Creating a 2000 IES-LFS Database in Stata

PROVIDE Project Technical Paper 2005:1

90%     63.31995       3090.994       Variance       12751.18

95%     116.2348       5134.359       Skewness       26.65743

99%     336.1646       8509.819       Kurtosis       1499.697

Figure 11: Distribution of the relative income and expenditure difference (variable diffp)

Note: Only values between -100% and 100 included in the graph. The vertical lines represent (from left to right)
the 10^th, 25^th, 50^th, 75^th and 90^th percentiles of variable diffp.

The fact that income or expenditure is underreported is not necessarily the problem, as this
is natural for most surveys of this kind. More problematic is the large average differences
between the two. A simple experiment performed here ranks households first by expenditure
(deciles) and then by income (deciles). Table 10 tabulates household income deciles against
household expenditure deciles. If income and expenditure were exactly the same, or even
within reasonable distances from each other, one would expect all households to lie on the
diagonal of the matrix. The shaded band above and below the diagonal shows those
households that move one group up or down. On average between 49.2% and 83.9% of
households remain in the same deciles. If the bands above and below are included, the figures
rise to between 81.6% and 94.8%.⁴¹

⁴¹ These percentages are reported in the last two rows.

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