Measurement Error in the Bank of Italy's Survey of Household Income and Wealth

Abstract

This paper is aimed at evaluating the incidence of measurement error in the Bank of Italy's Survey of Household Income and Wealth (SHIW). In the case of time-invariant variables, we assess the degree of inconsistency of answers given by panel households in subsequent survey waves. For quantities that vary with time, we estimate the incidence of measurement error by decomposing observed variability into true dynamics and error-induced noise. We apply the Heise model or the latent Markov model, depending on whether the data are continuous or categorical. We also present regression models that explain the error-generating process. Our results are relevant to researchers who use SHIW data for economic analysis, but also to data producers involved in similar income and wealth surveys. The methods we describe and test can be employed in a number of contexts to gain better understanding of data-related problems and plans for survey improvement. Copyright 2008 The Authors. Journal compilation 2008 International Association for Research in Income and Wealth Published.

Consumption growth, the interest rate, and financial sophistication

“…The SHIW is a biannual survey of a representative sample of the Italian population conducted by the Bank of Italy covering about 8,000 households and 24,000 individuals. Details of the questionnaire, sample design, response rates and comparison of survey data with macroeconomic data are provided in Faiella et al (2008), Bartiloro et al (2010), and Biancotti et al (2012).…”

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“…Of the two kinds of errors that can affect survey data -sampling and non-sampling errors -the literature focuses almost exclusively on the second, trying to measure and correct misreporting (see, for example, Biancotti, 2008;and Neri and Zizza, 2010). 17 The natural starting point of any attempt in this direction is a comparison between the SHIW estimates and the corresponding national account aggregates.…”

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“…Finally, errors in worker satisfaction measurement can be related to respondent's lack of attention or to other psychological mechanisms that can affect the response behaviour. These errors are far for being negligible and inconsistencies may also arise for easy items (Biancotti et al, 2008). In general respondents will be prone to select the answer adopting a 'satisficing' behaviour (Simon, 1957), choosing an adequate answer that may not be the optimal one, in the attempt to minimize the burden of the question (Krosnick, 1991).…”