Definitions from the SCF
Every three years, the Federal Reserve Board conducts a study called
the Survey of Consumer Finances. They collect
detailed financial data from several thousand households, and provide several
reports. The methodology is consistent and the resulting
reports are well respected.
Wealthandwant has taken the
data provided in several published reports and done additional
calculations from that data; copies of the spreadsheet are available
upon request; nothing shown here is done from the downloadable datasets
on the FRB website, though some of the findings here may suggest some
additional work that might be done from those datasets.
Because the reports are so clear and detailed, I've copied the definitional
data they provide. The sources here are
- Recent Changes in U.S. Family Finances:
Evidence from the 2001 and 2004 Survey of Consumer Finances (January,
2006);
- Currents and Undercurrents: Changes in
the Distribution of Wealth, 1989–2004 (January, 2006);
- A Rolling Tide: Changes in the Distribution of Wealth in
the U.S.,
1989-2001 (March, 2003)
Net Worth The
difference between assets and debts.
Assets Assets fall into two categories, financial
and nonfinancial.
Financial Assets. Financial
assets (FIN) include Transaction accounts (also known as
liquid assets, CD's, Savings Bonds, Bonds, Stocks, Pooled investment
funds (also known as Non-money market mutual funds), Retrement
accounts, Cash value life insurance, other managed assets and other
financial assets. (LIQ+CDS+SAVBND+BOND+STOCKS+NMMF+RETQLIQ+CASHLI+OTHMA+OTHFIN.)
Transaction Account (also known as Liquid Assets, abbreviated LIQ) "transaction account — a category comprising checking, savings, and
money market deposit accounts, money market mutual funds, and call
accounts at brokerages." (source: Recent Changes)
Certificates of Deposit (CDs) — interest-bearing
deposits with a set
term
Savings Bonds [SAVBND] — Holdings
of
savings bonds.
Bonds [BOND] Direct holdings of "bonds,
...
mortgage-backed
bonds and corporate or
foreign bonds ... tax-exempt and other government bills
and bonds(Direct holdings are those held outside of a managed asset such
as mutual funds, trusts, managed investment accounts, annuities, and tax-deferred
retirement accounts.)
Publicly Traded STOCKS Direct holdings
of
publicly traded stocks. (Direct holdings are those held outside of a managed
asset such as mutual funds, trusts, managed investment accounts, annuities, and
tax-deferred
retirement accounts.) "Families
may hold stocks in publicly traded companies
directly or
indirectly" ... " Among families that held stocks in 2004, 78.2 percent held
them through
a tax-deferred retirement account, 42.5 percent through direct holdings
of stocks, 29.4 percent through direct holdings of pooled investment
funds, and 9.7 percent through a managed investment account or an
equity interest in an annuity or trust (data not shown in the tables);
44.0 percent had ownership through more than one such means. Regarding
the distribution of the amount of directly and indirectly held
equities, 30.8 percent was held in tax-deferred retirement accounts,
37.1 percent as directly held stocks, 24.1 percent as directly held
pooled investment funds, and 8.0 percent as other managed assets."
Pooled Investment Funds,
also
known as Non-money Market Mutual Funds (NMMF)
— Mutual Funds other than money market mutual funds — "funds largely invested
in
either
stocks
or
government
bonds
...
funds
dedicated to a balance between stocks and bonds ... a
miscellaneous category of funds, which is composed of hedge funds,
exchange traded funds, and similar instruments "
"16. Pooled investment funds in
this article are taken to exclude money market mutual funds and
indirectly held mutual funds and to include all other types of directly
held pooled investment funds, such as traditional open-end and
closed-end mutual funds, real estate
investment trusts, and hedge funds." (footnote 16, Recent Changes)
Retirement Accounts [RETQLIQ] — IRAs,
Keogh accounts, and other pension accounts where withdrawals or loans may
be
taken (such as 401(k) accounts).
Tax-deferred retirement
accounts consist of IRAs, Keogh accounts, and certain
employer-sponsored accounts. Employer-sponsored accounts consist of
401(k), 403(b), and thrift saving accounts from current or past jobs;
other current job plans from which loans or withdrawals can be made;
and accounts from past jobs from which the family expects to receive
the account balance in the future. This definition of
employer-sponsored plans is intended to confine the analysis to
accounts that are portable across jobs and for which families will
ultimately have the option to withdraw the balance. IRAs and Keoghs may
be invested in virtually any asset, including stocks, bonds, pooled
investment funds, options, and real estate. In principle,
employer-sponsored plans may be invested in a similarly broad way, but,
in practice, individuals’ choices for investment are often limited to a
narrower set of assets.
