Book: Changing Fortunes

## Summary

* Part I. Measurement and Data: Ch 2, 3, and 4
* Part II. Income Mobility: Ch 5, 6, and 7
* Part III. Poverty Dynamics: Ch 8, 9, 10, and 11

### 1. Introduction: Longitudinal Perspectives on the Income Distribution

* 3-7: this book relies on data from the British Household Panel Survey (BHPS). Income mobility is 'good' because it reduces the association between income origins and destinations over time, so that persistent poverty is low. It is 'bad' because it means volatility and uncertainty for people, increasing volatility itself ceteris paribus is probably undesirable. Positive reasons to study dynamics include: (1) duration is itself an important characteristic of poverty as persistent, recurrent, or occasional poverty are experienced as different phenomena, (2) dynamics are important to understand the *determinants* of poverty and we need to consider entries and exits separately, (3) the design of anti-poverty policy should depend on whether poverty is short v. long, and concentrated among particular groups v. 'random'. (ends with notes on data on p6-7).
	+ David Ellwood: "Dynamic analysis gets us closer to treating causes, where static analysis often leads us towards treating symptoms. If, for example, we ask who are the poor today, we are led to questions about the socioeconomic identity of the existing poverty population. Looking to policy, we then typically emphasize income supplementation strategies. The obvious static solution to poverty is to give the poor more money. If instead, we ask what leads people into poverty, we are drawn to events and structures, and our focus shifts to looking for ways to ensure people escape poverty."
* 7-9: **1.1. Distinguishing Features of the Book**: (1) the focus is on HH income rather than wages, earnings (as often done by labor economists), or wealth, (2) includes discussion of data definitions and sources (part I of the book), (3) focus only on the UK using the BHPS, (4) it examines both income mobility and poverty dynamics (parts II and III respectively), and (5) it examines trends over time in income mobility and poverty dynamics, in the context of policy changes.
* 9-13: **1.2. Changes in the State of Britain's Economy and in its Tax-Benefit System, 1991-2006**: SKIPPED, not useful to summarize further.
* 13-18: **1.3. Outline of the Book**: SKIPPED, not useful to summarize further.
* 18-21: **1.4. Income Mobility and Poverty Dynamics: A Preview**:

### (I) 2. Income over Time: Measurement Issues

* 25-26:
* 26-30: **2.1. Income and Other Measures of Economic Well-Being**:
* 30-31: **2.2. Coverage of Income Sources**:
* 31-37: **2.3. Households and Individuals**:
* 37-46: **2.4. Income and Time**:
* 46-55: **2.5. Further Data Issues: Household Surveys and Income**:
* 55: **2.6. Summary and Conclusions**:

### (I) 3. Sources of Longitudinal Data on Income: Household Panel Surveys in Context

* 56-57:
* 57-60: **3.1. Administrative Register Data**:
* 60-62: **3.2. Cohort Panel Surveys**:
* 62-75: **3.3. Household Panel Surveys**:
* 75-76:  **3.4. Linked Panel Survey-Administrative Data**:
* 76-77: **3.5. Summary and Conclusions**:

