Match Procedure 2003




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	Statistical Match Procedure Used Beginning with the 2003 Baseline The statistical match procedure used in the 2003-2004 baselines is an unconstrained nearest neighbor match. Prior to matching, the CPS and PUF are divided into mutually exclusive groups that only allow matching within each respective group. The groups are defined by the following "blocking variables": filing status - whether the taxpayer files a single, joint, or head of household return aged status - whether the taxpayer (or spouse in the case of a joint return) is age 65 or over dependents - the number of dependents claimed by the taxpayer (none, one, or two or more) dependency status - whether the taxpayer can be claimed as a dependent on another return Once the blocking variables have been used to identify the set of PUF records that can be matched to a given CPS tax unit, an PUF record is selected using a "minimum distance" function that takes into account the difference between the CPS tax unit and the PUF record for each of ten income items reported on both the CPS and the PUF (wages and salary, interest income, dividend income, pensions and retirement income, total social security benefits, unemployment compensation, rental income or loss, self-employed income or loss, farm income or loss, and alimony received). Once selected, variables from that record are assigned to the CPS tax unit. The weight of the PUF record is then reduced by the weight of the CPS tax unit. Once the weight for an PUF record has been reduced to zero, it cannot be matched to additional CPS tax units. Several additional constraints are imposed on the matching algorithm that have the effect of reducing the number of PUF records that are potential matches to a particular TRIM3 record. These constraints relate to: Capital Gains and Transfer Program Recipients. TRIM3 does not assign capital gains to tax units receiving SSI, TANF, or food stamp benefits, or living in public or subsidized housing. (This test was inadvertently excluded from the 2003 baseline). Home Ownership. A TRIM3 tax unit must own a house in order to be matched with an PUF tax unit that claims itemized deductions for home mortgage interest expenses or real estate taxes. State and Local Tax Deductions. A TRIM3 tax unit must reside in a state with a state income tax in order to be matched with an PUF tax unit that claims an itemized deduction for state and local income taxes. Adjustments for Keogh/SEP Contributions. A TRIM3 tax unit must have self-employment income in order to be matched with an PUF tax unit that claims adjustments to income for contributions to Keogh or SEP retirement accounts. Child and Dependent Care Expenses. A TRIM3 tax unit must have a dependent child under the age of 13 in order to be matched with an PUF tax unit that claims child and dependent care expenses. PUF Variables Exceeding Prescribed Levels. A single large value for an PUF variable can produce skewed results if the PUF record in question represents only a few tax units but is matched to a CPS tax record representing many tax units. To avoid this problem, the match procedure disallows matches to PUF records with very large values for certain variables.
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Statistical Match Procedure Used Beginning with the 2003 Baseline