"Two common and often particularly important types of
retirement plan
are not included in the assets described in this section: Social
Security (the federally funded Old-Age and Survivors’ Insurance
program, or OASI) and employer-sponsored defined-benefit plans."
Cash Value Life Insurance [CASHLI]
Cash value life insurance combines an investment vehicle with insurance coverage
in the form of a death
benefit.22 Some cash value life insurance policies offer a high degree
of choice in the way the policy payments are invested.
Other Managed Assets [OTHMA]
— other managed assets — personal annuities and
trusts
with an equity interest and managed investment accounts. To quote
Recent Changes, "The survey encourages
respondents who have trusts or managed investment
accounts that are held in relatively common investments to
report the components. Of the 4.2 percent of families that reported
having any kind of trust or managed investment account in 2004,
45.1 percent of them reported at least one of the component assets
separately. Of families that detailed the components in 2004, 87.2
percent reported some type of financial asset, 11.0 percent reported
a primary residence, 13.4 percent reported other real estate, 3.6
percent reported a business, and 2.7 percent reported another type of
asset ... In this article, the trust or managed
investment accounts included in other managed assets are those in which families
have an equity
interest and for which component parts were not separately
reported. ... In 2004,
79.0 percent of families with trusts or managed investment accounts had
an equity interest in those accounts. Annuities may be those in which
the family has an equity interest in the asset or in which there
is an entitlement only to a stream of income. The wealth figures in
this article include only the annuities in which there is an equity
interest.
Other Financial Assets [OTHFIN] — a
heterogeneous category including oil and gas leases, futures contracts, royalties,
proceeds from lawsuits or
estates in settlement, and loans made to others
Nonfinancial Assets [NFIN] includes Vehicles,
Primary Residence (also known as Houses), Other Residential Real Estate, Equity
in
Nonresidential real estate, Business Equity and Other nonfinancial
assets. [VEHIC+HOUSES+ORESRE+BUS+OTHNFIN.]
Vehicles [VEHIC] "The definition
of vehicles
here is a broad one that includes cars, vans,
sport-utility vehicles, trucks, motor homes, recreational
vehicles, motorcycles, boats, airplanes, and
helicopters. Of families owning any type of vehicle in
2004, 99.8 percent had a car, van, sport-utility vehicle,
motorcycle, or truck. The remaining types of vehicle were
held by 13.3 percent of families." A Rolling Tide used these words to
define it: "Market value of all personally owned automobiles, trucks, motor homes,
campers, motorcycles, boats, airplanes, helicopters, and miscellaneous vehicles."
Primary Residence [HOUSES] — Market
value of principal residences
Other
Residential Real Estate [ORESRE]
residential real
estate besides a primary residence (second homes, time shares, one- to
four-family rental properties, and other types of residential
property); Market value of residential real estate other than principal residences
Net Equity in Nonresidential
Real
Estate (NNRESRE):
Net equity in real estate other than HOUSES and ORESRE.
Net Equity in Privately
Held
Businesses (BUS) Net equity in closely held businesses.
"The forms of business in
this category are sole proprietorships, limited
partnerships, other types of partnership, subchapter S
corporations and other types of corporation that are
not publicly traded, limited liability companies, and
other types of private business. If the family surveyed
lived on a farm or ranch that was used at least in part for
agricultural business, the value of that part net of the
corresponding share of associated debts is included
with other business assets." " In the survey, self-employment
status and business ownership
are independently determined. Among the 11.5 percent of
families with a business in 2004, 69.9 percent had a
family head or the spouse or partner of the head who
was self-employed; among the 15.0 percent of families
in which either the head or the spouse or partner of the head
was self-employed, 53.5 percent owned a business (data not shown
in the tables)."
Other NonFinancial Assets [OTHFIN] — nonfinancial
assets (tangible items including artwork, jewelry, precious metals, antiques,
hobby equipment,
and collectibles)
DEBT: MRTHEL+INSTALL+OTHLOC+CCBAL+ODEBT.
