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

28 Pages Posted: 10 May 2014

See all articles by Gregory Huber

Gregory Huber

Yale University - Department of Political Science

Jacob S. Hacker

Yale University - Department of Political Science; Yale University - Institution for Social and Policy Studies

Austin Nichols

The Urban Institute

Philipp Rehm

Ohio State University (OSU) - Department of Political Science

Mark Schlesinger

Yale University - School of Medicine

Robert G. Valletta

Federal Reserve Bank of San Francisco; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 2014

Abstract

This article presents the Economic Security Index (ESI), a new measure of economic insecurity. The ESI assesses the individual‐level occurrence of substantial year‐to‐year declines in available household resources, accounting for fluctuations not only in income but also in out‐of‐pocket medical expenses. It also assesses whether those experiencing such declines have sufficient liquid financial wealth to buffer against these shocks. We find that insecurity - the share of individuals experiencing substantial resource declines without adequate financial buffers - has risen steadily since the mid‐1980s for virtually all subgroups of Americans, albeit with cyclical fluctuation. At the same time, we find that there is substantial disparity in the degree to which different subgroups are exposed to economic risk. As the ESI derives from a data‐independent conceptual foundation, it can be measured using different panel datasets. We find that the degree and disparity by which insecurity has risen is robust across the best available sources.

Keywords: household income, household risk, medical spending, volatility, wealth

JEL Classification: D31, I14, J11

Suggested Citation

Huber, Gregory and Hacker, Jacob S. and Nichols, Austin and Rehm, Philipp and Schlesinger, Mark and Valletta, Robert G., The Economic Security Index: A New Measure for Research and Policy Analysis (May 2014). Review of Income and Wealth, Vol. 60, pp. S5-S32, 2014. Available at SSRN: https://ssrn.com/abstract=2435360 or http://dx.doi.org/10.1111/roiw.12053

Gregory Huber

Yale University - Department of Political Science ( email )

Box 208269
New Haven, DC 06520-8269
United States

Jacob S. Hacker

Yale University - Department of Political Science ( email )

Box 208269
New Haven, DC 06520-8269
United States

HOME PAGE: http://pantheon.yale.edu/~jhacker

Yale University - Institution for Social and Policy Studies ( email )

89 Trumbull Street
New Haven, CT 06515
United States

Austin Nichols

The Urban Institute ( email )

2100 M Street, NW
Washington, DC 20037
United States

Philipp Rehm

Ohio State University (OSU) - Department of Political Science ( email )

Columbus, OH 43210
United States

Mark Schlesinger

Yale University - School of Medicine ( email )

Department of Epidemiology and Public Health
60 College Street, P.O. Box 208034
New Haven, CT 06520-8034
United States
203-785-4619 (Phone)
203-785-6287 (Fax)

Robert G. Valletta

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States
415-974-3345 (Phone)
415-977-4084 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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