Survey data

Using credit report records and data collected from several household surveys, we analyze changes in household debt and saving during the 2007 recession. We find that, while different segments of the population were affected in distinct ways, depending on whether they owned a home, whether they owned stocks, and whether they had secure jobs, the crisis’ impact appears to have been widespread, affecting large shares of households across all age, income, and education groups.

Doorways to Dreams Fund (D2D) is working to develop and test video games attractive to low-income and minority adults that will provide training in critical financial skills to improve financial decision-making. During the last year, D2D has conceived, developed and delivered the third and fourth titles in its growing library of financial literacy casual video games: Farm Blitz and Bite Club. In Farm Blitz, players take on the role of a farmer who must harvest crops to generate earnings, manage debt, save money, and weather unexpected emergencies.

The authors conducted a field experiment to evaluate the effect of receiving information about the retirement savings decisions of one's peers. Non-participants and low savers in one firm's 401(k) plan received letters enabling them to enroll or increase their plan contribution rate by returning a simple reply form. Some employees were randomly assigned to receive peer information: a statement about the fraction of their coworker peers who were participating in the plan or a statement about the fraction of their coworker peers who were contributing at least 6% of their salary to the plan.

This paper investigates the effectiveness of both videos and narratives in improving people's understanding of five basic concepts in financial planning: (1) compound interest; (2) inflation; (3) risk diversification; (4) tax treatment of retirement savings vehicles; and (5) employer matches of defined contribution savings plans. To that end the authors have administered a quiz about these concepts in the American Life Panel to establish a baseline of what respondents understand about these concepts.

This study surveyed thousands of Americans about their knowledge of retirement planning in general and Social Security in particular. It found that most Americans feel ill prepared for retirement and have a very low level of understanding of how the Social Security system works, when they should start claiming, and how much they are likely to receive in benefits. Respondents expressed a high level of trust in the Social Security Administration and would like more guidance from the agency on how to improve their retirement planning.

Abstract: We propose a novel approach to estimate household income uncertainty at various future horizons and characterize how the estimated uncertainty evolves over the life cycle. We measure income uncertainty as the variance of linear forecast errors conditional on information available to households prior to observing the realized income. This approach is semiparametric because we impose essentially no restrictions on the statistical properties of the forecast errors.

Prior research has demonstrated that defaults have a powerful influence on economic outcomes in a wide range of settings because individuals often passively accept default options. This paper examines the degree to which defaults become less powerful as they become more extreme. We study a firm with a defined contribution retirement savings plan in which employees are automatically enrolled at a 12% contribution rate, a rate that is considerably higher than those studied in previous work.

Merchant fees and reward programs generate an implicit monetary transfer to credit card users from non-card (or “cash”) users because merchants generally do not set differential prices for card users to recoup the costs of fees and rewards. On average, each cash-using household pays $149 to card-using households and each card-using household receives $1,133 from cash users every year. Because credit card spending and rewards are positively correlated with household income, the payment instrument transfer also induces a regressive transfer from low-income to high-income households in general.

Abstract: Recent fiscal policies have aimed to stimulate household spending. In 2008, most households received one-time economic stimulus payments. In 2009, most working households received the Making Work Pay tax credit in the form of reduced withholding; other households, mainly retirees, received one-time payments. This paper quantifies the spending response to these different policies and examines whether the spending response differed according to whether the stimulus was delivered as a one-time payment or as a flow of payments in the form of reduced withholding.

Financial literacy — the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being — is becoming more and more important as individuals and families become increasingly responsible for their own long-term financial well-being. Financial and economic literacy education programs have been shown to increase financial literacy and capability. Many federal agencies and departments have long-standing financial education programs, and, in recent years, steps have been taken to increase coordination of such efforts.