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Working Paper
Does education loan debt influence household financial distress? An assessment using the 2007-09 SCF Panel
This paper uses the recent 2007-09 SCF panel to examine the influence of student loans on financial distress. Families with student loans in 2007 have higher levels of financial distress than families without such loans, and these families were more susceptible to transitions to financial distress during the early stages of the Great Recession. This correlation persists once we control for a host of other demographic, work-status, and household balance sheet measures. Families with an average level of student loans were 3.1 percentage points more likely to be 60 days late paying bills and 3 ...
Working Paper
Wealth Concentration in the United States Using an Expanded Measure of Net Worth
Defined benefit (DB) pensions and Social Security are two important resources for financing retirement in the United States. However, these illiquid, non-market forms of wealth are typically excluded from measures of net worth. To the extent that these broadly held resources substitute for savings, measures of wealth inequality that do not account for DB pensions and Social Security may be overstated. This paper develops an alternative, expanded wealth concept, augmenting precise net worth data from the Survey of Consumer Finances with estimates of DB pension and expected Social Security ...
Working Paper
Wealth Distribution and Retirement Preparation among Early Savers
This paper develops a new combined-wealth measure by augmenting data on net worth from the Survey of Consumer Finances with estimates of defined benefit (DB) pension and expected Social Security wealth. We use this concept to explore retirement preparation among two groups of households in pre-retirement years (aged 40 through 49 and 50 through 59), and to explore the concentration of wealth. We find evidence of moderate, but rising, shortfalls in retirement preparation. We also show that including DB pension and Social Security wealth results in markedly lower measures of wealth ...
Working Paper
Inequality in 3-D : Income, Consumption, and Wealth
We do not need to and should not have to choose amongst income, consumption, or wealth as the superior measure of well-being. All three individually and jointly determine well-being. We are the first to study inequality in three conjoint dimensions for the same households, using income, consumption, and wealth from the 1989-2016 Surveys of Consumer Finances (SCF). The paper focuses on two questions. What does inequality in two and three dimensions look like? Has inequality in multiple dimensions increased by less, by more, or by about the same as inequality in any one dimension? We find an ...
Working Paper
Do Rising Top Incomes Lead to Increased Borrowing in the Rest of the Distribution?
One potential consequence of rising concentration of income at the top of the distribution is increased borrowing, as less affluent households attempt to maintain standards of living with less income. This paper explores the ?keeping up with the Joneses? phenomenon using data from the Survey of Consumer Finances. Specifically, it examines the responsiveness of payment-to-income ratios for different debt types at different parts of the income distribution to changes in the income thresholds at the 95th and 99th percentiles. The analysis provides some evidence indicating that household debt ...
Working Paper
Comparing Micro and Macro Sources for Household Accounts in the United States: Evidence from the Survey of Consumer Finances
Household income, spending, and net worth are key inputs in macroeconomic forecasting and economic research. Macro-level data sources are often used to measure household accounts, but lack important information about heterogeneity across different types of households that can be found in micro-level data sources. This paper compares aggregates computed based on one micro-level data source--the Survey of Consumer Finances (SCF)--with macro-level sources of information on household accounts. We find that on most measures, aggregates computed from the SCF line up well with macro-level data ...
Working Paper
Do rising top income shares affect the incomes or earnings of low and middle-income families?
This paper uses US state panel data to explore the relationship between the share of income received by affluent households and the level of income and earnings received by low and middle-income families. A rising top share of income can potentially lead to increases in the incomes of low and middle-income families if economic growth is sufficiently responsive to increases in inequality. A substantial literature on the impacts of inequality on economic growth exists, but has failed to achieve consensus, with various studies finding positive impacts, negative impacts, and no impacts on growth ...
Journal Article
Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances
The Federal Reserve Board's Survey of Consumer Finances for 2013 provides insights into the evolution of family income and net worth since the previous time the survey was conducted, in 2010. The survey shows that, over the 2010-13 period, the median value of real (inflation-adjusted) family income before taxes fell 5 percent, while mean income increased 4 percent. The differential movements in median and mean incomes are consistent with increased income inequality over the 2010-13 period, though some of that differential growth simply reversed the cyclical decrease in income inequality that ...
Report
The Limited Role of Intergenerational Transfers for Understanding Racial Wealth Disparities
Transfers of wealth between generations—whether through inheritances or inter vivos gifts—are less important in explaining racial disparities in wealth than might be expected. While this factor looms large in the media’s discussions of racial inequality, it explains relatively little of the disparities evident in the data. One reason is that most people, regardless of race, receive no inheritance or other transfer of substantial value. In addition, most recipients of inheritances ultimately consume those bequests and do not plan to leave substantial gifts to their offspring. Further, ...
Working Paper
Estimating the marginal propensity to consume using the distributions of income, consumption and wealth
Recent studies of economic inequality almost always separately examine income, consumption, and wealth inequality and, hence, miss the important synergy among the three measures explicit in the life-cycle budget constraint. Using Panel Study of Income Dynamics data from 1999 through 2013, we examine whether these changes are more dramatic at higher or lower levels of wealth and find that the marginal propensity to consume is lower at higher wealth quintiles. This suggests that low-wealth households cannot smooth consumption as much as other households do, which further implies that increasing ...