The current state of U.S. household balance sheets
The Board of Governors of the Federal Reserve System is responsible for two of the most widely used datasets containing information about U.S. household balance sheets: the quarterly macro-level Financial Accounts of the United States (FA, formerly known as the Flow of Funds Accounts) and the triennial microlevel Survey of Consumer Finances (SCF). The FA is very timely, but the data can be used only to describe the household sector as a whole. The SCF provides the micro-level detail needed to capture heterogeneity in household finances, but the data are available only with a long lag. The ...
Measuring Income and Wealth at the Top Using Administrative and Survey Data
Administrative tax data indicate that U.S. top income and wealth shares are substantial and increasing rapidly (Piketty and Saez 2003, Saez and Zucman 2014). A key reason for using administrative data to measure top shares is to overcome the under-representation of families at the very top that plagues most household surveys. However, using tax records alone restricts the unit of analysis for measuring economic resources, limits the concepts of income and wealth being measured, and imposes a rigid correlation between income and wealth. The Survey of Consumer Finances (SCF) solves the ...
Is the Consumer Expenditure Survey representative by income?
Aggregate under-reporting of household spending in the Consumer Expenditure Survey (CE) can result from two fundamental types of measurement errors: higher-income households (who presumably spend more than average) are under-represented in the CE estimation sample, or there is systematic under-reporting of spending by at least some CE survey respondents. Using a new data set linking CE units to zip-code level average Adjusted Gross Income (AGI), we show that the very highest-income households are less likely to respond to the survey when they are sampled, but unit non-response rates are not ...
Lifecycle Patterns of Saving and Wealth Accumulation
Empirical analysis of U.S. income, saving and wealth dynamics is constrained by a lack of high-quality and comprehensive household-level panel data. This paper uses a pseudo-panel approach, tracking types of agents by birth cohort and across time through a series of cross-section snapshots synthesized with macro aggregates. The key micro source data is the Survey of Consumer Finances (SCF), which captures the top of the wealth distribution by sampling from administrative records. The SCF has the detailed balance sheet components, incomes, and interfamily transfers needed to use both sides of ...
The effect of self-reported transitory income shocks on household spending
We use repeated cross-sections of the Survey of Consumer Finances (SCF) to study the effect of self-reported transitory income shocks on household food spending. The self-reported shocks in the SCF are derived from survey questions about the gap between actual and "normal" income. This approach stands in contrast to existing income shock measures in the literature, which are generally derived from the residuals of estimated earnings or income equations. Although the self-reported transitory shocks could potentially give very different answers, the overall variance and asymmetry of shocks over ...
Early withdrawals from retirement accounts during the Great Recession
Early withdrawals from retirement accounts are a double-edged sword, because withdrawals reduce retirement resources, but they also allow individuals to smooth consumption when they experience demographic and economic shocks. Using tax data, we show that pre-retirement withdrawals increased between 2004 and 2010, especially after 2007, but early withdrawal rates are substantial (relative to new contributions) in all of those years. Early withdrawal events are strongly correlated with shocks to income and marital status, and lower-income taxpayers are more likely to experience the types of ...
Heterogeneity in Economic Shocks and Household Spending
Large swings in aggregate household-sector spending, especially for big ticket items such as cars and housing, have been a dominant feature of the macroeconomic landscape in the past two decades. Income and wealth inequality increased over the same period, leading some to suggest the two phenomena are interconnected. Indeed, there is supporting evidence for the idea that heterogeneity in economic shocks and spending are connected, most notably in studies using local-area geography as the unit of analysis. The Survey of Consumer Finances (SCF) provides a household-level perspective on changes ...
The Evolution of Retirement Wealth
Is the current mix of tax preferences for employer-sponsored pensions and individual retirement saving in the U.S. delivering the best possible retirement-preparedness across and within generations? Using data from the triennial Survey of Consumer Finances for 1989 through 2013, cohort-based analysis of life-cycle trajectories shows that (1) overall retirement plan participation was relatively stable or even rising through 2007, though participation fell noticeably in the wake of the Great Recession and has remained lower, (2) participation is strongly correlated with income, and the shift in ...
The annuitization of Americans' resources: a cohort analysis
An analysis of the changes since 1960 in the share of Americans' resources that are annuitized, which has declined slightly for younger Americans but has risen dramatically for the elderly, with important implications for the national saving rate and income inequality.
Understanding the postwar decline in United States saving: a cohort analysis
An analysis of the postwar decline in U.S. national saving that decomposes changes in the net national saving rate into those due to changes in cohort-specific consumption propensities, the intergenerational distribution of resources, the rate of government spending, and demographics. ; A review and expansion of Calomiris, Kahn, and Longhofer's (1994) cultural affinity theory of discrimination in the residential mortgage market, which is based on the idea that lenders find it easier or less costly to evaluate the creditworthiness of applicants with whom they have a common experiential ...