Hi-
I pooled data from ASEC and the displaced worker supplement for years 2012, 2014, 2016 and 2018. I am using FTOTVAL (family income) as a control variable in my analysis. Since I am using multiple years of data do I need to adjust FTOTVAL for inflation? Also, I noticed there are some high values for FTOTVAL (max 2200798) and distribution has right skew, but I noticed there are negative family income values so not sure it is possible (or recommended) to log FTOTVAL to address skew. Would appreciate any additional guidance on how to work with FTOTVAL variable. Thanks!
FTOTVAL (total family income) reports the sum of INCTOT (total personal income) for all family members within a household; see FAMUNIT for information on how family membership is constructed. INCTOT itself is the sum of many individual components of individual income, including 21 components in ASEC samples from 2019-onwards. These are listed on the INCTOT comparability tab. Note that INCBUS (non-farm business income) and INCFARM (farm income) are the only components that are allowed to be negative to indicate losses. As a result, FTOTVAL will be negative when those losses are greater than all other sources of income across family members.
The decision of whether to adjust FTOTVAL for inflation or skewness will depend on your specific project. Our user support team is unable to provide this type of analytical advice. I recommend reviewing how this is addressed by other papers in the literature to help inform your approach to these questions. IPUMS CPS offers an Adjust Monetary Values feature from the Extract Options menu (immediately before submitting your extract for processing). Using this feature will adjust values for inflation by adding a new variable to your extract that reports values that have been converted to 2010 dollars.