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The Economic Security Index: A New Measure for Research and Policy Analysis

  • Hacker, Jacob S.

    ()

    (Yale University)

  • Huber, Gregory Alain

    ()

    (Yale University)

  • Nichols, Austin

    ()

    (Urban Institute)

  • Rehm, Philipp

    ()

    (Ohio State University)

  • Schlesinger, Mark

    ()

    (Yale University)

  • Valletta, Robert G.

    ()

    (Federal Reserve Bank of San Francisco)

  • Craig, Stuart

    (Yale University)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6946.

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Length: 56 pages
Date of creation: Oct 2012
Date of revision:
Publication status: published in: Review of Income and Wealth, 2014, 60 (S1)
Handle: RePEc:iza:izadps:dp6946
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  1. Gerlinde Fellner & Matthias Sutter, 2009. "Causes, Consequences, and Cures of Myopic Loss Aversion - An Experimental Investigation," Economic Journal, Royal Economic Society, vol. 119(537), pages 900-916, 04.
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  10. 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, March.
  11. 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.
  12. Olga gorbachev, 2007. "Did Household Consumption Become More Volatile?," ESE Discussion Papers 161, Edinburgh School of Economics, University of Edinburgh.
  13. 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.
  14. Nichols, Austin, 2008. "Trends in Income Inequality, Volatility, and Mobility Risk," IRISS Working Paper Series 2008-10, IRISS at CEPS/INSTEAD.
  15. 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.
  16. 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.
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