Liabilities
Mortgage and Home Equity Loan (Primary
Residence) [MRTHEL] - debt
secured by the primary residence (hereafter,
home-secured debt); in A Rolling Tide, this definition: "Amount outstanding
on mortgages and home equity lines of credit secured by principal residences."
35. Home-secured debt consists
of first-lien and junior-lien mortgages and home equity
lines of credit secured by the primary residence.
For purposes of this article, first- and
junior-lien mortgages consist only of closed-end loans, that is, loans
typically with a
one-time extension of credit and a prearranged payment size and
frequency. As a type of open-end credit, home equity lines typically
allow credit extensions at the borrower’s discretion subject to a
prearranged limit and allow repayments at the borrower’s discretion
subject to a prearranged minimum size and frequency.
Other residential debt [RESDBT] Amount
outstanding on mortgages secured by residential real estate other than a principal
residence.
Installment Debt [INSTALL] Amount
outstanding
on installment debt. "The
majority of installment borrowing is related to the purchase of a vehicle (data
not shown in the tables); in
2004, such borrowing accounted for 55.5 percent of the total amount
owed (54.8 percent in 2001). The second-largest use of installment
borrowing is for education-related expenses. Balances on loans for this
purpose in 2004 made up 26.0 percent of total installment debt; the
comparable figure for 2001 had been 22.2 percent.
39. The term ‘‘installment
borrowing’’ in this article describes
closed-end consumer loans, that is, those that typically have fixed
payments and a fixed term. Examples are automobile loans, student
loans, and loans for furniture, appliances, and other durable goods."
Other Lines of Credit [OTHLOC] Amount outstanding
on lines of credit other than home equity lines of credit.
Credit Card Balance [CCBAL] - Amount outstanding
on credit cards.
40. In this article, credit card
balances consist of balances on bank-type cards (such as Visa,
MasterCard, and Discover, and Optima and other American Express cards
that routinely allow carrying a balance), store cards or charge
accounts, gasoline company cards, so-called travel and entertainment
cards (such as American Express cards that do not routinely allow
carrying a balance and Diners Club), other credit cards, and revolving
store accounts that are not tied to a credit card. Balances exclude
purchases made after the most recent bill was paid.
Other Debt ODEBT "Amount outstanding on
miscellaneous debts (e.g., debts to family members, borrowing against insurance
policies or pension accounts, margin debt, etc.)."
From 2001 to 2004, the proportion of families that held other types of
debt edged up 0.4 percent, to 7.6 percent.42 In 2004, 0.5 percent of
families had a margin loan, 3.5 percent had a loan against a pension
from a current job of the family head or that person’s spouse or
partner, 1.6 percent had a loan against a cash value life insurance
policy, and 2.7 percent had another miscellaneous type of loan (data
not shown in the tables).
42. The ‘‘other debt’’ category
comprises loans on cash value life insurance policies,
loans against pension accounts, borrowing on margin
accounts, and a miscellaneous category largely comprising personal
loans not explicitly categorized elsewhere.
EQUITY: Total value of direct and indirect
stock holdings (included in STOCKS
and RETQLIQ).*
(*Direct holdings are those held outside of a managed asset such as mutual funds,
trusts, managed investment accounts, annuities, and tax-deferred retirement accounts.)
INCOME: Total income for the year preceding
the survey year. "To
measure income, the interviewers request information on the family’s
cash income, before taxes, for the full calendar year preceding the survey.
The components of income in the SCF are wages; self-employment and business
income; taxable and tax-exempt interest; dividends; realized capital gains;
food stamps and other, related support programs provided by government; pensions
and withdrawals from retirement accounts; Social Security; alimony and other
support payments; and miscellaneous sources of income for all members of
the primary economic unit in the household." (Recent Changes, footnote 2.)
FAMILY The definition
of ‘‘family’’ used
throughout this article differs from that typically used in other government
studies. In the
SCF, a household unit is divided into a ‘‘primary economic unit’’
(PEU) — the family — and everyone else in the household. The PEU
is
intended to be the economically dominant single individual or couple
(whether married or living together as partners) and all other persons
in the household who are financially interdependent with that
economically dominant person or couple.
This report also designates a head of the PEU, not to convey a judgment
about how an individual family is structured but as a means of
organizing the data consistently. If a couple is economically dominant
in the PEU, the head is the male in a mixed-sex couple and the older
person in a same-sex couple. If a single individual is economically
dominant, that person is designated as the family head in this report.
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