2016/12/20 by Fabian T. Pfeffer, Pfeffer, Fabian T., Jamie Griffin +1
Psychology · Social Sciences · #Income, Poverty, and Inequality #Psychological Well-being and Life Satisfaction #Urban, Neighborhood, and Segregation Studies #active savings #imputation #measurement error #panel study #wealth
paper · doi:10.12758/mda.2016.015
openalex publication_date 2017/02/07 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01
fluctuation in measured economic characteristics might indicate compounding measurement error rather than actual changes in families' economic wellbeing. In this article, we address this claim by moving beyond the assumption that particularly large fluctuation in economic conditions might be too large to be realistic. Instead, we examine predictors of large fluctuation, capturing sources related to actual socio-economic changes as well as potential sources of measurement error. Using the Panel Study of Income Dynamics, we study between-wave changes in a dimension of economic wellbeing that is especially hard to measure, namely, net worth as an indicator of total family wealth. Our results demonstrate that even very large between-wave changes in net worth can be attributed to actual socio-economic and demographic processes. We do, however, also identify a potential source of measurement error that contributes to large wealth fluctuation, namely, the treatment of incomplete information, presenting a pervasive challenge for any longitudinal survey that includes questions on economic assets. Our results point to ways for improving wealth variables both in the data collection process (e.g., by measuring active savings) and in data processing (e.g., by improving imputation algorithms).