Search Results
Journal Article
The cost of unanticipated household finance shocks : two examples
This article presents two simple calculations aimed at providing a first step in quantifying the costs of unanticipated financial shocks to a household. The two types of shocks considered are (1) an unanticipated drop in net worth and (2) an unexpected increase in the interest rate on borrowing. The shocks are faced by households in a life-cycle consumption-savings model and the costs are measured in terms of annual consumption. In general, for empirically plausible shocks, the results show that net worth shocks are substantially costlier than interest rate shocks. The costs of the shocks ...
Periodic Essay
Unsteady progress: income trends in the Federal Reserve's survey of consumer finances
Short essays related to research on understanding and strengthening the balance sheets of American households.
Journal Article
Changes in U.S. family finances from 2007 to 2010: evidence from the Survey of Consumer Finances
The Federal Reserve Board's Survey of Consumer Finances for 2010 provides insights into changes in family income and net worth since the 2007 survey. The survey shows that, over the 2007?10 period, the median value of real (inflation-adjusted) family income before taxes fell 7.7 percent, while mean income fell more sharply, an 11.1 percent decline. Both median and mean net worth decreased even more dramatically than income over this period, though the relative movements in the median and the mean are reversed; the median fell 38.8 percent, and the mean fell 14.7 percent. This article reviews ...
Working Paper
The Racial Wealth Gap, Financial Aid, and College Access
We examine how the racial wealth gap interacts with financial aid in American higher education to generate a disparate impact on college access and outcomes. Retirement savings and home equity are excluded from the formula used to estimate the amount a family can afford to pay. All else equal, omitting those assets mechanically increases the financial aid available to families that hold them. White families are more likely to own those assets and in larger amounts. We document this issue and explore its relationship with observed differences in college attendance, types of institutions ...
Report
Bad credit, no problem? Credit and labor market consequences of bad credit reports
Credit reports are used in nearly all consumer lending decisions and, increasingly, in hiring decisions in the labor market, but the impact of a bad credit report is largely unknown. We study the effects of credit reports on financial and labor market outcomes using a difference-in-differences research design that compares changes in outcomes over time for Chapter 13 filers, whose personal bankruptcy flags are removed from credit reports after seven years, to changes for Chapter 7 filers, whose personal bankruptcy flags are removed from credit reports after ten years. Using credit bureau ...
Lower interest rates don’t necessarily improve housing affordability
The direct impact of higher mortgage rates on housing affordability has received much attention. We emphasize that housing affordability not only depends on mortgage rates but also on house prices, which have competing effects.
Working Paper
The Effect of the Patient Protection and Affordable Care Act Medicaid Expansions on Financial Wellbeing
We examine the effect of the Medicaid expansions under the 2010 Patient Protection and Affordable Care Act (ACA) on consumer, financial outcomes using data from a major credit reporting agency for a large, national sample of adults. We employ the synthetic control method to compare individuals living in states that expanded Medicaid to those that did not. We find that the Medicaid expansions significantly reduced the number of unpaid bills and the amount of debt sent to third-party collection agencies among those residing in zip codes with the highest share of low-income, uninsured ...
Reciprocal deposit networks provide means to exceed FDIC’s $250,000 account cap
Because of their prominence, reciprocal deposits are important in the broader discussion of deposit insurance. Though they have the potential to increase banks’ moral hazard, they also bring increased trust and safety to the banking system.
Working Paper
Targeted business incentives and the debt behavior of households
The empirical effects of place-based tax incentive schemes designed to aid low-income communities are unclear. While a growing number of studies find beneficial effects on employment, there is little investigation into other behaviors of households affected by such programs. We analyze the impact of the Texas Enterprise Zone Program on household debt and delinquency. Specifically, we utilize detailed information on all household liabilities, delinquencies, and credit scores from the Federal Reserve Bank of New York Consumer Credit Panel/Equifax, a quarterly longitudinal 5% random sample of ...
Working Paper
Borrowers in Search of Feedback : Evidence from Consumer Credit Markets
We study recent technological innovation in credit markets and document their role in providing information to households. We show that households value the ability to learn detailed information about their cost of credit. This function is most valued by less creditworthy households with less experience in credit markets. To measure the demand for information provision we exploit a quasi-natural experiment in an online consumer credit market. A large lending platform unexpectedly switched from pricing loans through an auction mechanism to centralized pricing determined by broad credit grade. ...