Finance and Economics Discussion Series: Data for paper 2011-17

# Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009

#### Figure 1. Distribution of wealth: 2007 vs. 2009

Figure 1 is framed by a y-axis labeled "cumulative distribution" and an x-axis labeled "dollars." Figure 1 shows the cumulative distribution function of 2009 wealth, represented with a solid line, and 2007 wealth, represented with a dashed line. The y-axis runs from 0 to 1 and tracks the cumulative distribution associated for each x-axis value. The x-axis is dollars of net wealth. Visually, both the 2009 wealth (the solid line) and the 2007 wealth (the dashed line) begin at values less than negative \$1,000,000. Both of the lines then begin to rise relatively quickly until negative \$1000 on the x-axis. Between negative \$1,000 and \$1,000 both lines still rise but at a much slower pace. For x-axis values greater than \$1,000, both lines begin a steep ascent until the lines generally plateau at x-axis values greater than \$1,000,000.

The 2009 wealth line rises faster than the 2007 wealth line, conveying that more families in 2009 are found with low dollar wealth. For example, for the x-axis value of \$0 the 2007 wealth line has risen to a height of nearly 0.10 on the y-axis. However, for the same x-axis value (\$0) the 2009 wealth line has risen to a height of roughly 0.15.

#### Figure 2. Quantile-difference: 2009 wealth- 2007 wealth.

Figure 2 is framed by a y-axis showing dollars in 2009 and an x-axis showing percentiles of net worth. One solid line describes the difference, in 2009 dollars, between the dollar value for each percentile of net worth in 2007 and the dollar value for each percentile of net worth in 2009. The line is always at a y-axis value less than zero. At the first percentile, the magnitude of the dollar difference shows greater than a \$100,000 loss. The line quickly rises to a peak near zero on the y-axis at roughly the 15th percentile, after which is begins a slow descent. The descent is interrupted briefly between the 60th and 70th percentiles and around the 90th percentile. At roughly the 80th percentile the line is again below negative \$100,000, where it continues to decline past negative \$5,000,000 at the highest net worth percentiles.

#### Figure 3. Density of changes in wealth.

Figure 3 is framed by a y-axis labeled "density" and an x-axis labeled "dollars." The y-axis shows the height of a histogram and the density of a kernel density function; the x-axis shows dollar value of net worth changes between 2007 and 2009. Two forms are present in the figure: a histogram and a kernel density function. Both forms show a bimodal distribution of wealth changes, with one mode lying in the negative x-axis range and another mode in the positive x-axis space. Both forms indicate that most of the mass lies in the negative x-axis (dollar change) space. The histogram shows a small mass at \$0 that the kernel density does not show.

#### Figure 4. Change in assets and debt as a share of 2007 wealth, by change in wealth percentile.

Figure 4 is framed by a y-axis labeled "percentage points" and an x-axis labeled "change in wealth percentile." The y-axis has a range from -100 to 100. The x-axis conveys families classified by the difference in their percentile rank in the wealth distribution in each of the two years of the survey (2007 and 2009). There are five classifications on the x-axis. From left to right there are (1) families whose rank in the wealth distribution declined by more than 10 percentile points, (2) families whose rank in the wealth distribution declined be between 3 to 10 percentile points, (3) families whose rank in the wealth distribution either declined by less than 3 or increased by less than 3 percentile points, (4) families whose rank in the wealth distribution improved by between 3 to 10 percentile points, (5) families whose rank in the wealth distribution improved by more than 10 percentile points.

For each of these five classifications, in Figure 4 we describe an interquartile range of the percentage point change in assets relative to net wealth (shown as the dark grey line with a dark grey dot) and percentage point change in debt relative to net wealth (shown as the light grey line and light grey dot). These interquartile ranges are presented as a dot-and-whisker plot, with a solid dot representing the median change. A whisker for the change at the 25th percentile and the 75th percentile are also shown, and the whiskers are connected to the dot by a solid line.

We begin with the change in assets relative to net wealth (the dark grey lines and dark grey dots). Moving from left to right on the x-axis and comparing across our groups, the medians (the dark grey dots) monotonically increase, as do the values for the 25th percentile and the 75th percentile whiskers. The median percentage point decline of the first group of families (those families whose rank in the wealth distribution declined by more than 10 percentile points) is roughly 75, and for the last group of families (those families whose rank in the wealth distribution improved by more than 10 percentile points) the median percentage point change is truncated at 100 in the Figure.

