In this forum thread, multiple people have asked questions or raised concerns related to the IPUMS USA variable POVERTY, specifically estimates derived from 5-year ACS samples. We appreciate your patience as we looked into the various questions.
First, I will provide some information about recent changes to the POVERTY variable and another variable that is used to calculate POVERTY, FAMUNIT. Then I will address comparisons between estimates derived from IPUMS data to estimates published by the Census Bureau. Finally, I will provide some information about why estimates from the 5-year ACS samples do not match estimates from the 1-year ACS samples.
1. Recent changes to POVERTY and FAMUNIT
On February 6th of this year, IPUMS released an update to IPUMS USA that included fixes to the POVERTY and FAMUNIT variables. From the IPUMS USA revision history:
POVERTY has been modified to improve internal consistency. POVERTY is now determined based on the IPUMS family unit (FAMUNIT), which differs from the Census Bureau family unit for primary families, for all family units within a household. Previously, for those with FAMUNIT > 1, the value of POVERTY was based on an IPUMS calculation using family size, number of children, and FTOTINC with in combination with Census Bureau published thresholds and everyone with FAMUNIT == 1 in the ACS and PRCS samples was assigned the Census Bureau recode value of poverty.
An error was found and corrected in FAMUNIT. The spouse of the head of household as identified by SPLOC was not identified as being related to the head of household in RELATE. As a result, the coresident grandchildren of the head of household and the head of household’s spouse were reported to not be part of the appropriate family unit in FAMUNIT. These third-generation children are now included in the IPUMS primary family unit.
These changes affect measurement of the POVERTY variable and explain differences between extracts from IPUMS USA created before and after February 6, 2024.
2. Differences between Census Bureau published estimates of poverty rates and estimates that use IPUMS data
We do not generally expect estimates from IPUMS microdata to exactly match Census Bureau published estimates for multiple reasons. One reason is that the data used by the Census Bureau to generate their official estimates are the full dataset available only internally to the Census Bureau, while the public use microdata (provided by IPUMS) are a subset of those original data. In the case of poverty estimates, IPUMS and the Census Bureau have differing definitions of families. As noted above, IPUMS recently made an update that improves consistency in the POVERTY variable by using IPUMS family definitions and the income for those family members when assigning values to POVERTY; because persons in FAMUNIT == 1 were previously assigned the Census Bureau measure and most households have only one family, the previous version of POVERTY produced estimates closer to those reported by the Census Bureau. While using IPUMS family definitions and the income for those family members limits the ability to replicate published estimates, it allows researchers to assess poverty with consideration for the income provided by all family members for more family types (e.g., those with a householder and an unmarried partner). Users can read more about the different definitions of families used by IPUMS and the Census Bureau in the FAMUNIT variable description (which links to other relevant variables and documentation). We plan to offer a “CBPOVERTY” variable in the future that will integrate the original Census Bureau income-to-poverty ratio recode; in the interim you can use the unharmonized source variables available from IPUMS USA (e.g., US2022A_POVPIP for the 2022 1-year ACS) for analyses where you need to replicate Census Bureau poverty estimates.
3. Discrepancies between 5-year ACS samples and 1-year ACS samples in estimates using POVERTY
Inflation adjustment practices explain the differences in POVERTY values between the 1-year ACS samples and the corresponding single-year estimates in the 5-year ACS samples (using MULTYEAR). When IPUMS releases 5-year ACS sample data, we inflate all dollar amounts (including income values used to calculate poverty status) to the last year in the 5-year file. IPUMS then converts the dollar amounts to 1989 dollars in order to determine poverty thresholds. See the IPUMS USA user note on poverty for more information on the general process (though I should note this note reports the 1999 matrix and indicates we adjust to 1999 dollars, which is incorrect; we use 1989 dollars and the corresponding 1989 matrix in the POVERTY variable). We then apply the Census Bureau adjustment factor to each individual year within the 5-year files, using MULTYEAR and ADJUST. As a result, the last year in a 5-year sample (e.g., 2022 in the 2022 5-year file) matches the corresponding 1-year file (the 2022 1-year ACS), but other years will not as each 5-year file will make a different inflation adjustment.
Estimates of POVERTY calculated from the PUMS data for the 5-year and 1-year samples are expected to differ.
Note: This post previously incorrectly stated that the Census Bureau adjusts dollar amounts inf the 5-year ACS to account for inflation (inflating all dollar amounts to the last year of the file). It has been corrected to indicate that IPUMS applies this inflation adjustment, not the Census Bureau.