Beginning in February 2016, the EPIC team launched a survey aimed at understanding more about the views various experts and stakeholders have on income volatility, its impact on the financial lives of affected Americans, and how to best address it.
The survey was conducted in two pairs of questionnaires, 1A and 1B, and 2A and 2B. See the slides below for the results. Keep scrolling for more information on the survey methodology, and the range of organizations that made up our respondents.
● Report PDF
● Question #1
Why is volatility a problem?
"[Income volatility] produces great economic insecurity for many families. The combination of low income, low wealth and high income volatility is particularly toxic. Income volatility (especially unpredictable changes) for families with low resources creates even greater stress under conditions of deprivation." William Darity, Duke University
“There is some evidence to suggest that [income] variability puts families, and particularly children, at risk by making it difficult to make consistent investments in well-being and by increasing levels of stress.” Heather Hill, University of Washington
“[Volatility] creates enormous economic insecurity that creates stress and makes it hard to budget and plan for the future.” Susan Lambert, University of Chicago
“Low-income households experiencing income volatility are more vulnerable to eviction. They may find it more difficult to plan for the future or to save money, making it harder to deal with future dips in income as well as endangering retirement security and the opportunity to buy a home or attend college. … With employment and scheduling becoming more erratic, income volatility is an increasingly prominent problem.” Amy Traub, Demos
● Question #2
What drives volatility?
“While other factors may exacerbate the effects of labor market conditions on income volatility, I think the root cause is job quality.” Liz Ben-Ishai, Center for Law and Social Policy
“My sense is that the constellation of irregular hours, unpredictable schedules, and involuntary part time work drive a substantial amount of week-to-week and month-to-month income volatility.” Daniel Schneider, University of California, Berkeley
● Question #3
What requires further research?
“The extent to which fluctuations in income are predictable and/or chosen versus unpredictable and/or involuntary.” Christopher Carroll, Johns Hopkins University
"We need to understand the most pronounced drivers of income volatility, how those drivers differ across the income distribution and by demographic groups, and what their short- and long-term repercussions are to family financial health and economic mobility." Erin Currier, Pew Charitable Trusts
● Question #4
What new policies or products do you think will best address the problem?
“The policies likely to prove most effective at reducing income volatility and its ill effects are those that strengthen unions and labor-community alliances.” Peter Gosselin, formerly Bloomberg News
“Further work should focus on how to pay low income workers as close to the time of their work as possible, rather than on a bimonthly or monthly basis. The more immediate payouts would likely have income smoothing benefits, as well as predictability benefits and all the associated health…and inter-generational benefits.” Camille Busette, Consultative Group to Assist the Poor
“Better social insurance protections like wage insurance or a more responsive and inclusive unemployment insurance system.” Elliott Schreur, National Academy of Social Insurance
“A solution like Auto IRA with the ability for a sidecar emergency fund would be an excellent idea.” Stig Nybo, Transamerica
“Attempts to replicate in the U.S. the sort of microinsurance programs…used in the developing world.” Charlotte Alexander, Georgia State University
“I believe shifting to periodic payment of tax refunds provides a logical starting point to moving the needle around income volatility.” David Marzahl, Center for Economic Progress
“What we need doesn’t exist yet – policies that provide broad stop-loss protection against catastrophic costs for medical care, long-term care, temporary disability, and other defined risks.” Jacob Hacker, Yale Institution for Social and Policy Studies
● About Our Experts
Here are some of the organizations represented among our survey respondents, which include world-class economists, think tank scholars, widely-published journalists, financial service providers, and high-level government officials.
● Government & Non-Profits
- Consumer Financial Protection Bureau (CFPB)
- U.S. Department of the Treasury
- Center on Financial Services Innovation (CFSI)
- The Federal Reserve
- Economic Policy Institute
- The Pew Charitable Trusts
- U.S. Department of Labor
- Washington Center for Equitable Growth
- American Enterprise Institute
● Academics & Researchers
- University of Wisconsin -Madison
- The Milano School of International Affairs
- University of British Columbia
- NYU Wagner Graduate School of Public Service
- Georgetown University
- University of Kentucky
- Johns Hopkins University
- Yale University
- New York University
- University of California -Berkeley
- University of Chicago
- University of Washington
● Private Sector
- Fenway Summer LLC
- FS Card Inc.
- JPMorgan Chase & Co. Institute
- Honest Dollar
- Putnam Investments
- Morningstar, Inc.
For this survey, we used a web-based Delphi process in order to refine and test the issues that emerged from the convenings with an expanded set of stakeholders . The Delphi Method is a proven procedure that fields an interactive survey with a carefully selected panel of diverse, deeply knowledgeable participants and provides opportunities for creative synthesis and controlled and transparent feedback. Respondents included: world-class economists, think tank scholars, widely-published journalists, financial service providers, and high-level government officials. The survey responses helped confirm and validate the results from the convenings and the research synthesis work. In addition to providing credibility to this new process, the survey also introduced EPIC and the issue of income volatility to a wider group of potential stakeholders and leaders.
● Why Delphi?
Policy Delphi is a method that collects the views of experts in an iterative set of surveys, allowing respondents to see how their answers compare to those of their peers. The Policy Delphi technique has been used extensively in other fields to analyze the views of experts on a specific issue. We chose the Delphi method because we wanted to facilitate additional dialogue on components of the issue beyond the in-person convenings and provide a unique opportunity to increase the diversity and cross-sector mix of people involved in the discussion. The method allows us to gauge the current level of agreement and disagreement on dimensions of the issue while the iterative nature also provides the opportunity for further convergence after respondents have the chance to share their perspectives and the level of confidence they have in their answers.
“We didn’t want EPIC’s perspective to be confined to the view of the few dozen experts we could fit in the same conference room. By using online Delphi surveys, a wider group of thinkers are invited to join the conversation, strengthening EPIC’s deliberative process.” Joanna Smith-Ramani, Financial Security Program Associate Director
● What Are We Trying To Learn?
The four online surveys, which are being administered by the research firm Greenwald & Associates, consist of two pairs of questionnaires: 1A and 1B, and 2A and 2B.
1A and 1B focuses on the prevalence, causes, and impact of income volatility with the hope of answering the following questions:
- Has year-to-year and/or month-to-month volatility increased among US households and should we expect it to get worse?
- What is the size and scope of the income volatility problem?
- Which demographic groups experience the most volatility?
- What is the impact of volatility at both the household and societal level?
- Should income volatility be a research priority?
2A and 2B focuses on potential solutions to income volatility with the hope of answering the following questions:
- Which institutional actors are best positioned to help families prevent volatility or mitigate its worst effects?
- Which policy interventions and product innovations are most promising?
- Which arguments will be most likely to persuade employers, policymakers, and entrepreneurs to take action?
- Should addressing income volatility be a national priority?
EPIC is an initiative of the Aspen Institute's Financial Security Program.