Pew Research Methodology | Data & Insights

Understanding Income ‍Tiers in Pew Research Center Studies: A ⁤Detailed Methodology

At Pew Research⁣ Center,accurately understanding the⁣ financial landscape ‍of the American population is crucial to our work. When analyzing data related to economic attitudes⁣ and experiences, notably within specific⁤ demographic groups like Latinos (as highlighted in recent research on thier views of‍ Trump policies), we employ a rigorous methodology for determining family ⁣income tiers. This ensures our findings are nuanced, reliable, and truly ⁢reflective of⁢ lived realities. This article details exactly how we calculate these tiers, providing clarity and demonstrating our commitment to sound research ⁣practices.

Why Adjust for Cost of Living and household Size?

Simply looking at raw ⁣income figures can be misleading. A $75,000⁣ income in rural Arkansas stretches much further than ⁤the same income in san Francisco.Similarly, a single-person household has⁣ different financial needs than a family of four, even with identical incomes.To address these complexities,we go beyond basic income reporting and implement ‍a multi-step adjustment process. This allows for a ⁤more equitable comparison of financial well-being across diverse ⁤geographic ⁢locations and household ⁤compositions.

Our Four-step Income Tier Calculation Process

We ⁢utilize data from the American ⁤Trends Panel (ATP), a⁣ nationally representative panel of U.S. ⁤adults, and supplement it with ⁣data from the SSRS Opinion Panel when oversampling is required. Here’s a breakdown of the process:

1. Initial Income Assignment:

Panelists initially report their family income through annual profile or⁣ recruitment surveys. We assign⁤ them‍ to the midpoint of the income range they select. This provides a starting ⁢point for more precise calculations.

2.Geographic Cost-of-Living Adjustment:

This is a critical step. We leverage Regional price Parities (RPP) published ⁤by the U.S. Bureau of Economic Analysis (BEA). ⁢ https://www.bea.gov/data/prices-inflation/regional-price-parities-state-and-metro-area RPP compare the price levels of goods⁣ and services across the⁤ U.S., relative to a national average.

* ‍ metropolitan Areas: We use the RPP specific to ⁢the panelist’s metropolitan⁢ statistical ‍area.
* Non-Metropolitan Areas: Panelists in areas‍ outside of metropolitan statistical areas are assigned the RPP for their state’s non-metropolitan region.

Example: Consider a ‍family earning $40,200 in Pine Bluff, Arkansas, where the⁣ cost of living is 19.7% below the national average.⁣ After adjustment,their financial standing is equivalent to a family earning $59,100⁤ in San Francisco,where the cost of living ‍is 18.2% above the⁢ national average. This adjustment ensures a fair comparison. We use⁣ the most recent available RPP data, which, at the time of our most recent annual profile survey, was from 2023.

3. Household Size Adjustment:

We recognize that‍ a larger ⁣household requires a higher income to maintain the same standard of living. We employ a methodology⁣ consistent with our previous work on the American middle class https://www.pewresearch.org/social-trends/2022/04/20/methodology-49/#adjusting-income-for-household-size. This adjustment accounts for economies of scale – the idea that costs don’t increase linearly with household size.

4. Income Tier‍ Assignment:

we assign ⁤panelists to one ⁤of three income tiers based⁣ on⁣ their adjusted family income:

* ⁣ Middle-Income: Families with adjusted incomes between two-thirds and double the median adjusted family income for the entire ATP. Currently (based on our most recent data), ⁤this⁢ range is approximately ⁤ $51,900 to $155,600. The median adjusted family income for the⁢ panel is roughly $77,800.
* ⁢ Lower-Income: Families with adjusted incomes less than $51,900.
* ‍ Upper-Income: Families with adjusted incomes greater than $155,600.

All figures are expressed in 2024 dollars⁤ and scaled to‍ a household size of