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Fed survey of consumer finances

This page is about the Federal Reserve's Survey of Consumer Finances (SCF). Of particular interest is the distribution of debt in relation to demographic variables.

Summary

10 Jun 2011.

The Federal Reserve Survey of Consumer Finances (SCF), normally occurring every three years, gathers data on income, saving, net worth, financial and nonfinancial assets, debt, debt payments, high debt burden (over 40% of income) and delinquency, all broken down by percentile ranking in income, age of head of household (HOH), education of HOH, race of respondent, work status of HOH, region, owner/renter, and percentile ranking of net worth.

E.g. From 1989 to 2004, for the first four income quintiles and the top two deciles, the increase in debt per family was 261%, 170%, 131%, 90%, 103%, 93%. So during the boom the poorest families increased their debt, proportionally, the most.

A 2000 study compared Flow of Funds Accounts (FFA) with results from the 1989, 1992, 1995, and 1998 SCF, after making a number of adjustments for definitional differences; the difference in FFA and SCF estimates of total liabilities varied from 0.4% to 10.4% over the four different sample years; for assets 0.9% to 9.3%.

Highlights

Definition (30 Nov 2008) “The Survey of Consumer Finances (SCF) is a triennial survey of the balance sheet, pension, income, and other demographic characteristics of U.S. families. The survey also gathers information on the use of financial institutions. The links to the surveys provide summary results, codebooks and other documentation, and the publicly available data. For the 1983 and 1989 surveys, a separate Survey of Pension Providers (SPP) was conducted to obtain detailed technical information on the pensions of SCF particpants; data and documentation for the SPP appear under a separate link.”


Methodological and stylistic highlights

  • Attention to wealthy households (30 Nov 2008) “to provide precise estimates of the highly skewed components of wealth, the SCF oversamples the highest income individuals and compensates for statistically high nonresponse rates among wealthy families by using data from tax files to adjust the sampling weights in the population estimates … This procedure minimizes the known biases found in wealth statistics derived from other surveys, such as the Survey of Income and Participation Program (SIPP)”
  • Conditional median (30 Nov 2008) “The principal detailed tables describing asset and debt holdings focus on the percent of various groups that have such items and the median holding for those that have them. This conditional median is chosen to give a sense of the ‘typical’ holding.”
  • Consistent over time (30 Nov 2008) “Except in a small number of instances (see the appendix for details), the survey questionnaire has changed in only minor ways since 1989, and every effort has been made to ensure the maximum degree of comparability of the data over time.”
  • Family orientation (30 Nov 2008) The main results are given by family, where a family is “intended to be the economically dominant single individual or couple (whether married or living together as partners) and all other persons in the household who are financially interdependent with that economically dominant person or couple.”
  • Sample size (30 Nov 2008) In the 2004 survey, 4,522 families were interviewed, and in the 2001 survey, 4,449 were interviewed.
  • Timeframe (30 Nov 2008) “The survey collects information on families’ total income before taxes for the calendar year preceding the survey. But the bulk of the data cover the status of families as of the time of the interview, including detailed information on their balance sheets and use of financial services as well as on their pensions, labor force participation, and demographic characteristics.”


Sources

See also

Recent commentary:

Clippings below were used in the construction of this page

Covered through 28 Mar 2008.

The SCF provides an independent check of the FFA

Oct 2000. Federal Reserve research paper.

http://www.federalreserve.gov/pubs/oss/oss2/papers/antoniewicz_paper.pdf

“A Comparison of the Household Sector from the Flow of Funds Accounts and the Survey of Consumer Finances. Rochelle L. Antoniewicz”

“The most widely used source of aggregate data for U.S. household balance sheets is the time series data from the Flow of Funds Accounts (FFA). In the FFA, financial assets and liabilities of the household sector are largely derived as residuals because reports on the balance sheet activities of households are generally not available, except intermittently. In other words, the FFA starts with known economy wide totals for individual transaction categories and then amounts reported to be held by other sectors are deducted, leaving the household sector with the remainder. For most transaction categories, such as home mortgage debt and time deposits, this method seems reasonable because the household sector is the largest holder. Yet uncertainty about the accuracy of the asset and liability estimates in the FFA household sector remains and at times, the FFA estimates have been in question because of their residual nature.

