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The Economic Security Index: a new measure for research and policy analysis

  • Jacob S. Hacker
  • Gregory Huber
  • Austin Nichols
  • Philipp Rehm
  • Mark Schlesinger
  • Robert G. Valletta
  • Stuart Craig

This paper presents the Economic Security Index (ESI), a new, more comprehensive measure of economic insecurity. By combining data from multiple surveys, we create an integrated measure of volatility in available household resources, accounting for fluctuations in income and out-of pocket medical expenses, as well as financial wealth sufficient to buffer against these shocks. We find that insecurity has risen steadily since the mid-1980s for virtually all subgroups of Americans, albeit with cyclical ups and downs. We also find, however, that there is substantial disparity in the degree to which different groups are exposed to economic risk. As the ESI derives from a data-independent conceptual foundation, it can be measured using different data sources. We find that the degree and disparity by which insecurity has risen is robust across these sources.

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Paper provided by Federal Reserve Bank of San Francisco in its series Working Paper Series with number 2012-21.

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Date of creation: 2012
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Handle: RePEc:fip:fedfwp:2012-21
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  1. Christopher D. Carroll & Karen E. Dynan & Spencer D. Krane, 2003. "Unemployment Risk and Precautionary Wealth: Evidence from Households' Balance Sheets," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 586-604, August.
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  3. Austin Nichols & Melissa M. Favreault, 2008. "The Impact of Changing Earnings Volatility on Retirement Wealth," Working Papers, Center for Retirement Research at Boston College wp2008-14, Center for Retirement Research, revised Dec 2008.
  4. Hacker, Jacob S., 2008. "The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream," OUP Catalogue, Oxford University Press, number 9780195335347, December.
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  11. Thomas Cusack & Torben Iversen & Philipp Rehm, 2006. "Risks at Work: The Demand and Supply Sides of Government Redistribution," Oxford Review of Economic Policy, Oxford University Press, vol. 22(3), pages 365-389, Autumn.
  12. Annamaria Lusardi & Daniel Schneider & Peter Tufano, 2011. "Financially Fragile Households: Evidence and Implications," CeRP Working Papers 116, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  13. Tullio Jappelli & Luigi Pistaferri, 2010. "The Consumption Response to Income Changes," NBER Working Papers 15739, National Bureau of Economic Research, Inc.
  14. Lars Osberg & Andrew Sharpe, 2005. "How Should We Measure The "Economic" Aspects Of Well-Being?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(2), pages 311-336, 06.
  15. Dickens, William T, 1984. "Differences between Risk Premiums in Union and Nonunion Wages and the Case for Occupational Safety Regulation," American Economic Review, American Economic Association, vol. 74(2), pages 320-23, May.
  16. Agell, Jonas, 1999. "On the Benefits from Rigid Labour Markets: Norms, Market Failures, and Social Insurance," Economic Journal, Royal Economic Society, vol. 109(453), pages F143-64, February.
  17. Gabor Kezdi & Purvi Sevak, 2004. "Economic Adjustment of Recent Retirees to Adverse Wealth Shocks," Working Papers wp075, University of Michigan, Michigan Retirement Research Center.
  18. Melvin Stephens, 2001. "The Long-Run Consumption Effects Of Earnings Shocks," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 28-36, February.
  19. Mughan, Anthony & Lacy, Dean, 2002. "Economic Performance, Job Insecurity and Electoral Choice," British Journal of Political Science, Cambridge University Press, vol. 32(03), pages 513-533, July.
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