Working Papers

USFD is designed to explore the ways in which households’ financial positions shift over time, and how peoples’ financial choices influence – and are influenced by – other aspects of their lives.  The papers below represent research from the project that can inform the development of financial tools and policies to support successful financial management strategies for poor families.

Papers IMAGES
Income Gains and Month-to-Month Income Volatility
Income Gains and Month-to-Month Income Volatility

By Anthony Hannagan and Jonathan Morduch

The US Financial Diaries track the finances of a small sample of low and moderate-income households over a year. The households faced substantial swings in income from month to month. On average, they experienced 2.5 months when income fell more than 25 percent below average, and 2.6 months when income was more than 25 percent above average. The volatility is summarized by an average coefficient of variation of monthly income (within year, averaged across households) of 39 percent. The CV is greatest (55 percent) for households below the poverty line, but the CV remained relatively high (34 percent) and steady for households with income from 100 percent of the poverty line up to 300 percent. Thus, in the non-poor sample, greater income did not imply notably greater income stability.

In and Out of Poverty
In and Out of Poverty

By Jonathan Morduch  and Julie Siwicki

We use data from the U.S. Financial Diaries study to relate episodic poverty to intra-year income volatility and to the availability of government transfers.The data allow the documentation of episodic poverty, and the attribution of a large share of it to fluctuations in earnings within jobs. For households with annual income greater than 150 percent of the poverty line, smoothing within-job income variability reduces the incidence of episodic poverty by roughly half. We decompose how month-to-month income volatility responds to receipt of eight types of public or private transfers. The transfers assist households mainly by raising the mean of income rather than by dampening intra-year income variability.