This paper addresses some of these questions by comparing figures on selected assets and liabilities from the FFA household sector with survey-based estimates from the 1989, 1992, 1995, and 1998 Surveys of Consumer Finances (SCF)–the most comprehensive survey on household wealth. Individual households are asked detailed questions regarding the current status of their financial assets and liabilities. Moreover, to provide precise estimates of the highly skewed components of wealth, the SCF oversamples the highest income individuals and compensates for statistically high nonresponse rates among wealthy families by using data from tax files to adjust the sampling weights in the population estimates (Kennickell, McManus, and Woodburn, 1996). This procedure minimizes the known biases found in wealth statistics derived from other surveys, such as the Survey of Income and Participation Program (SIPP), the Panel Study of Income Dynamics, and the Consumer Expenditure Survey. …

the complex structure of the FFA, with all sectors, in a sense, leading to the household sector, and the vast disparate sources that are used as inputs–about 3500 data series are currently used to compile the Flow of Funds Accounts–make calculating even the most simplistic standard error a daunting, if not impossible, task. …

[earlier] studies generally did not fully adjust the FFA and SCF measures to place them on a definitionally equivalent basis. …

The FFA and SCF estimates of total liabilities differ by 1.4 percent in 1989, 0.4 percent in 1992, 10.4 percent in 1995, and 4 percent in 1998. Much of the wider discrepancy between the FFA and SCF liability estimates in 1995 and 1998 owes to a significant difference between the two measures of consumer credit. After nearly exact matches in 1989 and 1992, the two measures diverged, particularly in 1995, with the FFA estimate of consumer credit growing much faster than the SCF estimate. On the asset side, the differences between the two measures of total assets are 2.1 percent in 1989, 7.2 percent in 1992, 9.3 percent in 1995, and 0.9 percent in 1998. For some asset categories, such as, mutual fund shares, owner-occupied real estate, and checkable deposits, the FFA and SCF estimates are very close in 1989 and 1992, but move apart in 1995 and 1998. For other assets, such as saving deposits and corporate equity, considerable differences, although smaller than those documented in previous studies, remain due to unresolved definitional issues or measurement error in either data set. …

Before one can compare the SCF and FFA asset estimates, several adjustments to both measures are necessary. The most crucial adjustments account for the broader inclusion of assets in the FFA and the different treatments of IRA/Keogh accounts and employer-sponsored private pension assets in the FFA and the SCF. The household asset estimates as reported in the FFA include assets of nonprofit organizations, unit investment trusts, and investment management accounts, none of which are reported in directly held assets in the SCF.5 These institutional assets account for between 5-1/2 percent and 7-1/2 percent of the FFA household sector's total financial assets over the 1989 to 1998 period. …

if adjusted for definitional differences, the SCF and FFA estimates of home mortgage debt are fairly close, although they do move apart a bit in 1995 and 1998, but still remain to within close to one SCF standard error. …

After careful adjustments for conceptual and definitional differences in the FFA and SCF transaction categories, I find that the FFA and SCF estimates for total liabilities and total assets are extremely close in 1989. Indeed, the 1989 FFA estimates of home mortgage debt, consumer credit, U.S. government securities, corporate and foreign bonds, municipal securities, mutual fund shares, publicly traded corporate equity, money market mutual funds, equity in noncorporate business, and owner-occupied real estate are all within one standard error of the SCF estimates. The match up between the FFA and SCF estimates becomes progressively worse for the remaining survey years. By 1998, only the FFA estimates of home mortgage debt, municipal securities, and equity in noncorporate business are within one standard error of the SCF estimates.

The main trouble between the SCF and FFA estimates primarily lies in the consistent and puzzling offsetting differences between the SCF and FFA estimates for time and saving deposits and the value of closely held corporate equity. The FFA shows higher time and saving deposits than the SCF, while the SCF shows higher closely held corporate equity.”

