Introduction and Overview

The term "income maintenance statistics" as used in this chapter refers to statistics in support of programs primarily devoted to increasing the income of people at the lower end of the income scale. Programs which are discussed include Social Security, Aid to Families with Dependent Children, Supplementary Security Income, and Food Stamps. The chapter does not include certain closely related programs which, together with income maintenance programs, are included within the Budget designation, "Federal Income Security Programs." The omitted Federal Income Security Programs include Federal employee benefits, veterans' benefits, unemployment insurance, railroad retirement tax expenditures, and programs providing benefits in kind. An exception to the exclusion of in-kind programs is made for the food stamp program because of the close relationship of this program to cash programs. This chapter does not take into account plans for welfare reform, which can be expected to have a major impact on data requirements and organizational structure. However, all of the suggested improvements in statistics should contribute to a smooth transition to a simplified welfare program.

Since the passage of the Economic Opportunity Act in 1964 there has been a great increase in Federal outlays for income maintenance programs. The growth in program outlays has been accompanied by an insistent demand for improved statistics assessing the effectiveness of these outlays and the distributive effects of changes in the economy in order to provide a solid base for program planning. The program related issues for which statistics are needed include: (1) the distribution of benefits, (2) the adequacy of support levels, (3) the current and potential budgetary impact of programs, (4) the effect on work incentives, (5) the causes of poverty, (6) the effect of alternative strategies for reducing the effects of poverty, and (7) the costs, including administration of alternative programs.

Prior to 1969 serious proposals to restructure income maintenance programs focused on adjustments to existing programs. However, as the

interaction of the existing programs became better understood, it became more and more apparent that modifications to individual programs frequently resulted in unwanted effects in other programs. The development of a computer model in the late 1960's for the President's Commission on Income Maintenance Programs in order to estimate benefit costs and the numbers of recipients for different levels of benefits payments marked a major watershed in the ability to provide quantitative analysis of reform proposals. Initially, the model was used extensively to set the basic guarantee for a family of four and the "tax" rate by which additional income would be offset by reductions in benefits. Later versions were used to provide quantitative analysis of the second attempt at general welfare reform in 1971 in the form of House Resolution 1. Other microsimulation models have been developed in recent years by government agencies and nonprofit and private organizations to analyze the probable impact of program modifications. The models in current use include several versions of "TRIM," "MATH," and "SSA/ORS." One effect of the modeling has been to place a premium on the generation of high quality microdata sets which provide detailed information on the social and economic characteristics of individuals and families. For further discussion of the interaction between income maintenance computer models and policymakers the reader is referred to the chapter, "Congress and Welfare Reform: A Case Study of the Family Assistance Plan," in Perspectives on Poverty, Dennis J. Dugan and William H. Leahy, editors (Praeger, N.Y., 1973).

The Department of Health, Education, and Welfare is the major producer of income maintenance statistics as a by-product of administrative data files. General-purpose statistics of importance to this area are produced by the Bureau of the Census, the Bureau of Economic Analysis, the Bureau of Labor Statistics, and the Department of Agriculture. Statistics of participation in programs providing in-kind benefits to recipients are compiled by the Departments of Agriculture; Housing and Urban Development; and Health, Education, and Weifare.

The roles of the principal program agencies are as follows:

The Department of Agriculture collects data relative to purchase of food stamps and participation in child nutrition programs, surveys the food consumption patterns of families and individuals, estimates the nutritional adequacy of the food consumed by individuals and families, and prepares food plans approximating nutritionally adequate diets while reflecting usual consumption patterns.

The Office of the Assistant Secretary for Planning and Evaluation in the Department of Health, Education, and Welfare supports data collection concerning the reasons for changes in family income relative to needs in order to determine the effects of various proposed changes in income maintenance programs; supports research relating to the distribution of income and wealth, income transfers, the income maintenance system, and the relationship between poverty and household decisionmaking and behavior; and coordinates departmental efforts to improve the income maintenance data bases.

The Social Security Administration (SSA) collects data on the characteristics of beneficiaries and benefits received for programs of: (1) social insurance against loss of income through old age, disability, or death of the breadwinner, (2) Supplementary Security Income and (3) Aid to Families with Dependent Children. SSA also analyzes the adequacy of payments in relation to beneficiary circumstances; studies the dynamics of the retirement process and interprets and projects demographic, economic, and social trends pertaining to the population eligible for income maintenance.