For the change in debt relative to net wealth (the light grey lines and light grey dots), the median change is always zero. Moving from left to right on the x-axis, the 75th percentile whisker value declines until the fifth and final groups of families (those families whose rank in the wealth distribution improved by more than 10 percentile points), where it edges up. The 25th percentile does not show a consistent trend across groups. Though the 25th percentile change generally is small, for the fifth group of families (those families whose rank in the wealth distribution improved by more than 10 percentile points) the decline in debt relative to net wealth is more than 100 percentage points (truncated in the Figure at -100).

#### Figure 5. Portfolio shares relative to assets, by year and change in wealth percentile.

Change in net worth percentile, 2007 to 2009 Year Value of home equity (primary residence minus mortgage debt) as a share of total assets Value of stock and business equity as a share of total assets Value of other assets as a share of total assets Value of mortgage debt as a share of total assets Value of non-mortgage debt as a share of total assets
(.,-10) 2007 20.7 25.7 28 25.6 -7.9
(.,-10) 2009 10.5 9.1 25 55.4 -18.8
[-10,-3) 2007 26 29.7 28.9 15.5 -3.6
[-10,-3) 2009 27 17.2 28.9 26.9 -8.9
[-3,3) 2007 16.9 50.1 27.3 5.6 -2.2
[-3,3) 2009 16.4 44.4 32.4 6.8 -3
[3,10) 2007 31.3 21.5 28.6 18.6 -6
[3,10) 2009 24.6 31.1 31.1 13.1 -4.6
[10,.) 2007 24.2 13.3 29.5 33 -13.2
[10,.) 2009 19.9 22.8 38.4 18.8 -6

This figure shows the shares of selected portfolio components relative to assets. The shares are shown separately for 2007 and 2009 for families grouped by the change in their rank in the net worth distribution.

#### Figure 6. 2009 Share that spend more (less) if value of assets goes up (down).

Figure 6. This figure shows the percent of families, categorized by the change in their rank in the 2007 and 2009 net worth distributions, that reported in the 2009 survey that they spend more if the value of assets go up and the share of families in each of the net-worth change groups that said they spend less if the value of assets go down. About 25 percent of families who experienced a decline or roughly maintained their rank in the net worth distribution said they spend more when the value of their assets increase. The corresponding share was lower--20 to 22 percent--for families that moved up in the net worth distribution by at least 3 percentiles. The share of families that reported they spend less if the value of their assets sink ranged between 59 and 65 percent across the net-worth percentile groups. The percentages were lowest for families with an absolute change of between three and ten percentile points, at 59 to 60 percent, and the percentage exceeded 63 percent for the other three percentile-change groups

#### Figure 7. Economic expectations by change in wealth percentile.

Figure 7 is framed by a y-axis labeled "percent" and an x-axis labeled "change in wealth percentile." The y-axis has a range from 0 to 60. As in Figure 4, the x-axis conveys families classified by the difference in their percentile rank in the wealth distribution in each of the two years of the survey (2007 and 2009). There are five classifications on the x-axis. From left to right there are (1) families whose rank in the wealth distribution declined by more than 10 percentile points, (2) families whose rank in the wealth distribution declined be between 3 to 10 percentile points, (3) families whose rank in the wealth distribution either declined by less than 3 or increased by less than 3 percentile points, (4) families whose rank in the wealth distribution improved by between 3 to 10 percentile points, (5) families whose rank in the wealth distribution improved by more than 10 percentile points.

The height of a dark grey bar represents the fraction of families in 2007 that expected that economic performance over the next 5 years will better than economic performance over the last 5 years. The height of a light grey bar represents the fraction of families in 2009 that expected that economic performance over the next 5 years will better than economic performance over the last 5 years.

Across all groups, the heights of the light grey bars are greater than the heights of the dark grey bars: the light grey bars range between 53 percent and 58 percent while the heights of the dark grey bars lie between 28 and 36 percent. The expectation within each group in 2009 is that the economy will be better over the next five years than in the previous five years. No distinct pattern is observed when comparing the 2009 expectations across the five groups. However, between 35% and 36% of families in 2007 that expected a better economy declined by more than 3 percentile points (the first two groups) in the wealth distribution. Of the families who either had small changes or improved their standing in the wealth distribution, only 28% to 29% expected a better economy over the next 5 years in 2007

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