lasted four years; the 2008 Panel is slated to have 13 waves. A re-engineered survey (ReSIPP) instrument was tested in the field in 2010 and is expected be production in 2013.

Whereas the CPS ASEC is a labor force survey with supplementary questions on income, the SIPP focuses on income and typically reports more income (and therefore lower annual poverty) than the CPS ASEC. The SIPP collects monthly income by source using a much more detailed questionnaire than the CPS ASEC --up to 81 sources of income and up to 73 individual income values. SIPP estimates of annual income and annual poverty can be obtained by summing 12 months of family income and monthly poverty thresholds, both of which may vary month to month. The SIPP also contains detailed information on government program participation, asset-holdings, and other subject areas critical for understanding social and economic well-being. Its estimates have been used to understand the relationship between job loss and health insurance coverage, how changes program eligibility rules affect target populations, to address housing affordability, to examine the economic well-being of the disabled, and in many other policy-relevant analyses.

The Census 2000 long form used a mail-out/mail-back questionnaire that was very similar that used by the ACS (asking about eight income types) in 2010. However, Census 2000 used only personal-visit follow-up using paper questionnaires while the ACS uses CATI, CAPI, and other methods to improve data quality. While the ACS collects data throughout the year on an on-going, monthly basis and asks for a respondent's income over the "past 12 months,"  Census 2000 collected the income data for a fixed period of time -- "during 1999" (the last calendar year).  In a comparison study between Census 2000 income data and the 2000 ACS, income collected in Census 2000 was found to be about 4 percent higher than that in the 2000 ACS.  For more information on the differences of income in the ACS and Census 2000, see http://www.census.gov/acs/www/Downloads/methodology/ASA_nelson.pdf

The Small Area Income and Poverty Estimates (SAIPE) program was created by the U.S. Census Bureau, with support from other Federal agencies, to provide estimates of selected income and poverty statistics for states, counties, and school districts. The main objective of this program is to provide updated estimates of income and poverty statistics for the administration of federal programs and the allocation of federal funds to local jurisdictions. Beginning with the estimates for 2005, data from the ACS are used in the estimation procedure; all prior year estimates used data from the CPS ASEC. Estimates are produced annually.

The SAIPE program "borrows strength" from multiple data sources, including administrative records and multiple household surveys, to produce estimates with lower variance than estimates from any one source, but they are available a year later than the annual estimates from the CPS ASEC. The SAIPE program uses statistical methods to improve subnational estimates of income and poverty by using information from a variety of sources, including current surveys, population estimates, and administrative records such as aggregate food stamps and aggregate adjusted gross income from tax returns. Although used for critical purposes, such as in the funding formula that is used to distribute about $14 billion dollars a year to school districts under the Department of Education’s Title I Program, such information is provided only as a characteristics of a specific geographic area. A significant advantage of household surveys is their ability to allow analysis of how income varies along with other household and individual characteristics, such as nativity and work experience.

Summary

The CPS ASEC provides the most timely and accurate national data on income and is the official source of national poverty estimates, hence it is the preferred source for national analysis. Because of its large sample size, the ACS is preferred for subnational data on income and poverty by detailed demographic characteristics. The Census Bureau recommends using the ACS for single-year estimates of income and poverty at the state level. Users looking for consistent, state-level trends before 2006 should use the CPS ASEC.

For substate areas, like counties, users should consider their specific needs when picking the appropriate data source. The SAIPE program produces overall poverty and household income single-year estimates with standard errors usually smaller than direct survey estimates. Users looking to compare estimates of the number and percentage of people in poverty for counties or school districts or the median household income for counties should use SAIPE, especially if the population is less than 65,000. Users who need other characteristics such as poverty among Hispanics or median earnings, should use the ACS, where and when available.

The SIPP is the only Census provided source of longitudinal poverty, income and program participation data. It provides national estimates and estimates for some larger states. As SIPP collects monthly income over 3 or 4 year panels, it is also a source of poverty estimates for time periods more or less than one year.

The chart below summarizes the recommendations at various geographic levels:

Footnote
¹ Use CPS ASEC 2-year averages when examining state trends that include years prior to 2000.
² ACS recommends using non-overlapping periods for trend analysis with multiyear estimates. For example, comparing 2005-2007 ACS 3-Year estimates with 2008-2010 ACS 3-Year estimates is preferred.
³ ACS recommends using non-overlapping periods for trend analysis with multiyear estimates. For example, comparing 2006-2010 ACS 5-Year estimates with 2011-2015 ACS 5-Year estimates is preferred for identifying change.