help ceqhhchar (beta version; please report bugs) Sean Higgins

Title

ceqhhchar -- Mean and median household-level sociodemographic characteristics for the "E22. GroupSociodemoCharac" sheets of the CEQ Master Workbook 2016 Section E

Caution: The construction of the CEQ income concepts Market Income, Market Income plus Pensions, Net Market Income, Gross Income, and Taxable Income will differ depending on which scenario for the public contributory pension system has been chosen. In the public contributory Pensions as Deferred Income (PDI) scenario, pension system income is treated as (Market) income earned previously deferred until today; while pension system contributions are treated as mandatory savings (income deferred to one’s future self). In contrast, the contributory Pensions as Government Transfer(PGT) scenario, pension system income is treated as a pure transfer (from the fisc), while pension system contributions are treated as a tax. In the PDI scenario pensions are prefiscal income while in the PGT scenario the public contributory pension system is a fiscal tax and transfer system that redistributes income from today’s working-age population to today’s pension-age population. When the user wishes to analyze both PDI and PGT scenarios, this command must be run twice: once for outputting information generated under the PDI scenario to a Masterworkbook (section E); and again for outputting information generated under the PGT scenario to its own Masterworkbook (section E). See also the Income concepts options section below for more detail.

Syntax

ceqhhchar varlist [if] [in] [weight] [using filename] [, options]

Income concepts
market(varname) Market income

mpluspensions(varname) Market income plus pensions

netmarket(varname) Net market income

gross(varname) Gross income

taxable(varname) Taxable income

disposable(varname) Disposable income

consumable(varname) Consumable income

final(varname) Final income

PPP conversion
ppp(real) PPP conversion factor (LCU per international $, consumption-based) from year of PPP (e.g., 2005 or 2011) to year of PPP; do not use PPP factor for year of household survey

cpibase(real) CPI of base year (i.e., year of PPP, usually 2005 or 2011)

cpisurvey(real) CPI of year of household survey

daily Indicates that variables are in daily currency

monthly Indicates that variables are in monthly currency

yearly Indicates that variables are in yearly currency (the default)

Note that the default PPP conversion factors, default poverty lines and default income cutoffs are related. See Poverty Lines options and Income group cut-offs options for a more detailed explanation.

Survey information
hsize(varname) Number of members in the household
(should be used when each observation in the data set is a household)

hhid(varname) Unique household identifier variable
(should be used when each observation in the data set is an individual)

psu(varname) Primary sampling unit; can also be set using svyset

strata(varname) Strata (used with complex sampling desings); can also be set using svyset

Income group cut-offs
cut1(real) Upper bound (exclusive) income for ultra-poor; default is $1.90 PPP per day

cut2(real) Upper bound (exclusive) income for extreme poor; default is $3.20 PPP per day

cut3(real) Upper bound (exclusive) income for moderate poor; default is $5.50 PPP per day

cut4(real) Upper bound (exclusive) income for vulnerable; default is $11.50 PPP per day

cut5(real) Upper bound (exclusive) income for middle class; default is $57.60 PPP per day

Produce subset of results
nodecile Do not produce results by decile

nogroup Do not produce results by income group

nocentile Do not produce results by centile

nobin Do not produce results by bin

Ignore missing values
ignoremissing Ignore any missing values of income concepts and fiscal interventions

Export directly to CEQ Master Workbook (requires Stata 13 or newer)
country(string) Country

surveyyear(string) Year of survey

authors(string) Authors of study

baseyear(real) Base year of PPP conversion (e.g., 2005, 2011)

scenario(string) Scenario

group(string) Group

project(string) Project

sheetm(string) Name of sheet to write results ranking by market income. Default is "E22.m GroupSociodemoCharac"

sheetmp(string) Name of sheet to write results ranking by market income plus pensions. Default is "E22.m+p GroupSociodemoCharac"

sheetn(string) Name of sheet to write results ranking by net market income. Default is "E22.n GroupSociodemoCharac"

sheetg(string) Name of sheet to write results ranking by gross income. Default is "E22.g GroupSociodemoCharac"

sheett(string) Name of sheet to write results ranking by taxable income. Default is "E22.t GroupSociodemoCharac"

sheetd(string) Name of sheet to write results ranking by disposable income. Default is "E22.d GroupSociodemoCharac"

sheetc(string) Name of sheet to write results ranking by consumable income. Default is "E22.c GroupSociodemoCharac"

sheetf(string) Name of sheet to write results ranking by final income. Default is "E22.f GroupSociodemoCharac"

open Automatically open CEQ Master Workbook with new results added

pweight allowed; see weights. Alternatively, weights can be specified using svyset.

