Understanding How Pew Research Center Defines & Calculates family Income Tiers
At Pew Research Center, we strive for accuracy and nuance in understanding the financial realities of American households. When analyzing public opinion and social trends, a clear and consistent definition of income is crucial. This article details exactly how we calculate family income tiers in our American Trends Panel (ATP) studies, ensuring our findings are robust and representative. We understand that income isn’t just a number; it’s deeply connected to lived experiences.
Why Adjust for Household Size & Location?
simply looking at raw income figures can be misleading. A $75,000 income stretches much further in a low-cost area than in an expensive city.similarly, a single-person household has different financial needs than a family of four, even with the same income. Therefore, our methodology goes beyond basic income reporting.
The Four Steps to Defining Income Tiers
We use a multi-step process to accurately categorize panelists into income tiers. Here’s a breakdown:
- Initial Income Assignment: We start with the income range you provided in our surveys – either the annual profile survey or your initial recruitment survey. This gives us a starting point for calculations.
- cost of Living Adjustment: we adjust your income based on the geographic area where you live. This is done using Regional price Parities (RPP) from the U.S. Bureau of Economic Analysis (https://www.bea.gov/data/prices-inflation/regional-price-parities-state-and-metro-area). RPP compares the cost of goods and services in your area to the national average. For example, the most recent data used (from 2022) shows:
Pine Bluff, Arkansas: 19.1% less expensive than the national average.
San Francisco-Oakland-Berkeley, California: 17.9% more expensive than the national average.
- Household Size Adjustment: We further refine the income calculation based on the number of peopel in your household.This is based on our established methodology for studying the american middle class (https://www.pewresearch.org/social-trends/2022/04/20/methodology-49/#adjusting-income-for-household-size). Larger households naturally require a higher income to maintain the same standard of living.
- Tier Assignment: we assign you to an income tier based on the median adjusted family income of all ATP members. Currently (based on the most recent annual profile survey):
Middle-Income: Between two-thirds and double the median adjusted family income – roughly $49,400 to $148,200 (in 2023 dollars, scaled to a household size of three).
Lower-Income: Adjusted income less than $49,400. Upper-Income: Adjusted income greater than $148,200.
No Answer: If you haven’t provided income or household size facts, you’ll be categorized as “no answer.”
A Real-World Example: The Impact of Cost of Living
Let’s illustrate how the cost-of-living adjustment works. A family earning $40,400 in Pine Bluff, arkansas, has the same purchasing power as a family earning $58,900 in San Francisco, California, due to the significant difference in living expenses.This adjustment ensures a fairer comparison of financial well-being across different regions.
Why This Matters to You
Understanding our methodology is important for interpreting our research findings. we aim to provide a clear and accurate picture of the economic landscape, and this detailed approach allows us to do just that. By accounting for household size and geographic location, we offer a more nuanced and reliable understanding of income distribution and its impact on American life.
We are committed to clarity and rigorous research. If you have any further questions
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