Financial Capability of American Adults: Insights from the American Life Panel
Marco Angrisani, Arie Kapteyn, and Annamaria Lusardi
FINRA Investor Education Foundation | January 2017
Summary:While providing a wide range of financial capability indicators, the National Financial Capability Study (NFCS) lacks information about important determinants of financial outcomes, such as individuals’ health and cognition, and does not offer a precise, quantitative assessment of critical variables, such as household income, the value of financial and real estate assets and the level of debt exposure. In 2012, the FINRA Investor Education Foundation funded the administration of the NFCS survey to a representative sample of 2,000 individuals selected from within the RAND American Life Panel (ALP), an online panel providing detailed information on American’s personal finances not available in the NFCS. This allowed us to obtain a richer set of socioeconomic variables for each respondent and, therefore, to more comprehensively document financial capability across U.S. households and its heterogeneity. This Brief describes the insights afforded by this unique data set. The NFCS assesses financial capability by looking at four key components: making ends meet, planning ahead, managing financial products and financial knowledge. We examine each of these components exploiting the wealth of household- and individual-level information available in the ALP.