Required commands

ceqhhchar requires installation of quantiles (Osorio, 2007) and sgini (Van Kerm, 2009). To install, ssc install quantiles and net install sgini, from(http://medim.ceps.lu/stata).

Description

ceqhhchar calculates
mean and median household-level sociodemographic characteristics (i.e., for
variables defined at the household level such as "age of household head",
"access to piped water", or "number of rooms"), as well as their standard deviation.
In addition, it calculates the mean of these variables by income decile, group, centile, and bin.
The sociodemographic characteristic variables are supplied in varlist.

The data set can be either at the household or individual level, but if it is at the
individual level make sure that for each individual the variables are equal
for all members of the household. (For example, for age of household head,
define a variable "age of household head" that equals the age of the head for all
members in that head's household; using a variable "age" in an individual-level data
set would not be correct for the household-level sociodemographic characteristics.)

If the data set is at the individual level (each observation is an individual), the variable with the
identification code of each household (i.e., it takes the same value for all members within a
household) should be specified in the hhid(varname) option; the hsize(varname) option
should not be specified. If the data set is at the household level, the number of members in the
household should be specified in hsize(varname); the hhid(varname) option should not be
specified. In either case, the weight used should be the household sampling weight and should not
be multiplied by the number of members in the household since the program will do this multiplication
automatically in the case of household-level data.

ceqhhchar automatically converts local currency variables to PPP dollars, using the PPP conversion
factor given by ppp(real), the consumer price index (CPI) of the year of PPP (e.g., 2005 or
2011) given by cpibase(real), and the CPI of the year of the household
survey used in the analysis given by cpisurvey(real). The year of PPP, also called base year,
refers to the year of the International Comparison Program (ICP) that is being used, e.g. 2005 or 2011.
The survey year refers to the year of the household survey used in the analysis. If the year of PPP is
2005, the PPP conversion factor should be the "2005 PPP conversion factor, private consumption (LCU per
international $)" indicator from the World Bank's World Development Indicators (WDI). If the year of
PPP is 2011, use the "PPP conversion factor, private consumption (LCU per international $)" indicator
from WDI. The PPP conversion factor should convert from year of PPP to year of PPP. In other words,
when extracting the PPP conversion factor, it is possible to select any year; DO NOT select the year of
the survey, but rather the year that the ICP was conducted to compute PPP conversion factors (e.g.,
2005 or 2011). The base year (i.e., year of PPP) CPI, which can also be obtained from WDI, should match
the base year chosen for the PPP conversion factor. The survey year CPI should match the year of the
household survey. Finally, for the PPP conversion, the user can specify whether the original variables
are in local currency units per day (daily), per month (monthly), or per year
(yearly, the default assumption).

There are two options for including information about weights and survey sample design for accurate
estimates and statistical inference. The sampling weight can be entered using
[weight] or svyset. Information about complex stratified sample designs can also be entered
using svyset since ceqhhchar automatically uses the information specified using svyset.
Alternatively, the primary sampling unit can be entered using the psu(varname) option and
strata can be entered using the strata(varname) option.

By default, ceqhhchar does not allow income concept variables to have missing
values: if a household has 0 income for an income concept, the household should have 0 rather than a missing value.
If one of these variables has
missing values, the command will produce an error. For flexibility, however, the command includes an
ignoremissing option that will drop observations with missing values for any of these variables, thus
allowing the command to run even if there are missing values.

Negative incomes are allowed in ceqhhchar, but a warning is issued for each core income concept that
has negative values. This is because
various measures are no longer well-behaved when negative values are included (for example, the Gini coefficient,
concentration coefficient, or squared poverty gap can exceed 1, and other desirable properties of these measures
when incomes are non-negative no longer hold when negative values are allowed).

