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Saturday, May 19 • 1:00pm - 2:30pm
G3a-A Refined Measure of Emergency Saving Adequacy in the SCF: Using a Food Demand Function to Estimate the Total Expenditures from the CE

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Kyoung Tae (KT) Kim, Hua Zan - A household is considered to have adequate emergency savings if they save enough liquid assets to cover at least 3 to 6 months of living expenses. Empirical studies, however, are often limited by the lack of quality data of both financial assets and expenditure. Most studies used income as the proxy for expenditure and compared it with liquid assets using the Survey of Consumer Finances (SCF) data. Such measure can lead to either an underestimation of emergency saving adequacy if most people spend less than income or an overestimation if most people spend more than their income. We proposed a refined measure of emergency saving adequacy by taking advantage of the expenditure data in the SCF and Consumer Expenditure Survey (CE). Specifically, we imputed the total household expenditure in SCF by estimating and inverting a food demand function in CE. Based on our refined measure, we found that 16.6-26.5% of Americans aged 25-64 had liquid assets to cover 3 to 6 months of expenses and over half of Americans aged 25-64 lived paycheck-by-paycheck.

Presenters
avatar for Kyoung Tae (KT) Kim

Kyoung Tae (KT) Kim

Assistant Professor, The University of Alabama


Saturday May 19, 2018 1:00pm - 2:30pm
Sand Key

Attendees (2)