It Is Surprisingly Difficult to Measure Income Segregation.

Abstract

Recent studies have shown that U.S. Census- and American Community Survey (ACS)-based estimates of income segregation are subject to upward finite sampling bias (Logan et al. 2018; Logan et al. 2020; Reardon et al. 2018). We identify two additional sources of bias that are larger and opposite in sign to finite sampling bias: measurement error-induced attenuation bias and temporal pooling bias. The combination of these three sources of bias make it unclear how income segregation has trended. We formalize the three types of bias, providing a method to correct them simultaneously using public data from the decennial census and ACS from 1990 to 2015-2019. We use these methods to produce bias-corrected estimates of income segregation in the United States from 1990 to 2019. We find that (1) segregation is on the order of 50% greater than previously believed; (2) the increase from 2000 to the 2005-2009 period was much greater than indicated by previous estimates; and (3) segregation has declined since 2005-2009. Correcting these biases requires good estimates of the reliability of self-reported income and of the year-to-year volatility in neighborhood mean incomes.