Board of Governors of the Federal Reserve System

June 21, 2021

Improving the Measurement of Racial and Ethnic Disparities in the Survey of Consumer Finances

Kevin B. Moore and Karen M. Pence

The Survey of Consumer Finances (SCF) is one of the main data sources in the United States for assessing and analyzing differences in wealth and financial well-being across families. In recent years, the SCF estimates of racial and ethnic wealth gaps have garnered considerable attention, in part because these disparities are so large and persistent. In 2019, for example, the median wealth of White families was five times that of Hispanic or Latino families and eight times that of Black families.¹ This relationship is essentially unchanged since 1995. The SCF microdata also reveal how these differences vary across subsets of families. For example, among families with a college degree, median wealth for White families in 2019 was four to five times as large as median wealth for Black and Hispanic or Latino families (table 1).

Table 1. Median and Mean Wealth, by Race/Ethnicity and Education

The SCF data have some limitations, however, for measuring racial and ethnic disparities and analyzing their causes and consequences. In particular, the number of minority families interviewed by the survey is small enough that the wealth and financial well-being of Asian families cannot be reliably estimated. ² Estimates are available for Black and Hispanic or Latino families overall and for certain subsets, but for other subsets the sample size is too small to provide robust estimates. As was recently announced, the 2022 SCF will address these limitations by increasing the sampling of minority families.

Since 1983, the SCF sample design has taken into account the highly skewed U.S. wealth distribution, in which the wealthiest 1 percent of families hold a disproportionate share of total wealth.³ Since a normal random sample is statistically unlikely to capture enough of these families to measure their wealth accurately, the SCF consists of two samples. The first is designed to be representative of the United States as a whole (the "area probability," or AP, sample) and the second is designed to disproportionately include wealthy families (the "list" sample). The two samples are combined in the final dataset, and sample weights are created to make the data nationally representative.⁴

In 2022, the survey will keep this dual-sample design, but will adjust the AP sample so that minority families are oversampled. We expect the raw number of Black families in the AP sample to increase from roughly 700 to about 900, Hispanic or Latino families from around 500 to 650, and Asian families from less than 200 to around 450. The overall sample size of the AP sample will remain at 4,500 families, and the list sample of 1,500 families will be unchanged. Since the overall size of the AP sample will not increase, there may be some increase in the standard errors of estimates for White non-Hispanic families. However, as these families make up the majority of the sample, researchers should still be able to estimate racial and ethnic wealth gaps or other statistics of interest with statistical precision.

This oversample is the latest step in an evolution over the past decades that has already enhanced the SCF's ability to measure and analyze racial and ethnic disparities. Starting with the 2010 SCF, the AP sample size increased by about 55 percent, which correspondingly increased the raw number of minority families in the sample by about 75 percent. Meanwhile, as minorities have become a larger share of the U.S. population, they have become a larger share of the SCF sample. From 1989 to 2019, the raw share of minority families in the data rose from 19 percent to about 31 percent.

The recent announcement indicated that the 2022 SCF data, including the minority oversample, will be released to the public in the fall of 2023. As is customary, the Federal Reserve will also release at that time summary tables and analytic pieces that describe trends in the data. The data will also be incorporated into the Distributional Financial Accounts, which provide quarterly estimates of the distribution of wealth split by numerous characteristics including race and ethnicity, and will be used by Federal Reserve staff for economic monitoring, analysis, and forecasting.⁵ We anticipate that the data will also spark and enable further work by outside researchers that sheds light on the causes and consequences of racial and ethnic disparities.

References
Batty, Michael, Jesse Bricker, Joseph Briggs, Elizabeth Holmquist, Susan McIntosh, Kevin Moore, Eric Nielsen, Sarah Reber, Molly Shatto, Kamila Sommer, Tom Sweeney, and Alice Henriques Volz (2019). "Introducing the Distributional Financial Accounts of the United States," Finance and Economics Discussion Series 2019-017. Washington: Board of Governors of the Federal Reserve System,

Bhutta, Neil, Jesse Bricker, Andrew C. Chang, Lisa J. Dettling, Sarena Goodman, Joanne W. Hsu, Kevin B. Moore, Sarah Reber, Alice Henriques Volz, and Richard A. Windle (2020). "Changes in U.S. Family Finances from 2016 to 2019: Evidence from the Survey of Consumer Finances (PDF)," Federal Reserve Bulletin 106(5).

Bhutta, Neil, Andrew C. Chang, Lisa J. Dettling, and Joanne W. Hsu (2020). "Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances," FEDS Notes. Washington: Board of Governors of the Federal Reserve System, September 28.

Bricker, Jesse, Alice Henriques, and Kevin Moore (2017). "Updates to the Sampling of Wealthy Families in the Survey of Consumer Finances," Finance and Economics Discussion Series 2017-114. Board of Governors of the Federal Reserve System.

Bricker, Jesse, Sarena Goodman, Kevin B. Moore, and Alice Henriques Volz (2020). "Wealth and Income Concentration in the SCF: 1989–2019," FEDS Notes. Washington: Board of Governors of the Federal Reserve System, September 28.

Dettling, Lisa, Joanne W. Hsu, Lindsay Jacobs, Kevin B. Moore, and Jeffrey P. Thompson (2017). "Recent Trends in Wealth-Holding by Race and Ethnicity: Evidence from the Survey of Consumer Finances," FEDS Notes. Washington: Board of Governors of the Federal Reserve System, September 27.

1. See Bhutta, Chang, Dettling, and Hsu (2020) and Dettling, Hsu, Jacobs, Moore, and Thompson (2017) for more information on racial and ethnic wealth disparities as measured in the SCF. Return to text

2. A family is defined as "minority" if the family member who answers the survey self-identifies as anything other than White non-Hispanic. A more detailed description of racial and ethnic identification in the SCF can be found in Bhutta, Bricker, Chang, Dettling, Goodman, Hsu, Moore, Reber, Volz, and Windle (2020). Return to text

3. In 2019, the wealthiest 1 percent of families held about a third of total wealth. See Bricker, Goodman, Moore, and Volz (2020). Return to text

4. For more information on the SCF sample design, see Bhutta, Bricker, Chang, Dettling, Goodman, Hsu, Moore, Reber, Volz, and Windle (2020) and Bricker, Henriques, and Moore (2017). Return to text

5. For more information on the Distributional Financial Accounts, see Batty, Bricker, Briggs, Holmquist, McIntosh, Moore, Nielsen, Reber, Shatto, Sommer, Sweeney, and Volz (2019). Return to text