Time and Financial Transfers Within and Beyond the Family: Results From the Health and Retirement Study

Research on time and financial transfers is often conducted along two distinct lines—transfers within the family and transfers beyond the family—without considering the fact that the two types of transfers are actually interrelated. Using longitudinal data from the Health and Retirement Study (HRS), this article investigates the links between the time and financial transfers within and beyond the family. The concepts of within and beyond the family transfers are discussed. Several data quality problems with the transfer measures in the HRS are corrected. Focusing on the interrelationships among the four types of transfers, the study finds that the transfers within and beyond the family are complements in the sense that households that are more willing to make within-family transfers are also more willing to make beyond-family transfers, and vice versa. Income and wealth are strong predictors of financial transfers. Black and Hispanic households lag systematically in the generosity to help the people both within and beyond their families.time and financial transfers; transfers within the family; transfers beyond the family; philanthropy and volunteerism; HRS

Correcting Second Home Equity in HRS/AHEAD: the Issues, a Method, and Preliminary Results

Second home equity is an important component of both housing equity and net worth for the old population. It has been covered, implicitly or explicitly, across all waves of HRS and AHEAD surveys. But due to a skip-pattern error, not all households with second homes were asked detailed questions about current market value, amount of mortgage, etc... The negative impact of the inconsistent treatment of second home on the estimation of housing equity and net worth is substantial. When the second home information is not collected for all the households who own second homes (as in AHEAD 1995 and HRS 1996), the second home equity measure based on the partial data is likely to suffer from selection bias, rendering vulnerable both measures of total housing equity and total net worth. This paper reports on an imputation method to correct for this bias that we demonstrate and find effective.

Knowledge and Preference in Reporting Financial Information

This article models respondent behavior in a financial survey with a framework explicitly integrating a respondent’s knowledge of and willingness to reveal his or her financial status. Whether a respondent provides a valid answer, a “don’t know”, or a “refusal” to a financial question depends on the interaction of his or her financial knowledge and preferences regarding revealing the knowledge. Using asset response and nonresponse data from the Health and Retirement Study (2000), we found that knowledge and preferences play interrelated roles in reporting financial information, that a respondent’s age, gender, education, and race and ethnicity are important predictors of respondent behavior, and that race and ethnicity affect a respondent behavior only via their influence on preferences, while gender only via its influence on knowledge. We also found strong heterogeneity in respondents’ financial knowledge and their willingness to reveal the knowledge.

Intergenerational Earnings Mobility: Mechanism and Measurement

Based on a model of two-stage life cycle, this paper investigates and measures intergerational relationships in lifetime earnings. Using data from PSID, I have found that the lifetime earnings transmission equation is non-linear. The elasticity of a son's lifetime earnings with respect to his father's, which may be loosely regarded as the inverse of intergenerational earnings mobility, is not constant across families. Specifically the relationship between the elasticity and the father's log lifetime earnings is of an inverted U- shape: the elasticity is relatively small at both ends of the spectrum, with the maximum in the middle.Intergenerational mobility, non-linear intergenerational relationship, lifetime earnings, earnings mobility, Ben-Porath Model, human capital investment, regression to the mean, PSID

Ensuring Time-Series Consistency in Estimates of Income and Wealth

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Regulatory capital determination and Its implications for internal ratings-based credit risk model development and validation

Focusing on the interconnections between the Basel regulatory capital formula and several well-specified statistical models, this working paper seeks to understand some of the important issues embedded in the Basel Accord. These include: Where does this formula come from? What risks does it try to capture? Why does the Basel Accord stipulate that the formula be implemented on a basis of homogeneous segments for retail exposures or similar risk ratings of wholesale obligors? Is there any desirable property on the number of loans for a segment (or obligor group)? Why is LGD treated as a constant as opposed to a random variable? When covering expected loss – and determined independently – how is the loss reserve related to the minimum regulatory capital? Answers to these questions have some important implications for Basel model development and validation

