ADJUST MONETARY VALUES FEATURE

The Adjust Monetary Values feature allows users to request that variables represented in monetary form be adjusted to standardized year 2000 U.S. dollar values. The tool applies a multiplier to variables, such as total income, wages, or monetary values in the country's currency, to convert them for general comparability across countries and time. It was designed specifically for use with international data, using both annual inflation rates and official exchange rates to dollars. To make meaningful comparisons across countries and time, the multiplier is constructed from publicly available sources: annual average change in consumer price index (inflation) values from the International Monetary Fund (IMF) and official exchange rates from the World Bank. For more information on the feature and underlying infrastructure, please read our working paper.

Approach

The consumer price index (CPI) measures the relative price of a basket of goods and services over time within each country. IMF's inflation rates capture these changes. We use the annualized average figures to compute cumulative inflation multipliers, adjusting income to the purchasing power of a base year. We then apply official exchange rates from the World Bank to convert the inflation-adjusted national currency values to constant U.S. dollars. The resulting Final Multiplier makes it possible to express incomes in a single, common metric: base-year USD. We currently convert all currency to the base year 2000 in U.S. dollars. In the future, IPUMS may offer alternative calculation methods (e.g., using Purchasing Power Parity) and allow users to specify a custom base year.

This approach is informed by established economic principles in international comparisons detailed by Deaton and Heston [2008] and survey harmonization practices used in cross-national databases like the Luxembourg Income Study (LIS) and other IPUMS collections. Similar issues are discussed on the International Labour Organization's website for the ILOSTAT PRICES database. The feature is similar to the one used by IPUMS USA and IPUMS CPS, and follows a similar logic. Whereas the U.S.-based feature uses CPI-U data from the Bureau of Labor Statistics to adjust U.S. dollar values across time, this international version applies the same principle to harmonize monetary data across both time and currencies.

Cautions

Cross-national income data are difficult to compare directly due to differences in both national price levels (inflation) and currency values, in this case relative to the U.S. dollar. Adjustments are imprecise because the value of money is constantly changing within and between countries. Hyperinflation and political decisions aimed at curbing it have introduced significant challenges for researchers and institutions attempting to construct consistent and reliable currency converters based on inflation and exchange rates. These circumstances apply to some samples with eligible monetary values, particularly from Latin America.

Policies such as fixed exchange rate regimes, currency redenominations, and full dollarization are often implemented in moments of economic crisis, disrupting the continuity of monetary series over time. For example, Argentina's 1:1 parity with the U.S. dollar during the 1990s and Ecuador's decision to adopt the dollar as its official currency in 2000 were political maneuvers aimed at stabilizing prices and restoring public confidence. However, such abrupt changes often obscure the underlying inflation dynamics and complicate longitudinal analyses. Although IMF CPI tries to capture some of these dynamics, these disruptions create "breaks" in monetary histories, where pre- and post-reform values are not easily comparable without nuanced, particular, and personalized adjustments.

For agencies, researchers, and policymakers seeking to harmonize data across countries and years, these complexities present formidable obstacles to producing accurate, inflation-adjusted currency conversions that reflect real purchasing power over time and geography. Cross-country and cross-temporal research can be rich, informative, and lead to ground-breaking discoveries. At the same time, users should exercise appropriate caution in drawing conclusions from analyses using adjusted values, noting that global measures generalize both annual inflation and currency conversion, yielding crude results.

Missing data codes

The multiplier is only applied to valid numeric income values. Any missing data codes (such as NIU, Refused, Don't Know, or No response) are preserved and assigned a uniform code in the adjusted version of each income variable. This code is structured as a string of 9s that is two digits wider than the original code and is meant to clearly signify that the income value was not observed. Users should be sure to check aggregate results to ensure these high values are removed from calculations.

Data availability

Because final inflation and exchange rate figures are often released with a lag, this feature is not available for country-year samples beyond the most recently confirmed data year. If a dataset includes years beyond this cutoff, adjusted income values for those future years will contain only the uniform missing code described above. Adjustments are computed using full-year CPI data, and therefore this tool is updated annually as new values become available.

Source data for multipliers

Consumer Price Index data from the International Monetary Fund (IMF)

Official exchange rates from the World Bank (WB)