Report Calls for a Coordinated Federal Data System to Better Measure Economic Disparities and Inform Policy

WASHINGTON - A national data infrastructure should be developed by federal agencies to produce more accurate and consistent data and statistics about household income, wealth, and consumption, says a new report from the National Academies of Sciences, Engineering, and Medicine. Coordination of federal data would improve national data on economic disparities and better inform research to understand patterns of economic well-being among U.S. families and the economic impacts of policies designed to improve well-being. The report builds upon the advances made by the federal statistical agencies and international bodies, and recommends that they expand their efforts to facilitate data sharing and improve data collection and standardization.

Many federal agencies provide data and statistics on households' income, spending, and wealth - including the Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, Internal Revenue Service, Federal Reserve Board, and the Congressional Budget Office. However, because the information provided by these agencies is often produced using different underlying data and methods, the resulting estimates of levels and trends in poverty, inequality, and wealth frequently differ.

Conflicting statistics can lead to confusion in policy debates and can enable advocates of different policy perspectives to choose their preferred set of estimates, the report says. Without data integration, it is impossible to understand where households fall on distributions of income, consumption, and wealth; to determine how policy affects household economic well-being; and to determine how U.S. levels and distributions of economic well-being compare to those of other countries. Coordinated and transparent data are essential to advance research on the nation's economic well-being and to measure how economic policies benefit U.S. households.

The report proposes high-level coordination and cooperation among relevant agencies to produce new and improved statistics on income, consumption, and wealth, and an integrated dataset for research and policy. It recommends that the chief statistician of the U.S. create a technical steering committee to resolve the large administrative, legal, and technical challenges that need to be met to integrate data from multiple federal entities as well as from private businesses that collect microdata on individuals and households. This technical steering committee would be responsible for developing methods that enable data acquisition and exchange and ensure cooperation across federal agencies to support the publication of privacy-protected statistics. The report provides a road map for the agencies and steering committee to use in creating these new statistics and data infrastructure.

"Right now, we simply don't have the coordinated data that researchers and policymakers need to effectively evaluate a wide range of economic outcomes in the U.S.," said Timothy Smeeding, chair of the committee that wrote the report and the Lee Rainwater Distinguished Professor of Public Affairs and Economics at the University of Wisconsin, Madison. "Creating a national data infrastructure is a massive undertaking, but until we address these issues, policymakers have no choice but to play a guessing game about what data to use when evaluating policies developed to improve economic outcomes for American families."

The report lays out short- and long-term recommendations for developing a national data infrastructure based on these needs:

• Definitions: The report's road map recommends that federal agencies work with a technical steering committee to finalize definitions; produce new and transparent statistics on income, consumption, and wealth; and evaluate methods for creating the underlying database.
  
  
• Improved Statistics and Data Quality: Agencies should focus next on expanding work to blend key survey and administrative data sources to enhance the accuracy, detail, and timeliness of income, consumption, and wealth data and statistics.
  
  
• Data Solutions, Confidentiality Protection, and Access: In the long term, agencies should establish secure modes for researchers to access the blended dataset, expand the data elements to include greater demographic and geographic detail, and create greater capacity to support longitudinal analyses of the same households over time.

The study - undertaken by the Committee on an Integrated System of U.S. Household Income, Wealth, and Consumption Data and Statistics to Inform Policy and Research - was sponsored by the Spiegel Family Fund (through the California Community Foundation), the Alfred P. Sloan Foundation, Omidyar Network, and the William and Flora Hewlett Foundation.

The National Academies of Sciences, Engineering, and Medicine are private, nonprofit institutions that provide independent, objective analysis and advice to the nation to solve complex problems and inform public policy decisions related to science, engineering, and medicine. They operate under an 1863 congressional charter to the National Academy of Sciences, signed by President Lincoln.

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