Board begins 2004 Survey of Consumer Finances

Federal Reserve Bulletin, Summer, 2004

The Federal Reserve Board announced on May 25, 2004, that in June, it would begin a statistical study of household finances, the Survey of Consumer Finances, that will provide policymakers with important insight into the economic condition of all types of American families.

The survey, undertaken every three years since 1983, is being conducted for the Board by NORC, a social science research organization at the University of Chicago, through December 2004.

The data collected will provide a representative picture of what Americans own--from houses and cars to stocks and bonds--how and how much they borrow and how they bank. Past study results have been important in policy discussions regarding pension and social security reform, tax policy, deposit insurance reform, and a broad range of other areas.

"Although good overall information on the state of the major sectors of the economy is available regularly, our knowledge about the financial circumstances faced by different types of households is much more limited," Alan Greenspan, Chairman of the Board of Governors of the Federal Reserve System, said in a letter to prospective survey participants. "Our survey fills a key part of this gap," he said.

The 2004 survey will contain a new section on the pension entitlements that families have. Earlier versions of the survey have collected data separately on traditional defined-benefit pension plans and account-based plans, such as 401 (k) accounts. In recent years, classification and measurement of pensions have been complicated by the growth of pension arrangements that combine aspects of both types of plans--particularly defined benefit plans with a specified cash settlement option in lieu of regular retirement payments, such as in a cash balance plan. The new question sequence will focus more on attributes of plans instead of asking the survey participants to make rigid distinctions between abstract types of plans that they may not understand fully.

Participants in the study are chosen at random from seventy-nine areas across the United States, using a scientific sampling procedure. A representative of NORC contacts each potential participant personally to explain the study and request time for an interview.

"Let me assure you that protecting the privacy of survey participants has the highest priority in our data collection system," Mr. Greenspan said. NORC uses names and addresses only for the administration of the survey, and that identifying information will be destroyed at the close of the 2004 study. NORC is required never to give the names and addresses of participants to anyone at the Federal Reserve or anywhere else.

Information provided by survey participants is also protected by the Confidential Information Protection and Statistical Efficiency Act of 2002. This act prohibits the Federal Reserve or any of its employees or agents (including NORC) from using the information provided by a participant for any nonstatistical purpose, or from disclosing the information in a way that would identify the participant without the participant's consent. To help ensure compliance, the act includes strong criminal penalties for any person that violates the act's protections.

Summary results for the 2004 study will be published in early 2006 after all data from the survey have been assessed and analyzed.