Financially Fragile Households: Evidence and Implications

49 Pages Posted: 19 Apr 2011

See all articles by Annamaria Lusardi

Annamaria Lusardi

Stanford University - Stanford Institute for Economic Policy Research

Daniel Schneider

Princeton University

Peter Tufano

Harvard Business School; University of Oxford, Said Business School

Multiple version iconThere are 2 versions of this paper

Date Written: March 7, 2011


This paper examines households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. Using data from the 2009 TNS Global Economic Crisis survey, we document widespread financial weakness in the United States: Almost half of Americans report that they are incapable of coming-up with the funds necessary to deal with an ordinary financial shock. While financial fragility is more severe among those with low educational attainment and no financial education, families with children, those who suffered large wealth losses, and those who are unemployed, a sizable fraction of seemingly “middle class” Americans judge themselves to be financially fragile. We examine the coping methods people use to deal with shocks. While savings s used most often, relying on family and friends, using formal and alternative credit, increasing work hours, and selling items are also used frequently to deal with emergencies, especially for some subgroups. Household finance researchers must look beyond precautionary saving to understand how families cope with risk. We also find evidence of a pecking order of coping methods in which savings appears to be first in the ordering. Finally, the paper compares the levels of financial fragility and methods of coping among eight industrialized countries. While there are differences in coping ability across countries, there is general evidence of a consistent ordering of coping methods.

Suggested Citation

Lusardi, Annamaria and Schneider, Daniel and Tufano, Peter, Financially Fragile Households: Evidence and Implications (March 7, 2011). Netspar Discussion Paper No. 03/2011-013, Available at SSRN: or

Annamaria Lusardi (Contact Author)

Stanford University - Stanford Institute for Economic Policy Research ( email )

366 Galvez Street
John A. and Cynthia Fry Gunn Building
Stanford, CA CA 94305
United States


Daniel Schneider

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Peter Tufano

Harvard Business School ( email )

Soldiers Field Road
Morgan Hall 131
Boston, MA 02163
United States

University of Oxford, Said Business School

Park End Street
Oxford, OX1 1HP
Great Britain

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics