Indicator: Economic security
Definition
Individuals reach median levels of wealth (net worth).
RECOMMENDED METRIC(S)
Percentage of individuals who reach median levels of wealth 10, 15, 20, and 30 years after completing their highest degree or leaving education (high school, workforce training, or postsecondary education)
Type(s) of Data Needed
Administrative data or surveysWhy it matters
Although minimum economic return and high earnings are important stepping stones, establishing financial security and building meaningful savings require individuals to accumulate wealth (that is, build net worth). Wealth allows individuals and families to withstand serious financial hardships, such as illness, unemployment, or divorce. Personal wealth is also associated with a variety of positive outcomes, including home ownership, health, and intergenerational educational attainment. Wealthier families can save more for their children’s postsecondary education, establishing an intergenerational foundation for economic mobility and security. However, there are significant racial disparities in wealth accumulation: one analysis finds that the gap in median wealth between Black and White college-educated adults is more than $150,000 and widens to more than $200,000 for those with a post-college degree.
What to know about measurement
Our proposed measure is aspirational in nature, given a lack of quality administrative data to measure wealth at scale. Killewald et al. describes a variety of challenges related to measuring net worth, including that there is no consensus on how best to operationalize it, and that the distribution of wealth is highly skewed. However, the authors also note advances in the availability of net worth data and describe nationally representative surveys that measure net worth on a regular basis at aggregate levels, including two that measure wealth annually: the Consumer Expenditure Survey and the Survey of Income and Program Participation. However, these sample only a small percentage of the U.S. population.
We also note an alternative definition of “security” frequently used in the field. Since 2013, the Federal Reserve Board has conducted the Survey of Household Economics and Decisionmaking (SHED), which asks about risks to households’ financial stability. The survey asks respondents to indicate (1) whether they have set aside emergency funds to cover expenses for three months and (2) whether they would be able to cover an immediate emergency cost of $400. The field often thinks of “financial security” in this way—as a more near-term measure of resilience against financial shocks. However, this definition is a lower bar than our proposed measure of median wealth, estimated to be above $100,000.
E-W Case Studies
Source frameworks
This indicator appeared in four source frameworks reviewed for this report. Our proposed indicator name and measure align with work by the Postsecondary Value Commission.
References
The framework's recommendations are based on syntheses of existing research. Please see the framework report for a list of works cited.