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Household

Overview

The WiNDC household subroutine is an extension to the core WiNDC buildstream that disaggregates regional representative households in the core database on the basis of household income from 2000-2021. The subroutine leverages several additional source datasets to produce disaggregate consumer accounts, including: the Current Population Survey (CPS), state-level statistics from the Statistics of Income (SOI) database, commuting flows from the American Community Survey, Medicare and Medicaid benefits from Centers for Medicare and Medicaid Services (CMS), National Income and Product Accounts (NIPA), average and marginal income tax rates from TAXSIM, the Consumer Expenditure Survey (CE), and several academic publications on under-reporting bias in survey data on transfer incomes. The disaggregation routine relies on an income balance condition that allows us to fully denominate incomes and expenditures without defining any ad hoc adjustment parameters to close the income balance constraint in a CGE model. The income balance condition is specified as:

$$ \sum_q WAGES_{rqh} + INTEREST_{rh} + \sum_{t}TRANS_{rht} = CONS_{rh} + TAXES_{rh} + SAVINGS_{rh} $$

For region $r$ and household $h$, the subroutine produces micro-consistent accounts that equates labor income (including all people that live in $r$ and work in region $q$), interest income, and government transfer income (across disaggregate transfer categories $t$, see below) with aggregate commodity consumption, labor income taxes, and household savings. The presentation on the household build at the WiNDC Annual Meeting 2021 offers a detailed description of a previous version of the calibration routine.

The routine is designed to be flexible. The default options produce a dataset with 5 income groups based on the Census definition of a household. Several additional options are provided depending on user preference:

  • Alternative definition of the regional representative agent denominated at the tax-filer unit level (based on SOI information).
  • Dynamic adjustments to investment/savings based on user choice of steady state parameters (depreciation, growth, and interest rates). The default option assumes a static investment closure, leaving the data to match BEA totals for investments.
  • Alternative assumptions of capital ownership. The subroutine employs a pooled national markets for savings and capital income by implicitly assume equalization of rates of return across all capital income and that the geography of savings is independent of the geography for investment demands. The default routine assumes all sectoral capital demands is owned domestically, and similarly, all investment demands are provided for by domestic savings. We have characterized an alternative option for capital income and savings where a portion of the capital stock and investment demands are owned or proved for internationally.

Running the Household Subroutine

Before running the household build, the user must first verify that the core WiNDC database has been constructed or downloaded and is located in the core subdirectory. Verify that all data sources have been downloaded to the local WiNDC distribution, specifically adding household files in the data directory. Navigate to the household subdirectory, which contains all GAMS code needed to generate the WiNDC household datasets for the years 2000 to 2021 (for the CPS-based build). Note that the distribution contains a restricted set of years for an SOI-based build, which is included purely as a sensitivity to the initial data source information.

If you have a local version of GAMS and access to the relevant licenses, navigate in your command line to the directory household and run the GAMS file build.gms by typing the following command:

gams build.gms

The code creates the directory datasets, generates the household datasets and saves all household datasets in this directory. Should the user like to generate household datasets based on alternative assumptions than those in the default settings, see command line options in the next section.

File Listing

  1. build.gms - launching program to generate WiNDC datasets with disaggregate household accounts. For many users, this is the only file that needs to be run in order to generate a dataset. All other files in household sub-directory are called from build.gms.

    Inputs: data/household

    Outputs: datasets/WiNDC_%hhdata%_%invest%_%capital_ownership%_%year%_%smap%_%rmap%.gdx.gdx

    Command line options:

    Command Options Default Description
    year cps: 2000-2021, soi: 2014-2017 2017, 2021 Years to compute data
    hhdata cps, soi cps Primary household data source
    invest static static Investment calibration
    captial_ownership all, partial all Assumption on capital ownership
    rmap state, census_divisions, census_regions, national state Regional mapping
    smap windc, gtap_32, gtap_10, macro, bluenote windc, gtap_32 Sectoral mapping

    Note: The option pair (cps, all) has a calibration error in years 2006 and 2007. If you require these two years, with the given option pair, you can modify the bounds on the household variables. We opted to leave as-is to preserve variable preciseness in other years.

    All other options and years run properly.

