Scientific article
Open access

The weight of the rich: improving surveys using tax data

Publication date2022-02-17
First online date2022-02-17

Household surveys often fail to capture the top tail of income and wealth distributions, as evidenced by studies based on tax data. Yet to date there is no consensus on how to best rec- oncile both sources of information, given the multiple biases at play. This paper contributes a novel method, rooted in standard calibration theory, to directly confront the problem of survey non-response between survey micro-data and anonymous tax data under reasonable assumptions. Our key innovation is to endogenously determine a “merging point” between the datasets, above which we start to incorporate information from tax data into the sur- vey, under the assumption that the rate of representativeness is constant, then decreasing with income. This is followed by a “reweighting” and a “replacing” step, which preserves the microdata structure of the original survey, assuming no re-ranking of observations. We illustrate our approach with simulations, which show that our method is robust to the exis- tence of income misreporting, and performs better than alternative methods. We also apply it to real data from five countries, both developed and less developed, finding changes to the levels and trends in income inequality. We discuss several limits to our approach and suggest some guidelines for future research.

  • Calibration
  • Inequality
  • Reweighting
  • Survey Representativeness
  • Tax Data
  • European Commission - The Distribution and Redistribution of Income and Wealth: A Global and Historical Perspective [340831]
Citation (ISO format)
BLANCHET, Thomas, FLORES, Ignacio, MORGAN, Marc. The weight of the rich: improving surveys using tax data. In: The journal of economic inequality, 2022, p. 32 p. doi: 10.1007/s10888-021-09509-3
Main files (2)
Article (Published version)
Article (Submitted version)
ISSN of the journal1569-1721

Technical informations

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