Intergenerational Transfer and Reporting Bias: An Application of the MIMIC Model

Area of Science:

• Sociology
• Economics
• Psychology

Background:

• Intergenerational transfer research often relies on self-reports from parents and adult children.
• Discrepancies in these reports suggest the presence of reporting biases.
• Previous studies have not adequately separated reporting bias from the actual transfer amounts.

Purpose of the Study:

• To develop and demonstrate a statistical method for disentangling reporting bias from true intergenerational transfers (money and time).
• To identify factors associated with both the accuracy of transfer reports and the extent of reporting bias.
• To provide a more nuanced understanding of parent-child financial and time transfers.

Main Methods:

• Utilized data from 4,947 parent-child dyads in the 2013 Panel Study of Income Dynamics.
• Applied a multiple-indicators-and-multiple-causes (MIMIC) model based on classical test theory.
• Decomposed transfer reports into latent factors representing true transfer and unique factors representing bias, identifying covariates for each.

Main Results:

• Significant reporting bias was found in both parents' and adult children's accounts of transfers.
• The self-enhancement hypothesis was insufficient to explain the direction of reporting bias.
• Identified correlates that were uniquely associated with transfer, uniquely with bias, or with both transfer and bias.

Conclusions:

• Reporting bias is a prevalent issue in studies of intergenerational transfer.
• The developed method allows for the separation of true transfer from reporting bias.
• This approach facilitates a clearer understanding of the dynamics underlying both intergenerational transfers and reporting inaccuracies.