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What do surveys say about the historical trend of inequality and the applicability of two table-transformation methods?

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  • Anna Naszodi

Abstract

We apply a pseudo panel analysis of survey data from the years 2010 and 2017 about Americans' self-reported marital preferences and perform some formal tests on the sign and magnitude of the change in educational homophily from the generation of the early Boomers to the late Boomers, as well as from the early GenerationX to the late GenerationX. In the analysis, we control for changes in preferences over the course of the survey respondents' lives. We use the test results to decide whether the popular iterative proportional fitting (IPF) algorithm, or its alternative, the NM-method is more suitable for analyzing revealed marital preferences. These two methods construct different tables representing counterfactual joint educational distributions of couples. Thereby, they disagree on the trend of revealed preferences identified from the prevalence of homogamy by counterfactual decompositions. By finding self-reported homophily to display a U-shaped pattern, our tests reject the hypothesis that the IPF is suitable for constructing counterfactuals in general, while we cannot reject the applicability of the NM. The significance of our survey-based method-selection is due to the fact that the choice between the IPF and the NM makes a difference not only to the identified historical trend of revealed homophily, but also to what future paths of social inequality are believed to be possible.

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  • Anna Naszodi, 2023. "What do surveys say about the historical trend of inequality and the applicability of two table-transformation methods?," Papers 2303.05895, arXiv.org.
    • Handle: RePEc:arx:papers:2303.05895
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    References listed on IDEAS

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    1. Pierre-Andre Chiappori & Monica Costa Dias & Costas Meghir, 2020. "Changes in Assortative Matching: Theory and Evidence for the US," Cowles Foundation Discussion Papers 2226, Cowles Foundation for Research in Economics, Yale University.
    2. Anna Naszodi, 2023. "Direct comparison or indirect comparison via a series of counterfactual decompositions?," Papers 2303.04905, arXiv.org.
    3. Lasse Eika & Magne Mogstad & Basit Zafar, 2019. "Educational Assortative Mating and Household Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 127(6), pages 2795-2835.
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    6. Eugene Choo & Aloysius Siow, 2006. "Who Marries Whom and Why," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 175-201, February.
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    8. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 519-578.
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    Cited by:

    1. Anna Naszodi, 2023. "Direct comparison or indirect comparison via a series of counterfactual decompositions?," Papers 2303.04905, arXiv.org.

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