Median family income question

I’m gathering data on median family income in Illinois from 2009 to 2016, using 5-year estimates. Is it appropriate to adjust those numbers for inflation using the consumer price index? The data indicate that incomes have been increasing steadily all that time until I adjust it for inflation to 2016 dollars, at which point it says median family income has been *decreasing* every year. Any help would be greatly appreciated!
  • Bill

    If you are trying compare change in income on a one-to-one basis, I'd recommend adjusting any income levels you use to the same point in time. It could be 2016 or it could even be 2018. If you make this adjustment using ACS guidelines for comparing income data, which calls for making adjustments using the CPI-U-RS. You can find details on the Census ACS website. Look under "Comparing ACS Data" and pick the years for the data sets you are using.

    However, your plan seems to raise another issue. When you compare 5 year ACS data that is less than 5 years apart there will be overlapping data sets underlying the statistics (eg, 2009-13 and 2011-16 share the data from 2012-13). While the larger sample dampens the effect on the margin of error it also means that you are not really comparing two independent values, and you will see more correlation than you might expect in the figures. This is not to say you should not follow this method. The answer to that question depends on what question you want to answer and who your audience will be. If I were undertaking this type of comparison I would use two non-overlapping 5 year ACS period if the data is available.
  • Are you just looking at state level trends? Can you use the ACS 1 year estimates? That way you can compare year to year, without any overlaps, as Cliff mentions.
  • In reply to Cliff Cook:

    Thanks for your response! This is really helpful. It seems like I'm learning something new every day about how to properly utilize ACS data. Right now I'm just interested in showing how median family income fluctuates over time. The concern about overlapping data is a valid one. After a little digging on the "Comparing ACS Data" site, it seems that comparing 1-year estimates (i.e., 2013 to 2014, 2014 to 2015, etc.) is not sound because there's some overlap there too. I wonder if I should compare 1-year data from even-numbered years to avoid overlap, and then use the consumer price index to adjust them for inflation?
  • In reply to Gene Shackman:

    Hi Gene, after taking some time on the Comparing ACS Data site, it looks like comparing single years (2012 to 2013, 2013 to 2014, etc.) should be used with caution; apparently there is some overlap there, too. I wonder if comparing even-numbered years, and then adjusting for inflation, would work!
  • Question about need to use inflation.

    I got US median income data from each individual year page. For example, I downloaded the data set from the 2017 page
    another from the 2016 page
    another from the 2015 page
    and so on to 2013

    Then I went to the most recent interactive tool trend page, and looked at US median income

    The US median income from each individual year data set was the same as the median income from the interactive tool for the respective years. Does that mean that the interactive tool does NOT adjust each year for inflation? So the median income now on the interactive tool for 2013 is the median income as estimated in 2014 (or when ever they estimated it), and NOT the median income for 2013 adjusted for inflation to match 2017 data?

    Is my question clear?