  2. cps_data.gms - Reads Current Population Survey (CPS) data from the directory data/household/cps, processes it and saves the processed data in a GDX file in the directory household/gdx. Processed data includes CPS income categories, number of households, and income tax rates. Notably, should a user like to change the income thresholds for households, see the R program that leverages the CPS API to grab and reconcile income data in data/household/cps/read_cps.r.

    Inputs: data/household/cps

    Outputs: household/gdx

  3. soi_data.gms - Reads Statistics of Income (SOI) data from the directory data/household/soi, processes it and saves the processed data in a GDX file in the directory household/gdx. Processed data includes SOI income categories and number of tax filers. Notably, should a user like to change the income thresholds for tax-filer categories, see the R program that downloads and aggregates the SOI data in data/household/cps/read_soi.r.

    Inputs: data/household/soi

    Outputs: household/gdx

  4. hhcalib.gms - Calibrates consumer accounts to several source datasets. The subroutine proceeds in three steps: (1) recalibrates investment demands to match steady state assumption if the user has selected the dynamic investment option [optional], (2) calibrates income and aggregate expenditures for each region and household type, (3) disaggregates total household expenditures by income group by defining an income expansion path for each commodity type.

    Inputs:

    • household/gdx,
    • data/household/cps/cps_nipa_income_categories.csv,
    • data/health_care/public_health_benefits_2009_2019.csv,
    • data/household/cps/windc_vs_nipa_domestic_capital.csv,
    • data/household/acs/acs_commuting_data.csv,
    • data/household/cex/national_income_elasticities_CEX_2013_2017.csv

    Outputs: gdx/calibrated_hhdata_%invest%_%hhdata%_%capital_ownership%_%year%.gdx

  5. dynamic_calib.gms - Reads the dynamic datasets and recalibrates the rest of the commodity accounts to satisfy balanced growth requirements.

    Inputs:

    • core/WiNDCdatabase.gdx
    • household/gdx

    Outputs: household/gdx/dynamic_parameters_%year%.gdx

  6. consolidate.gms - Merges the recalibrated household accounts (and adjusted dynamic parameters, if dynamic option is chosen) with the rest of the WiNDC accounts for a given year.

    Inputs:

    • core/WiNDCdatabase.gdx
    • household/gdx

    Outputs: datasets/WiNDC_%hhdata%_%invest%_%capital_ownership%_%year%.gdx

  7. aggr.gms - This aggregation routine is optional. The output of consolidate.gms is at the state-level with a summary-level sector scheme maintained in the core WiNDC database. Should a user like to aggregate the dataset to be at a different regional and/or sectoral aggregation, this program allows for users to create mapping files to aggregate the data. Several are already provided with the distribution. See options for rmap and smap in the above table.

Canonical Static Household Model

The mutli-regional, multi-sectoral, multi-household CGE model accompanying this distribution can be found in static_model.gms.

  • The model reads in the chosen household dataset using windc_hhdata.gms.
  • We provide a method for calibrating a labor-leisure choice to exogenous labor supply income and substitution elasticities from McClelland and Mok (2012) based on the calibration strategy found in the SAGE documentation.
  • The model verifies both the calibration of both an MPSGE and MCP version of the model and replicates an equivalent shock to a reduction in the marginal labor income tax rate.

A complete overview of the household model accompanying the disaggregated set of consumer accounts is forthcoming in a future publication.

Optional R Routines

Source datasets are compiled using the R programming language. All R routines needed for generating CPS, NIPA, SOI, ACS, and CMS source dataset CSV files accompany the data source download. All programs are heavily documented and should be self explanatory.