Overview of results from 2004 survey

Feb 2006. Summary article from Federal Reserve Bulletin.

http://www.federalreserve.gov/pubs/oss/oss2/2004/bull0206.pdf

“Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances. Brian K. Bucks, Arthur B. Kennickell, and Kevin B. Moore”

“The Federal Reserve Board’s Survey of Consumer Finances for 2004 provides insights into changes in family income and net worth since the 2001 survey. The survey shows that, over the 2001–04 period, the median value of real (inflation-adjusted) family income before taxes continued to trend up, rising 1.6 percent, whereas the mean value fell 2.3 percent. … median real family net worth in the 2001−04 period increased 1.5 percent, but mean net worth rose 6.3 percent. …

The survey collects information on families’ total income before taxes for the calendar year preceding the survey. But the bulk of the data cover the status of families as of the time of the interview, including detailed information on their balance sheets and use of financial services as well as on their pensions, labor force participation, and demographic characteristics. Except in a small number of instances (see the appendix for details), the survey questionnaire has changed in only minor ways since 1989, and every effort has been made to ensure the maximum degree of comparability of the data over time.

The need to measure financial characteristics imposes special requirements on the sample design for the survey. The SCF is expected to provide reliable information both on attributes that are broadly distributed in the population (such as homeownership) and on those that are highly concentrated in a relatively small part of the population (such as closely held businesses). To address this requirement, the SCF employs a sample design, essentially unchanged since 1989, consisting of two parts: a standard, geographically based random sample and a special over-sample of relatively wealthy families. Weights are used to combine information from the two samples to make estimates for the full population. In the 2004 survey, 4,522 families were interviewed, and in the 2001 survey, 4,449 were interviewed. …

The principal detailed tables describing asset and debt holdings focus on the percent of various groups that have such items and the median holding for those that have them. This conditional median is chosen to give a sense of the ‘typical’ holding. Generally, when one deals with data that exhibit very large values for a relatively small part of the population—as is the case for many of the items considered in this article—estimates of the median are often statistically less sensitive to such outliers than are estimates of the mean. …

The definition of ‘family’ used throughout this article differs from that typically used in other government studies. In the SCF, a household unit is divided into a ‘primary economic unit’ (PEU)—the family—and everyone else in the household. The PEU is intended to be the economically dominant single individual or couple (whether married or living together as partners) and all other persons in the household who are financially interdependent with that economically dominant person or couple. This report also designates a head of the PEU, not to convey a judgment about how an individual family is structured but as a means of organizing the data consistently. If a couple is economically dominant in the PEU, the head is the male in a mixed-sex couple and the older person in a same-sex couple. If a single individual is economically dominant, that person is designated as the family head in this report.”

Main tables (most are broken down by percentile ranking in income, age of head of household (HOH), education of HOH, Race of respondent, work status of HOH, Region, owner/renter, and percentile ranking of net worth):

  • Before-tax family income, percentage of families that saved, and distribution of families, by selected characteristics of families, 1995–2004 surveys
  • Family net worth, by selected characteristics of families, 1995–2004 surveys
  • Family holdings of financial assets, by selected characteristics of families and type of asset, 2001 and 2004 surveys
  • Direct and indirect family holdings of stock, by selected characteristics of families, 1995–2004 surveys
  • Family holdings of nonfinancial assets and of any asset, by selected characteristics of families and type of asset, 2001 and 2004 surveys
  • Family holdings of unrealized capital gains, by selected characteristics of families, 1995–2004 surveys
  • Family holdings of debt, by selected characteristics of families and type of debt, 2001 and 2004 surveys
  • Ratio of debt payments to family income (aggregate and median), share of debtor families with ratio greater than 40 percent, and share of debtors with any payment past due sixty days or more, 1995–2004 surveys

Debt increase by income, 1998 to 2004

Feb 2006. Summary article from Federal Reserve Bulletin.

http://www.federalreserve.gov/pubs/oss/oss2/2004/bull0206.pdf

“Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances. Brian K. Bucks, Arthur B. Kennickell, and Kevin B. Moore”

