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# 1996 Panel Wave 3 and Wave 6 Wealth/Net Worth Recodes within the Assets, Liabilities, and Eligibility Sections User Note

Statement of Problem:

In Waves 3 and 6 of the 1996 Panel, there are four cases in each wave where the formula used to calculate "Rental debt" resulted in negative values for the recode variable RHHSCDBT (Total Secured Debt), and in turn for the recode value RHHDEBT (Household Level Debt), as RHHSCDBT is a component used to calculate the recode variable RHHDEBT. Rental debt was calculated in the recode variable RHHSCDBT using the formula:

[ ERTSHA /(ERTMV - ERTPRI)] * ERTPRI.

The variable ERTSHA, which is one part of the "rental debt" formula, is also a component of the recode variable RHHORE (Real Estate Debt that is not your own home, such as rental properties and other real estate).

However, while RHHORE - which uses the ERTSHA portion of the rental debt equation - may be reported as a negative value, the value for RHHSCDBT should be positive. In the eight instances mentioned above, where the values for RHHSCDBT were negative, the rental debt formula used resulted in negative values. This was because ERTMV (the total market value of the rental property owed with other than spouse) was less than ERTPRI (the amount of principal the respondent owed with other than spouse).

Since RHHSCDBT is a component of the recode variable RHHDEBT, in the cases where RHHSCDBT was reported as a negative value, RHHDEBT also resulted in a negative value, although the RHHDEBT amount should have been a positive value.

Resolution of Problem:

Beginning in Wave 9 of the 1996 Panel, the calculation used to determine rental debt was updated to include the absolute value of ERTMV - ERTPRI. The update reads as follows:

[ERTSHA / |(ERTMV - ERTPRI)|] * ERTPRI

Also, the definition for the recode component variable ERTSHA, used in variables RHHSCDBT and RHHORE was updated to read "the total value of respondent's share or loss of equity in rental property owned jointly with other than spouse, not attached/located on own residence." Beginning in Wave 3 of the 2001 Panel instrument, the question for variable ERTSHA was updated to include the words "or loss".

It is suggested that data users delete the four cases each in Wave 3 and Wave 6 of the 1996 Panel where a negative debt value was output for variables RHHSCDBT and RHHDEBT. The variable RHHORE needs no adjustment, as RHHORE negative values are valid.