Set Listing

Sets

Set Name Description
r Regions - Controlled by rmap
s, gm Goods and sectors from BEA and Margin related sectors. Controlled by smap
m Margins (trade or transport)
h household categories
trn transfer types

Parameters

Parameter Name Domain Description
ys0 r, s, g Sectoral supply
ld0 r, s Labor demand
kd0 r, s Capital demand
id0 r, g, s Intermediate demand
ty0 r, s Production tax
yh0 r, g Household production
cd0 r, g Final demand
c0 r Aggregate final demand
i0 r, g Investment demand
g0 r, g Government demand
bopdef0 r Balance of payments
hhadj0 r Household adjustment
s0 r, g Aggregate supply
xd0 r, g Regional supply to local market
xn0 r, g Regional supply to national market
x0 r, g Exports of goods and services
rx0 r, g Re-exports of goods and services
a0 r, g Armington supply
nd0 r, g Regional demand from national market
dd0 r, g Regional demand from local market
m0 r, g Imports
ta0 r, g Tax net subsidy rate on intermediate demand
tm0 r, g Import tariff
md0 r, m, g Total margin demand
nm0 r, g, m Margin demand from national market
dm0 r, g, m Margin supply from local market
le0 r, q, h Household labor endowment
ke0 r, h Household interest payments
tk0 * Capital tax rate
tl_avg0 r, h Average tax rate on labor income
tl0 r, h Marginal tax rate on labor income
tfica0 r, h FICA tax rate on labor income
cd0_h r, g, h Household level expenditures
c0_h r, h Aggregate household level expenditures
sav0 r, h Household saving
fsav0 Foreign savings
fint0 Foreign interest payments
trn0 r, h Household transfer payments
hhtrn0 r, h, trn Disaggregate transfer payments
pop0 r, h Population (households or returns in millions)

Set Listing

Regions

  1. state
  2. census_divison
  3. census_regions
  4. national

States

r Description r Description
AK Alaska MT Montana
AL Alabama NC North Carolina
AR Arkansas ND North Dakota
AZ Arizona NE Nebraska
CA California NH New Hampshire
CO Colorado NJ New Jersey
CT Connecticut NM New Mexico
DC District of Columbia NV Nevada
DE Delaware NY New York
FL Florida OH Ohio
GA Georgia OK Oklahoma
HI Hawaii OR Oregon
IA Iowa PA Pennsylvania
ID Idaho RI Rhode Island
IL Illinois SC South Carolina
IN Indiana SD South Dakota
KS Kansas TN Tennessee
KY Kentucky TX Texas
LA Louisiana UT Utah
MA Massachusetts VA Virginia
MD Maryland VT Vermont
ME Maine WA Washington
MI Michigan WI Wisconsin
MN Minnesota WV West Virginia
MO Missouri WY Wyoming
MS Mississippi

Census Divisions

uni element_text
neg New England
mid Mid Atlantic
enc East North Central
wnc West North Central
sac South Atlantic
esc East South Central
wsc West South Central
mtn Mountain
pac Pacific