### (I) 4. The British Household Panel Survey and its Income Data

* 78-79:
* 79-82: **4.1. BHPS: Its Design and Other Features**:
	+ The first wave of the BHPS (fall 1991) was intended to represent the private HH population of GB south of the Caledonian Canal (GB = England + Wales + Scotland, UK = GB + Northern Ireland). The main survey instruments are: (1) an individual questionnaire for each adult member of a HH (~45 min), (2) a HH questionnaire answered by one of them (~15 min), and (3) adult self-completion questionnaire, and (4) from wave 4 onwards a self-completion questionnaire for children aged 11-15 ('British Youth Panel', from 16 they answer the adult one). All the info used to collect the components of the HH income are derived from (1) and (2)
	+ Participant selection: based on residential addresses, and selecting all HH's at each address. Hence, individuals in institutions (e.g. nursing home,s military barracks, prisons, student halls of residence), and people without a residential address (e.g. homeless people) were not eligible to be selected.
	+ BHPS 'household' = 'one person living alone or a group of people who either share living accommodation (for 6+ months), or share one meal a day and who have the address as their only mor main residence'
	+ BHPS 'family' = 'a single person or a couple living together without dependent children (a child younger than 16, or under 19 and unmarried, in FT non-advance education, and living with their parents)'. This coincides with the definition in the British tax-benefit system (the 'benefit' unit).
	+ defines: Original Sample Member (OSM), Permanent Sample Member (PSM), and Temporary Sample Member (TSM)
* 82-83: **4.2. Sample Size**: The number of personal interviews at wave 1 was 10,264 across 5,505 HH's. The number of pairs of successive waves at which respondents gave a full interview (the relevant sample size to estimation of (average) poverty transition rates) are large, over 110,000 (including the extension samples). There are roughly 60,000 transitions from employment-to-employment, and (only) 1,400 employment to unemployment transitions.
* 83-86: **4.3. Response Rates, Including Attrition**: Wave on wave response rates tend to be around 95% after the first two waves. Yet, in the 13th wave only 65% of those eligible responded, and from the 1st to the 13th wave only 55% of those eligible responded to *all* waves.
* 86-87: **4.4. Item Non-Response**: Even if people are counted as respondents in a wave they might not answer every question, because they are unwilling to do so or because they just don't know. For variables related to income, item non-response rates are relatively high. E.g. for 'usual pay at last payment' for those employed, the non-response rate is between 6.9% and 15.1% (waves 9 and 1 resp.), compared to overall nonresponse of around 2%. For 'net profit from self-employment', it ranges from 32.8% to 47.16% (note that self-employment is however much less common). This issue is exacerbated for for HH variables. E.g. HH income is incomplete if there is item non-response of any member in the HH (or of course, unit non-response). Most analysts including Jenkins use imputations for the missing data (this maintains sample sizes, but measurement error might contaminate estimates).
* 87-91: **4.5. Adjusting the Data after Collection: (i) BHPS Weights**: The BHPS contains a large number of weighting variables that can be used to account for non-response in estimation. [lots of detail omitted] The right choice is often not clear, e.g. when pooling transitions from multiple pairs of waves, it is unclear what population of interest the pooled transitions are intended to represent, and how to calculate suitable longitudinal weights or how to combine supplied weights. A common approach is to compare weighted and unweighted estimates and claim robustness if they are similar. [some more notes on economists' skepticisms]
* 91-93: **4.6. Adjusting the Data after Collection: (ii) BHPS Imputation Procedures**: Item non-response is when a respondent has been interviewed, but data on some variables are missing in a way that may be non-random and bias estimates. The BHPS producers 'fill in' missing values by making assumptions about the item non-response process, and use these to generate predicted values (these are flagged) [omitted detail about procedures]. For total gross income for HH's with members who refuse the questionnaire, income totals are imputed using this method, and can thus be derived for every HH. The book uses BHPS imputations (for the most part, not everywhere), "as do the majority of BHPS analysts".
* 93-102: **4.7. Derivation of the Net Household Income Variables**: So far, all discussion was on data in the main public-release BHPS files, but the net HH income variables analyzed throughout this book are published separately. [IS THERE ANYTHING AVAILABLE FOR THE UNDERSTANDING SOCIETY SURVEY FOR THE YEARS 2010-PRESENT?]
* 102-103: **4.8. Equivalence Scales and Price Indices**:
* 103-105: **4.9. Current versus Annual Measures of Income**:
* 105-112: **4.10. Comparison of BHPS and HBAI Net Income Distributions from a Cross-Sectional Perspective**:

## Conceptualizations

### Main categories of movements

* Job changes
* Salary changes
* Demographic events (divorce, marriage, death of a partner, birth of a child)

1. ↑ Mentions 4,653 respondents were present at every wave from 1 to 13 (note this is different than attrition, as e.g. people might pass away, or move abroad).
2. ↑ Note, for many types of analysis, this is not necessary. E.g. also for poverty dynamics, if someone has a 3-year spell which they leave, and two years later they miss one year, the 3-year spell can still be used to estimate entry and exit probabilities?
3. ↑ Just like the main public-release BHPS files available with the UK Data Service (study number: 5151), the net HH income variables constructed by Jenkins and coauthors are available there with the latest 2012 edition for all the BHPS waves 1991-2009/1-18 (study number: 3909).

The data for US and harmonized BHPS for 2009-2022 and 1991-2009 resp as well (study number: 6614)