And

Jan 2003. Summary article from Federal Reserve Bulletin.

http://www.federalreserve.gov/pubs/oss/oss2/2001/bull0103.pdf

“Recent Changes in U.S. Family Finances: Evidence from the 1998 and 2001 Survey of Consumer Finances. By Ana M. Aizcorbe, Arthur B. Kennickell, and Kevin B. Moore”

Table of 'percent with debt' and 'median debt among those with debt', by income percentile and type of debt. (Note: 1998 was the first summary article with results classified by income percentile.)

Debt secured by primary residence

Percentile 1998 2001 2004
0-19.9% 11.2% / $27.2k 13.8% / $29.8k 15.9% / $37.0k
20-39.9% 23.9% / $40.3k 27.0% / $42.6k 29.5% / $53.3k
40-59.9% 43.7% / $47.9k 44.4% / $59.8k 51.7% / $78.0k
60-79.9% 63.5% / $70.8k 61.8% / $80.5k 65.8% / $97.0k
80-89.9% 73.6% / $87.6k 76.9% / $96.9k 67.8% / $133.0
90-100% 73.0% / $127.4k 75.4% / $142.7k 76.2% / $185.0

Any debt

Percentile 1998 2001 2004
0-19.9% 47.3% / $4.8k 49.3% / $5.5k 52.6% / $7.0k
20-39.9% 66.8% / $11.0k 70.2% / $12.2k 69.8% / $16.1k
40-59.9% 79.9% / $27.8k 82.1% / $31.0k 84.0% / $44.7k
60-79.9% 87.3% / $62.9k 85.6% / $66.4k 86.6% / $93.4k
80-89.9% 89.6% / $92.9k 91.4% / $103.1k 92.0% / $136.0
90-100% 88.1% / $137.3k 85.3% / $155.9k 86.3% / $209.0

Increase in debt by percentile of income, 1989 to 2004

25 May 2007. “Tables based on the public data”, table 13.

http://www.federalreserve.gov/pubs/oss/oss2/2004/scf2004home.html

The point of the table below is to look at increase in debt from 1989 to 2004, by income percentile. Note this assumes the percentile bands are comparable. Three measures are used: increase in the median among those who have debt, increase in the mean among those who have debt, and increase in the average across the whole group.

For each of 1989 and 2004, each cell gives median debt / fraction of families with debt, times mean debt for families with debt = average debt per family. All in 2004 $. (Number of families not given)

Percentile 1989 2004 Increase in median/mean/avg
0-19.9% $2.49k / .472*$7.72k = $3.64k $7.0k / .526*$25.0k = $13.15k 181% / 224% / 261%
20-39.9% $7.33k / .596*$18.4k = $10.97k $16.49k / .697*$42.5k = $29.62k 125% / 131% / 170%
40-59.9% $17.59k / .780*$32.4k = $25.27k $44.2k / .840*$69.6k = $58.46k 151% / 215% / 131%
60-79.9% $41.34k / .860*$57.5k = $49.45k $91.8k / .867*$108.1k = $93.72k 122% / 188% / 90%
80-89.9% $58.64k / .935*$75.8k = $70.87k $136.0k / .917*$156.6k = $143.6k 132% / 107% / 103%
90-100% $108.49k / .875*$152.2k = $133.18k $209.0k / .864*$297.5k = $257.04k 93% / 95% / 93%

High level view

28 Mar 2008. SCF home page.

http://www.federalreserve.gov/pubs/oss/oss2/scfindex.html

“The Survey of Consumer Finances (SCF) is a triennial survey of the balance sheet, pension, income, and other demographic characteristics of U.S. families. The survey also gathers information on the use of financial institutions. The links to the surveys provide summary results, codebooks and other documentation, and the publicly available data. For the 1983 and 1989 surveys, a separate Survey of Pension Providers (SPP) was conducted to obtain detailed technical information on the pensions of SCF particpants; data and documentation for the SPP appear under a separate link.”