Financially Fragile Households: Evidence and Implications

53 Pages Posted: 23 May 2011 Last revised: 24 Feb 2023

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: May 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: Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans. If we consider the respondents who report being certain or probably not able to cope with an ordinary financial shock of this size, we find that nearly half of Americans are financially fragile. 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 also judge themselves to be financially fragile. We examine the coping methods people use to deal with shocks. While savings is 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 savings 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 (May 2011). NBER Working Paper No. w17072, Available at SSRN:

Annamaria Lusardi (Contact Author)

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

366 Galvez Street
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Daniel Schneider

Princeton University ( email )

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Princeton, NJ 08544-0708
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Peter Tufano

Harvard Business School ( email )

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Boston, MA 02163
United States

University of Oxford, Said Business School

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Oxford, OX1 1HP
Great Britain

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