Census Regions

uni element_text
nor
mid
sou
wes

National

uni element_text
usa

Goods and sectors from BEA -- Margin related sectors

  1. windc
  2. gtap_32
  3. gtap_10
  4. macro

WiNDC Aggregation

s gm Description
agr agr Farms (111-112)
fof fof Forestry, fishing, and related activities (113-115)
oil oil Oil and gas extraction (211)
min min Mining, except oil and gas (212)
smn - Support activities for mining (213)
uti - Utilities (22)
con - Construction (23)
wpd wpd Wood products manufacturing (321)
nmp nmp Nonmetallic mineral products manufacturing (327)
pmt pmt Primary metals manufacturing (331)
fmt fmt Fabricated metal products (332)
mch mch Machinery manufacturing (333)
cep cep Computer and electronic products manufacturing (334)
eec eec Electrical equipment, appliance, and components manufacturing (335)
mot mot Motor vehicles, bodies and trailers, and parts manufacturing (3361-3363)
ote ote Other transportation equipment manufacturing (3364-3366, 3369)
fpd fpd Furniture and related products manufacturing (337)
mmf mmf Miscellaneous manufacturing (339)
fbp fbp Food and beverage and tobacco products manufacturing (311-312)
tex tex Textile mills and textile product mills (313-314)
alt alt Apparel and leather and allied products manufacturing (315-316)
ppd ppd Paper products manufacturing (322)
pri pri Printing and related support activities (323)
pet pet Petroleum and coal products manufacturing (324)
che che Chemical products manufacturing (325)
pla pla Plastics and rubber products manufacturing (326)
wht wht Wholesale trade (42)
mvt mvt Motor vehicle and parts dealers (441)
fbt fbt Food and beverage stores (445)
gmt gmt General merchandise stores (452)
ott ott Other retail (4A0)
air air Air transportation (481)
trn trn Rail transportation (482)
wtt wtt Water transportation (483)
trk trk Truck transportation (484)
grd - Transit and ground passenger transportation (485)
pip pip Pipeline transportation (486)
otr otr Other transportation and support activities (487-488, 492)
wrh - Warehousing and storage (493)
pub pub Publishing industries, except Internet (includes software) (511)
mov mov Motion picture and sound recording industries (512)
brd - Broadcasting and telecommunications (515, 517)
dat - Data processing, internet publishing, and other information services (518, 519)
bnk - Federal Reserve banks, credit intermediation, and related services (521-522)
sec - Securities, commodity contracts, and investments (523)
ins - Insurance carriers and related activities (524)
fin - Funds, trusts, and other financial vehicles (525)
hou - Housing (HS)
ore - Other real estate (ORE)
rnt - Rental and leasing services and lessors of intangible assets (532-533)
leg - Legal services (5411)
com - Computer systems design and related services (5415)
tsv - Miscellaneous professional, scientific, and technical services (5412-5414, 5416-5419)
man - Management of companies and enterprises (55)
adm - Administrative and support services (561)
wst - Waste management and remediation services (562)
edu - Educational services (61)
amb - Ambulatory health care services (621)
hos - Hospitals (622)
nrs - Nursing and residential care facilities (623)
soc - Social assistance (624)
art - Performing arts, spectator sports, museums, and related activities (711-712)
rec - Amusements, gambling, and recreation industries (713)
amd - Accommodation (721)
res - Food services and drinking places (722)
osv - Other services, except government (81)
nan - nan
fdd - Federal general government (defense) (GFGD)
fnd - Federal general government (nondefense) (GFGN)
fen - Federal government enterprises (GFE)
slg - State and local general government (GSLG)
sle - State and local government enterprises (GSLE)

GTAP_32 Aggregation

s gm Description
agr agr Farms and farm products (111CA)
fof fof Forestry and fishing
oil oil Petroleum, coal products
uti - Utilities (electricity-gas-water)
pmt pmt Primary metals (331)
fbp fbp Food and beverage and tobacco products (311FT)
tex tex Textiles
alt alt Apparel and leather and allied products (315AL)
trd trd Trade
oxt oxt Coal, minining and supporting activities
ros - Recreational and other services
dwe - Dwellings and real estate activities
LUM LUM Lumber and wood products
NMM NMM Mineral products nec
FMP FMP Metal products
MVH MVH Motor vehicles and parts
OTN OTN Transport equipment nec
OME OME Machinery and equipment nec
CNS - Construction
WTP WTP Water transport
ATP ATP Air transport
ISR - Insurance
OGS OGS Crude oil and natural gas
PPP PPP Paper products, publishing
CRP CRP Chemical, rubber, plastic products
EEQ EEQ Electronic equipment
OMF OMF Manufactures nec
OTP OTP Transport nec
CMN CMN Communication
OFI - Financial services nec
OBS - Business services nec
OSG - Public Administration, Defense, Education, Health

GTAP 10 Aggregation

s gm Description
agr agr Agriculture forestry and fishing
man man Other manufacturing sectors
oil oil Petroleum products
trn trn Transportation
ele nan Electric power generation, transmission, and distribution and other utilities
ogs ogs Crude oil and natural gas extraction
col col All mining
eis eis Energy/Emission intensive sectors (embodied carbon > .5 kg per $)
cns nan Construction
ser ser Other services

Macro

s gm Description
con nan Construction
agr agr Agriculture
trn trn Transportation
mfr mfr Manufacturing
ser ser Services

Margins (trade or transport)

m Description
trn transport
trd trade

Household Categories

Based on income thresholds.

h Description
hh1 <$25k
hh2 $25k - $50k
hh3 $50k - $75k
hh4 $75k - $150k
hh5 >$150k

Transfer Types

trn Description
hucval unemployment compensation
hwcval workers compensation
hssval social security
hssival supplemental security
hpawval public assistance or welfare
hvetval veterans benefits
hsurval survivors income
hdisval disability
hedval educational assistance
hcspval child support
hfinval financial assistance
medicare
medicaid