Options

Core options

using is required, and indicates the filename for the output. Results are automatically exported to the CEQ Master Workbook if
using filename is specifed in the command, where filename is the Master Workbook. By
default, ceqhhchar prints to the sheets titled "E22.X GroupSociodemoCharac" where X indicates the
income concept (m, m+p, n, g, t, d, c, f); the user can override the sheet names using the
sheetm(string), sheetmp(string), sheetn(string), sheetg(string),
sheett(string), sheetd(string), sheetc(string), and sheetf(string) options,
respectively. Exporting directly to the Master Workbook requires Stata 13 or newer. The Master
Workbook populated with results from ceqhhchar can be automatically opened if the open
option is specified (in this case, filename cannot have spaces). Results are also saved in
matrices available from return list. To produce only a portion of the results, specify only a
subset of the income concept options or use nodecile, nogroup, nocentile, or
nobin.

Notice that if the user wishes to do the CEQ Assessment for both the "pensions as deferred income scenario" and
"pensions as government transfer scenario", the ado does NOT run both scenarios automatically. The user must run the
ado twice, one time per scenario (see Income concepts options for an explanation on the differences across
scenarios), and create two separate sets of E sheets. Hence, filename should be changed accordingly.

Income concepts options

The CEQ core income concepts include market income, market income plus pensions, net market income, gross income,
taxable income, disposable income, consumable income, and final income. The variables for these income
concepts, which should be expressed in local currency units (preferably per year for ease of comparison
with totals from national accounts), are indicated using the market(varname), mpluspensions(varname),
netmarket(varname), gross(varname), taxable(varname), disposable(varname),
consumable(varname), and final(varname) options.

The public contributory old-age pension system can be incorporated into a CEQ Assessment as deferred income or as a government transfer (for a detailed discussion regarding
the alternatives see Lustig (2018) available at http://commitmentoequity.org/publications-ceq-handbook). The decision regarding the public contributory pension system can have a significant impact on assessing the redistributive power of a fiscal system, especially in countries with a high proportion of retirees and large spending on social security. The construction of Market income, Market income plus pensions, Gross income, Net market income, and Taxable Income will differ between the PDI and PGT scenarios (while Disposable income, Consumable income and Final income are equivalent in value in both scenarios). The user must create two separate sets of E sheets, one per scenario (for a more detailed
explanation see using in core options).

In CEQ Assessments in the "pensions as deferred income scenario", it is assumed that contributions
during working years are a form of “forced saving” and income concepts are defined in the following way:

Market income given by market(varname) as factor income (wages and salaries and income from capital) plus private transfers
(remittances, private pensions, etc.) PLUS imputed rent and own production MINUS contributions to social insurance old-age pensions.

Market income plus pensions given by mpluspensions(varname) as Market income (PDI) PLUS contributory social
insurance old-age pensions. Prefiscal income (PDI) is defined as Market income plus Pensions (PDI).

Gross Income given by gross(varname) as Market Income plus pensions (PDI) PLUS direct cash and near cash
transfers (conditional and unconditional cash transfers, school feeding programs, free food transfers, etc.).

Net Market Income given by netmarket(varname) as Market Income plus pensions (PDI) MINUS direct taxes
and MINUS non-pension social contributions.

Taxable income given by taxable(varname) as Gross Income (PDI) MINUS all non-taxable Gross Income components.

Disposable income given by disposable(varname) as Market Income plus pensions (PDI) PLUS all direct transfers
MINUS all direct taxes and non-pension social contributions.

In the "pensions as government transfer scenario", it is assumed that pensions are a pure government transfers and income concepts are defined in the following way:

Market income given by market(varname) as factor income (wages and salaries and income from capital) plus private transfers
(remittances, private pensions, etc.) PLUS imputed rent and own production. Prefiscal income (PGT) is defined as Market income (PGT).

Market income plus pensions given by mpluspensions(varname) as Market income (PGT) PLUS contributory social insurance old-age pensions.

Gross Income given by gross(varname) as Market Income plus pensions (PGT) PLUS direct cash and near cash transfers (conditional and
unconditional cash transfers, school feeding programs, free food transfers, etc.).

Net Market Income given by netmarket(varname) as Market Income (PGT) MINUS direct taxes and MINUS non-pension
social contributions.

Taxable income given by taxable(varname) as Gross Income (PGT) MINUS all non-taxable Gross Income components.

Disposable income given by disposable(varname) as Market Income (PGT) MINUS all direct taxes PLUS pension income PLUS
all other direct transfers MINUS all pension and non-pension social contributions.

