Staff Report 568
What Do Survey Data Tell Us about U.S. Businesses?
Revised August 2, 2018
This paper examines the reliability of survey data for research on U.S. businesses, including sole proprietorships, partnerships, S corporations, and C corporations. We examine all surveys that ask questions about these businesses and compare outcomes across surveys and with aggregated administrative data. We document large inconsistencies in business incomes, receipts, and number of returns. We highlight problems due to non-representative samples and measurement errors. Non-representativeness is reflected in undersampling of businesses, especially in categories of owners with low total incomes. Measurement errors arise because respondents do not refer to relevant documents when answering survey questions and also because some questions are framed in a manner that is confusing to respondents. Finally, we discuss the implications for statistics of interest, such as returns and valuations of ongoing private businesses, as well as the implications for research that studies positive and normative questions pertaining to businesses.
Download Paper (pdf)