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

Objectives: Parents' and adult children's reports of transfer do not always agree, because each has respective bias. This study demonstrates a method to separate reporting bias from transfer and identify their respective correlates. Method: The analysis was based on 4,947 parent-child dyads from the Family Roster and Transfer Module added to the 2013 wave of the Panel Study of Income Dynamics. Drawing on classical test theory, a multiple-indicators-and-multiple-causes (MIMIC) model was used to decompose parents' and adult children's reports of time and money transfers into a latent factor (true transfer) and unique factors (bias). This model further identified respective covariates associated with true transfer and bias. Results: A substantial amount of bias existed in parents' and adult children's reports. The self-enhancement hypothesis did not fully explain how resources to help and need for support relate to the direction of reporting bias. Some correlates of transfer identified in prior studies were associated with transfer only, some with bias only, and others with both transfer and bias. Discussion: Bias is common in both parents' and adult children's reports of transfer. Separating bias from transfer and identifying their respective correlates makes it possible to explain why intergenerational transfer and reporting bias occur.