The construction of Consumable and Final income is done in the same way in both the PDI and PGT scenarios:

Consumable income given by consumable(varname) as Disposable Income PLUS indirect subsidies (energy, food and other general
or targeted price subsidies) and MINUS indirect taxes (VAT, excise taxes, and other indirect taxes).

Final income given by final(varname) as Consumable income PLUS Monetized value of in-kind transfers in education and health
services at average government cost and MINUS co-payments and user fees.

Income group cut-offs options

cut1(real) to cut5(real) are in $PPP. The default cut-off values of $1.90, $3.20 and $5.50 correspond to the income-category-specific poverty lines suggested in Joliffe & Prydz (2016), who determined the median (to the nearest 10 cents) national poverty line in $PPP (using the 2011 ICP PPP conversion factors) for each set of countries grouped under the World Bank's income classification system. Specifically, there are three income class-specific poverty lines: US$1.90 a day for low income countries, US$3.20 a day for lower middle- income countries and US$5.50 a day for upper middle-income countries. Thus, in the context of middle-income countries, we call those living on less than US$1.90 PPP per day the “ultra-poor.” The US$3.20 and US$5.50 PPP per day poverty lines are commonly used as extreme and moderate poverty lines for Latin America and roughly correspond to the median official extreme and moderate poverty lines in those countries.

The $11.50 and $57.60 cutoffs correspond to cutoffs for the vulnerable and middle-class populations suggested for the 2005-era PPP conversion factors by Lopez-Calva and Ortiz-Juarez (2014); $11.50 and $57.60 represent a United States CPI-inflation adjustment of the 2005-era $10 and $50 cutoffs. The US$10 PPP per day line is the upper bound of those vulnerable to falling into poverty (and thus the lower bound of the middle class) in three Latin American countries, calculated by Lopez-Calva and Ortiz-Juarez (2014). Ferreira and others (2013) find that an income of around US$10 PPP also represents the income at which individuals in various Latin American countries tend to self-identify as belonging to the middle class and consider this a further justification for using it as the lower bound of the middle class. The US$10 PPP per day line was also used as the lower bound of the middle class in Latin America in Birdsall (2010) and in developing countries in all regions of the world in Kharas (2010). The US$50 PPP per day line is the upper bound of the middle class proposed by Ferreira and others (2013).

The user may specify any set of cut points that create exclusive population groups. For example, the older cut points for the ultra-poor, extreme poor, moderate poor, vulnerable and middle class, which corresponded to the 2005-era PPP conversion factors were $1.25, $2.50, $4, $10 and $50 (respectively).

Examples

Locals for PPP conversion (obtained from WDI through the wbopendata command)

. local ppp = 1.5713184 // 2005 Brazilian reais per 2005 $ PPP

. local cpi = 95.203354 // CPI for Brazil for 2009

. local cpi05 = 79.560051 // CPI for Brazil for 2005

Individual-level data (each observation is an individual)

. ceqhhchar [pw=w] age_head water_access number_rooms using C:/MWB2016_E22.xlsx, hhid(hh_code) psu(psu_var) strata(stra_var) m(ym) mplusp(ymplusp) n(yn) g(yg) t(yt) d(yd) c(yc) f(yf) pens(pensions) ppp(`ppp') cpibase(`cpi05') cpisurvey(`cpi') open

Household-level data (each observation is a household)

. ceqhhchar [pw=w] age_head water_access number_rooms using C:/MWB2016_E22.xlsx, hsize(members) psu(psu_var) strata(stra_var) m(ym) mp(ymplusp) n(yn) g(yg) t(yt) d(yd) c(yc) f(yf) ppp(`ppp') cpibase(`cpi05') cpisurvey(`cpi') open

Saved results

Pending

Author

Sean Higgins, CEQ Institute, sean.higgins@ceqinstitute.org

References

Commitment to Equity (CEQ) website.

Lustig, Nora, editor. 2018. Commitment to Equity Handbook. Estimating the Impact of Fiscal Policy on Inequality and Poverty. Brookings Institution Press and CEQ Institute, Tulane University.

Osorio, R. 2007. "quantiles: Stata module to categorize by quantiles." Boston
College Department of Economics Statistical Software Components S456856.