User and Policy Groups

The principal users of income maintenance data and of the analyses produced by computer models are congressional committees; principally the Subcommittee on Fiscal Policy of the Joint Economic Committee, the Senate Finance Committee, and the House Ways and Means Committee, the Budget Committees of the House and Senate, the Congressional Budget Office and the Congressional Research Service; and executive agencies including the Council of Economic Advisers, the Office of Management and Budget and the Treasury Department. In addition, the congressional committees with jurisdiction over program agencies generate inquiries which require use of income maintenance data.

All of the major income maintenance programs including the Supplementary Security Income (SSI)

program involve supplemental funding by State or local governments and, except for the SSI program, are administered by States and in some States by local agencies. These governments are directly concerned with the operation of income maintenance programs within their jurisdictions. The State and local governments use their own data systems for local program data, but rely on Federal statistics for information on the population at risk and for comparisons with other States. They also rely heavily on Federal analysis of the interaction of different income maintenance programs.

An extensive number of special interest groups are also concerned with data concerning income maintenance program issues. These include organizations of government bodies; professionals employed in the provision of welfare services; groups focused on the needs of particular population groups, such as the aging, the blind and the disabled; unions; social welfare organizations and organizations concerned with poverty law. Many of these organizations in turn form close working associations with each other around issues of mutual concern, as for example, specific legislative proposals.

In addition to these groups there are a number of large nonprofit policy research organizations with an extensive need for data. Finally, academicians constitute another large group of users of income maintenance data and statistics.

Adequacy of Income Maintenance Statistics

The adequacy of statistics in this area must be judged by how completely they inform us about the economic well-being of the population and the contribution made by individual programs to improvement in economic and social conditions. Further they must be evaluated on the basis of their contribution to effective program administration. Data needed to address these concerns and the program-related issues enumerated in the introduction are discussed under the headings: population at risk, adjustments for cost-of-living differences, measures of sufficiency, and program participation.

Population At Risk

A comprehensive overview of the population at risk (potentially eligible for income maintenance and welfare programs) does not yet exist. No one source or interlocking set of sources describes economic status, including sources of income, assets and liabilities, and current consumption; or individual characteristics such as employment, health or

disability status, which are necessary to assess program eligibility and program impact. Users must make do with partial data bases from a variety of sources, many with serious deficiencies.

One reason for the lack of adequate statistics is that the data needed about the population at risk are ill-defined. Important changes in individual status which may lead to dependency, such as family breakups, teenage motherhood and parental incapacity, are difficult to measure. Another difficulty is that, depending on the program, States may supplement a Federal payment, set income limits for eligibility, or determine acceptable deductions from income. As a consequence, the complexity of variations among States frequently have outrun the ability to make provision for them in large national data gathering efforts.

The primary source of detailed national data is the decennial census program, which will be augmented by a mid-decade program beginning in 1985. Currently, between censuses the Current Population Survey (CPS) program of the Bureau of the Census provides data on income and population characteristics in addition to labor force estimates. Over the last 10 years, significant improvements have been made in the CPS including increased detail on income source, cross-checking to program aggregates and increased sample size. Only money income is included in the annual income supplement and underreporting is a serious problem at the lower and upper ends of the income distribution. Some data are obtained in separate CPS supplements concerning the purchase of food stamps and residence in public housing. In addition to the CPS, many program agencies carry out periodic special-purpose surveys, often utilizing the Census Bureau's interviewing staff.

In addition, the Bureau of Economic Analysis of the Department of Commerce is developing annual measures of the size distribution of personal income by age, race, sex and other socioeconomic characteristics. These figures are consistent with the personal income aggregates of the national economic accounts. Thus, they include estimates of household money income as well as nonmoney income, for example the value of food stamps and medicare benefit payments, and imputations for the rental value of owner-occupied housing, interest, and food consumed on farms. The personal income series are based on primary source data from the Bureau of the Census, Internal Revenue Service and other government agencies. The personal income measures correct for substantial underreporting in the CPS income data.

Data on consumption and wealth of the population at risk are less well-developed and are not integrated with income data of high quality. For an assessment of these data needs see the chapter on income, consumption and wealth. Consumption expenditure data are available decennially from the Consumer Expenditure Survey, and in a few years will be available annually. Aggregate estimates of consumer expenditures are developed for major components quarterly and for more detailed categories annually as part of the national economic accounts (see the chapter on national economic accounts). Data on the consumption of food are obtained through the household food consumption survey, but the associated data on income and program participation are limited. Current data on the distribution of wealth are fragmentary, and are not tied into data on program participation.

While much remains to be done, two major developments have taken place in recent years that are focused on improving the available data bases and better understanding of behavorial responses to income maintenance programs. These developments are (1) the income maintenance experiments carried out by DHEW and (2) the extensive use of microsimulation models as a technique of estimating program impact and potential program outlays under alternative criteria and as a technique for analyzing in an experimental mode possible programmatic and behavorial responses to a set of altered conditions.