The Effect of Unfolding Brackets on the Quality of Wealth Data in the HRS

A characteristic feature of survey data on household wealth is the high incidence of missing data—roughly one in three respondents who report owning an asset are unable or unwilling to provide an estimate of the exact amount of their holding. A partial solution to that problem is to devise a series of questions that put the respondent’s holdings into a quantitative range (less than x, more than x, or what?). These quantitative ranges are called unfolding brackets, and they represent a survey innovation that aims to improve the quality of wealth data by substituting range data for completely missing data. In this paper, we examine the effect of unfolding brackets on the quality of HRS wealth data. Special attention is given to the impact of unfolding bracket entry points on the distribution of asset holdings in HRS 1998. Although there is a small positive relationship between mean asset holdings and entry point, there are many cases where that relationship does not hold. In general, our conclusion is that entry point bias problems are not a major concern in the evaluation of quality in the 1998 HRS wealth data.

Enhancing the Quality of Data on Income and Wealth

Over the last decade or so, a substantial effort has gone into the design of a series of methodological investigations aimed at enhancing the quality of survey data on income and wealth. These investigations have largely been conducted at the Survey Research Center at the University of Michigan, and have mainly involved two longitudinal surveys: the Health and Retirement Study (HRS), with a first wave beginning in 1992 and continued thereafter every other year through 2004; and the Assets and Health Dynamics Among the Oldest Old (AHEAD) Study, begun in 1993 and continued in 1995 and 1998, then in every other year through 2004. This provides and overview of the main studies and summarizes what has been learned about correcting longitudinal inconsistencies that arise.

The Effect of Unfolding Brackets on the Quality of Wealth Data in HRS.

A characteristic feature of survey data on household wealth is the high incidence of missing data—roughly one in three respondents who report owning an asset are unable or unwilling to provide an estimate of the exact amount of their holding. A partial solution to that problem is to devise a series of questions that put the respondent’s holdings into a quantitative range (less than x, more than x, or what?). These quantitative ranges are called unfolding brackets, and they represent a survey innovation that aims to improve the quality of wealth data by substituting range data for completely missing data. In this paper, we examine the effect of unfolding brackets on the quality of HRS wealth data. Special attention is given to the impact of unfolding bracket entry points on the distribution of asset holdings in HRS 1998. Although there is a small positive relationship between mean asset holdings and entry point, there are many cases where that relationship does not hold. In general, our conclusion is that entry point bias problems are not a major concern in the evaluation of quality in the 1998 HRS wealth data.Social Security Administrationhttp://deepblue.lib.umich.edu/bitstream/2027.42/49427/1/wp113.pd

Enhancing the Quality of Data on the Measurement of Income and Wealth

Over the last decade or so, a substantial effort has gone into the design of a series of methodological investigations aimed at enhancing the quality of survey data on income and wealth. These investigations have largely been conducted at the Survey Research Center at the University of Michigan, and have mainly involved two longitudinal surveys: the Health and Retirement Study (HRS), with a first wave beginning in 1992 and continued thereafter every other year through 2004; and the Assets and Health Dynamics Among the Oldest Old (AHEAD) Study, begun in 1993 and continued in 1995 and 1998, then in every other year through 2006 This paper provides an overview of the main studies and summarizes what has been learned so far. The studies include; a paper by Juster and Smith (Improving the Quality of Economic Data: Lessons from the HRS and AHEAD, JASA, 1997); a paper by Juster, Cao, Perry and Couper (The Effect of Unfolding Brackets on the Quality of Wealth Data in HRS, MRRC Working Paper, WP 2006-113, January 2006); a paper by Hurd, Juster and Smith (Enhancing the Quality of Data on Income: Recent Innovations from the HRS, Journal of Human Resources, Summer 2003); a paper by Juster, Lupton and Cao (Ensuring Time-Series Consistency in Estimates of Income and Wealth, MRRC Working Paper, WP 2002-030, July 2002); a paper by Cao and Juster (Correcting Second-Home Equity in HRS/AHEAD: MRRC Working Paper WP 2004-081, June 2004); and a paper by Rohwedder, Haider and Hurd (RAND Working Paper, 2004).Social Security Administrationhttp://deepblue.lib.umich.edu/bitstream/2027.42/55450/1/wp151.pd