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From |
"Morris, Stephen" <s.morris@imperial.ac.uk> |

To |
"'statalist@hsphsun2.harvard.edu'" <statalist@hsphsun2.harvard.edu> |

Subject |
st: Turning banded income into a continuous variable |

Date |
Wed, 2 Apr 2003 13:00:17 +0100 |

Hello, I have individual-level data on grouped income, where an individual's income may be in one of 31 bands. The bands get wider at higher incomes (the highest being open-ended). I know the cut points for each band and the number of observations/individuals within each band. I would like to compute a continuous individual-level income variable from this. The most common method seems to be to take the midpoint of the band and assign this value to all individuals in the band, making some reasonably arbitrary assumption as to the value to be used for the highest (unbounded) group. It seems to me this is very simplistic. I use Stata 7 and in the past I have used interval regression to regress banded income on a number of explanatory variables and then used the predictions from this model as a measure of predicted income. Invariably this methods leads to some observations having a predicted income value outside the original band, which is not very satisfactory. I have been looking at the possibility of using some kind of kernel density estimation, setting the widths equal to the income bands. However, as far as I can see, in Stata 7's hardwired -kdensity- command it is not possible to set different widths across the distribution (my income bands are not equal widths). Also, I am not sure how then to apply the information on the resulting density estimates to generate values for observations within each band. Any thoughts on how to proceed are much appreciated. I guess this must be a common problem and applies to a whole range of variables, not just income. Apologies in advance if I have missed something obvious. Thankyou. Steve Morris * * For searches and help try: * http://www.stata.com/support/faqs/res/findit.html * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**Follow-Ups**:**st: RE: Turning banded income into a continuous variable***From:*"David Moore" <davem@hartman-group.com>

**Re: st: Turning banded income into a continuous variable***From:*Ronan Conroy <rconroy@rcsi.ie>

**st: RE: Turning banded income into a continuous variable***From:*"Nick Cox" <n.j.cox@durham.ac.uk>

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