State and local data concerning the population at risk are limited to the items provided in the census of population which is the chief source of data for local areas. As for other program areas, the information must be supplemented in intercensal years.

In sum, some 13 years after the beginning of an expanded Federal concern with the status of the poor, it is not possible to describe with any precision. the characteristics of the populaion at risk for any but the programs for the elderly. Even for this population group, data on assets leave much to be desired. Although glaring data gaps exist, much valuable statistical work was initiated during the period including the large-scale income maintenance experiments, significant improvements on the income. estimates provided in the Current Population Survey, improvements in the measurement of consumption expenditures and special-purpose surveys focused on the population groups served by individual program agencies.

The single most important approach to filling the void concerning the population at risk is the forthcoming Survey of Income and Program Participation (SIPP) which is currently being

developed by the DHEW Office of the Assistant Secretary for Planning and Evaluation (ASPE). This survey, which is described in general terms in an unpublished paper entitled "A Program to Develop a Survey of Income and Program Participation" (November, 1977), is designed to provide improved information on the income and characteristics of the population and in government program participation. Because the survey will focus on describing the population at risk in terms as close as possible to program eligibility requirements, SIPP is expected to become the major source of data for future microsimulation modeling. The survey will describe income for time periods approximating those determining eligibility for program benefits, determine the degree of participation in income maintenance programs, obtain data on income in kind, consumption and assets and generally improve information available for describing those characteristics of the population, especially the lower income population. The SIPP is also expected to play an important role in the provision of improved data concerning the economic well-being of families. A discussion of measures of family well-being is provided in the chapter on income, wealth, and consumption.

The Survey of Income and Program Participation (SIPP) should be made operational as soon as feasible after completion of the 1980 Census. The SIPP will provide the best single source of information concerning eligibility for income maintenance programs. It will also provide estimates of concurrent participation in more than one income maintenance program.

The most important existing body of information and analysis on the population at risk is provided by the Social Security Administration. A great deal of the information which is produced is a by-product of program administration. These data are supplemented by a considerable array of special-purpose surveys, some of which are conducted by SSA staff. The program and survey data sets provide the basis for extensive continuing analysis and modeling of program costs and effects. A few highlights from the data program for the annual Work Plan of the SSA Office of Research and Statistics will illustrate the breadth of activities. Basic program data for the social security program (Old-Age, Survivors, and Disability Insurance (OASDI)) which are relevant to income maintenance concerns include monthly benefit statistics; data by State and county, zip code and metropolitan area; and the Continuous Work History Sample. Studies related to income maintenance include the 10-year longitudinal retirement history study, status of the elderly, young

beneficiaries, child survivors, surveys of the disabled and private pension plan coverage and provisions. Within the relatively new Supplementary Security Income (SSI) program, the pattern of detailed analysis of basic program data is continued. In addition, SSA conducted large before-and-after surveys of the population eligible for benefits from the SSI program. The principal data needs relative to programs administered by the Social Security Administration are for data concerning the population at risk, information concerning participation in more than one income maintenance program and for data concerning the effects on behavior of future pension rights. These data needs will in large part be met through the SIPP program.

Adjustments for Cost-of-Living Differences

An important aspect of the determination of the population at risk concerns a set of interlocking issues related to the desirability of making adjustments for variations in the cost of living for cities of different sizes located in different regions of the country. The issues which need to be addressed include migration effects, regional and rural development policy and the effect on work incentives. Data are needed to help focus the discussion on these and other questions by providing information which will permit comparison of the resources that could be obtained under alternative proposals for geographic adjustments by families in different parts of the country or in places of different sizes. Such information is needed to adjust estimates of the population at risk, for possible use in formulas for the allocation of Federal funds and, in some programs, to determine individual eligibility for program benefits. Currently, there is no valid way to adjust national data to reflect place-to-place differences in the cost of living due to limitations in measures of income adequacy, interarea price differences and of levels of equivalent consumption for families of different sizes and types. A more complete discussion of these topics is given in "Technical Appendices" 4 and 15 of the DHEW study, The Measure of Poverty.

In order to provide alternative measures of the cost of living, a developmental program is needed which will determine: (1) the extent of geographic differences, including differences by size of place and region, in the cost of living of the population at risk; (2) alternative approaches to making cost-of-living adjustments; (3) the impact of alternative adjustments on work incentives, migration patterns and Federal and State budgets; and (4) ongoing data collection programs which would be necessary to support cost-of-living adjustments.