Sunday, July 31, 2011

Wealth Estimates: Pew vs Feds

Last week Pew Research Center released an important study of household wealth, based on the Census Bureau's Survey of Income and Program Participation (SIPP). The study examined and compared the wealth of blacks, Hispanics, Asians, and whites. These race and Hispanic origin breakdowns are especially valuable, since the Federal Reserve Board's Survey of Consumer Finances--the only other survey that produces estimates of household wealth--lumps blacks, Hispanics, and Asians into the single group "nonwhites or Hispanics."

There are big differences in the median wealth estimates produced by the two surveys, and these differences demand explanation. Take a look at each survey's median household net worth estimates for 2009...

Asians: $78,066
Blacks: $5,677
Hispanics: $6,325
Whites: $113,149

Non-Hispanic whites: $149,900
Nonwhites or Hispanics: $23,300

Note that median household net worth is higher in the Fed survey regardless of race or Hispanic origin. One factor that makes a difference between the two surveys are the race and Hispanic origin groupings. In the Pew study, Hispanics are also counted in the "white" racial group, lowering its net worth. In the Fed survey, Asians are included in the "nonwhite or Hispanic" group, raising its net worth.

Another reason for the differences is methodological. The Fed survey includes several items that are not included in SIPP, according to Pew's researchers, such as the value of personal property, equity in defined-benefit pension plans, and cash value life insurance policies.

Source: Pew Research Center, Wealth Gaps Rise to Record Highs Between Whites, Blacks and Hispanics; Federal Reserve Board, Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009

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