Alice M. Henriques

Analysis of Wealth Using Micro and Macro Data: A Comparison of the Survey of Consumer Finances and Flow of Funds Accounts

Researchers use different types of household balance sheet data to study different aspects of lifecycle saving and wealth accumulation behavior. Macro data from the Flow of Funds Accounts (FFA) are produced at a quarterly frequency and are available in a timely manner, but they can only be used to study the behavior of the household sector as a whole. Micro data from the Survey of Consumer Finances (SCF) are available every three years and only with a lag, but they can be used to address questions that involve differences in behavior over time and across various types of households. Despite the very different approaches to estimating household net worth, the two data sets show the same general patterns wealth changes over the past twenty-five years. Areas where the FFA and SCF diverge in aggregate levels — in categories such as owner-occupied housing, noncorporate equity, and credit cards — may be explained by methodological decisions applied in the production of the data. Those differences do not fundamentally alter ones perception of household wealth dynamics in the period leading up to and following the Great Recession.

The Effect of Shocks to College Revenues on For-Profit Enrollment: Spillover from the Public Sector

Between 2000 and 2010, U.S. public postsecondary schools experienced widespread and uneven changes in funding from state and local appropriations. We estimate that statewide funding cuts lead to a decrease in public attendance that is offset by an increase in for-profit attendance, with no change in overall enrollment rates. We document a corresponding increase in borrowing, driven by both a shift in attendance toward a higher-borrowing sector and public institutions price adjusting to offset losses in revenue. Finally, we examine potential channels underlying these results and detect meaningful changes in public universities’ tuition, faculty, and competitive admissions slots.

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 type of pension coverage occurred within--not just across--income groups, (3) relative to previous cohorts and a counterfactual lifecycle benchmark, the recent decline in retirement plan participation and defined contribution (DC) retirement account balance-to-income ratios is concentrated among younger families and lower-income families.

Where Credit is Due: The Relationship between Family Background and Credit Health

Using a novel dataset that links an individual’s background, education, and federal financial aid participation to her future credit records, we document that, even though it is not, and cannot be, used by credit agencies in assigning risk, family background is a strong predictor of early-career credit health (that is, an individual’s credit score when she is around 30 years old). This relationship persists even after controlling for achievement, a range of postsecondary schooling variables (e.g., educational attainment, institutional quality, undergraduate borrowing), and key elements of early credit histories (e.g., default on educational loans). Interestingly, undergraduate borrowing, which is not underwritten, correlates with background and appears to explain some of the difference in scores. In light of the many important contexts in which credit scores are relied upon to evaluate consumers (e.g., lending, insurance, employment), our study offers a new dimension in understanding the transmission of socioeconomic status across generations.

On Intergenerational Immobility : Evidence that Adult Credit Health Reflects the Childhood Environment

Using a novel dataset that links socioeconomic background to future credit, postsecondary education, and federal student loan and grant records, we document that, even though it is not and cannot be used by credit agencies in assigning risk, background is a strong predictor of adult credit health. A relationship remains upon inclusion of achievement, attainment, and debt management metrics. These findings reveal a new dimension along which childhood circumstances persist into adulthood and imply that the many important contexts in which credit scores are relied upon to evaluate individuals (e.g., lending, insurance, employment) may be helping to preserve inherited inequities.

Updates to the Sampling of Wealthy Families in the Survey of Consumer Finances

Participation in household surveys has fallen over time, making it harder to produce a household survey-like the Survey of Consumer Finances (SCF)-in a timely manner. To address these challenges, the reference year of the sampling frame data for the 2016 SCF wealthy oversample was shifted back one year, allowing the oversample to be selected earlier than the past. In implementing this change, though, we risk identifying an outdated set of families and introducing variability in the sampling process. However, we show that the set of families selected in the new frame are observationally equivalent to those that would have been selected from a past frame, and that the increased variability of wealth estimates is compensated-for with the use of more comprehensive data than in the past. Other aspects of the SCF sampling process are revisited, too. We continue to find support for using permanent income in the sampling process, rather than annual income. We also estimate the geographic distribution of wealthy families and show that the current distribution is similar to the past. We propose adding one geographic area to the oversample, though, and supplementing by 100 the set of sampled families.

Has Tax-Preferred Retirement Saving Offset Rising Wealth Concentration?

The share of wealth owned by top wealth-holders in the U.S. has been rising over the past few decades, though there is some debate about exactly how concentrated wealth is, and how fast those top wealth shares are rising.

The Role of Social Security in Overall Retirement Resources: A Distributional Perspective

In this note, we first present trends in participation in employment-related retirement plans, and then provide analysis for one birth cohort, nearing retirement age, of the impact of Social Security on retirement wealth.

The Role of State and Local Budget Cuts in the Run-Up of For-Profit Attendance and Student Borrowing: Spillovers between the Public and For-Profit Sectors

Between 2000 and 2010, U.S. public postsecondary schools experienced widespread decreases in appropriations funding. We document that every 10 percent cut in appropriations statewide increased for-profit attendance by 2 percent, owing to students who otherwise would have attended public institutions. We hypothesize that public institutions price adjusted in response to funding cuts which, together with a shift in attendance toward a higher-borrowing sector, induced greater reliance on debt financing among students. We estimate a corresponding increase in annual borrowing of 0.7 percent, driven by for-profit borrowers. Finally, we detect meaningful changes in public universities’ tuition, faculty, and competitive admissions slots.

The Increase in Wealth Concentration, 1989-2013

Wealth is highly concentrated in the United States, and top shares have been rising in recent decades, raising both normative and macroeconomic policy concerns.