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Tue May 26, 2015, 09:44 AM

When even the big banks start to worry about inequality, you know something is seriously wrong.


from Dissent magazine:


JPMorgan Sounds the Alarm on Inequality
Colin Gordon ▪ May 22, 2015


The first study from the newly established JPMorgan Chase Institute, released yesterday, offers an intriguing “big data” glimpse at economic insecurity in today’s U.S. economy. “Weathering Volatility: Big Data on the Financial Ups and Downs of U.S. Individuals” uses a stratified sample from the account and transaction data of almost 30 million JPMorgan Chase customers. Alongside credit information (monthly payments, outstanding balances, delinquencies) for the same individuals, the JPMorgan data measures variation in income and consumption, over a short and recent time span, with rare precision—and a notable tone of angst.

At a sample size of 100,000, the JPMorgan data set boasts nearly twice the sample size of the Current Population Survey (60,000 household respondents) and far exceeds the reach of the Bureau of Labor Statistics’ Consumers Expenditure Survey (7,000 households) or the various panel surveys (which have between 5,000 and 15,000 respondents). The resulting sample, broken into income quintiles (equal fifths of the underlying population), follows the structure of the Census numbers: the upper limit for its first quintile is $23,000, just over the Census/CPS threshold of $21,433 for 2013, and so on up to $104,500, the upper limit for the fourth (compared to the Census/CPS’s $106,101). But most importantly, the JPMorgan data consists of actual transactions—a much more precise and reliable measure of earning and spending than we can expect from survey respondents.

The findings, unsurprisingly, point to large swings in both incomes and consumption, both from year to year and from month to month. Seventy percent of those sampled see a swing in income of more than 5 percent from one year to the next; 84 percent see that volatility from month to month. Some of this is an artifact of the data collection (those paid weekly, for example, see their incomes bounce around just because some months have five Friday paydays and some don’t), but much of it signals the economic damage and insecurity that comes with stagnant wages, a tattered safety net, persistently high unemployment and underemployment, and raggedly unreliable work schedules.

Of interest to JPMorgan, of course, are the behavioral responses to income volatility, and the financial products (“innovative insurance or credit products“) that might be offered in response. The report devotes much of its energy to parsing the difference between “responders” (those whose changes in consumption tend to track changes in their income), “sticky optimists” (mostly higher earners) for whom consumption increases more than income by more than 10 percent, and “sticky pessimists,” for whom consumption lags behind increases in income by more than 10 percent. .............(more)

http://www.dissentmagazine.org/blog/jpmorgan-sounds-the-alarm-on-inequality




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Reply When even the big banks start to worry about inequality, you know something is seriously wrong. (Original post)
marmar May 2015 OP
dembotoz May 2015 #1

Response to marmar (Original post)

Tue May 26, 2015, 09:50 AM

1. don't need a weatherman to see which way the wind is blowing

To not look at trends is a bad idea

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