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Definitions from the SCF

Every three years, the Federal Reserve Board conducts a study called the Survey of Consumer Finances.  They collect detailed financial data from several thousand households, and provide several reports.   The methodology is consistent and the resulting reports are well respected.  

Wealthandwant has taken the data provided in several published reports and done additional calculations from that data; copies of the spreadsheet are available upon request; nothing shown here is done from the downloadable datasets on the FRB website, though some of the findings here may suggest some additional work that might be done from those datasets.

Because the reports are so clear and detailed, I've copied the definitional data they provide.  The sources here are

  • Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances (January, 2006);
  • Currents and Undercurrents: Changes in the Distribution of Wealth, 1989–2004 (January, 2006);
  • A Rolling Tide: Changes in the Distribution of Wealth in the U.S., 1989-2001 (March, 2003)



Net Worth   The difference between assets and debts.

Assets  
Assets fall into two categories, financial and nonfinancial.

Financial Assets.   Financial assets (FIN) include Transaction accounts (also known as liquid assets, CD's, Savings Bonds, Bonds, Stocks, Pooled investment funds (also known as Non-money market mutual funds), Retrement accounts, Cash value life insurance, other managed assets and other financial assets. (LIQ+CDS+SAVBND+BOND+STOCKS+NMMF+RETQLIQ+CASHLI+OTHMA+OTHFIN.)

Transaction Account (also known as Liquid Assets, abbreviated LIQ) "transaction account — a category comprising checking, savings, and money market deposit accounts, money market mutual funds, and call accounts at brokerages." (source: Recent Changes)

Certificates of Deposit (CDs) — interest-bearing deposits with a set term

Savings Bonds [SAVBND] — Holdings of savings bonds.

Bonds [BOND] Direct holdings of "bonds, ... mortgage-backed bonds and corporate or foreign bonds ... tax-exempt and other government bills and bonds(Direct holdings are those held outside of a managed asset such as mutual funds, trusts, managed investment accounts, annuities, and tax-deferred retirement accounts.)

Publicly Traded STOCKS Direct holdings of publicly traded stocks. (Direct holdings are those held outside of a managed asset such as mutual funds, trusts, managed investment accounts, annuities, and tax-deferred retirement accounts.) "
Families may hold stocks in publicly traded companies directly or indirectly" ... " Among families that held stocks in 2004, 78.2 percent held them through a tax-deferred retirement account, 42.5 percent through direct holdings of stocks, 29.4 percent through direct holdings of pooled investment funds, and 9.7 percent through a managed investment account or an equity interest in an annuity or trust (data not shown in the tables); 44.0 percent had ownership through more than one such means. Regarding the distribution of the amount of directly and indirectly held equities, 30.8 percent was held in tax-deferred retirement accounts, 37.1 percent as directly held stocks, 24.1 percent as directly held pooled investment funds, and 8.0 percent as other managed assets."


Pooled Investment Funds, also known as Non-money Market Mutual Funds (NMMF) — Mutual Funds other than money market mutual funds — "funds largely invested in either stocks or government bonds ... funds dedicated to a balance between stocks and bonds ...  a miscellaneous category of funds, which is composed of hedge funds, exchange traded funds, and similar instruments "
"16. Pooled investment funds in this article are taken to exclude money market mutual funds and indirectly held mutual funds and to include all other types of directly held pooled investment funds, such as traditional open-end and closed-end mutual funds, real estate investment trusts, and hedge funds." (footnote 16, Recent Changes)

Retirement Accounts  [RETQLIQ] — IRAs, Keogh accounts, and other pension accounts where withdrawals or loans may be taken (such as 401(k) accounts).
Tax-deferred retirement accounts consist of IRAs, Keogh accounts, and certain employer-sponsored accounts. Employer-sponsored accounts consist of 401(k), 403(b), and thrift saving accounts from current or past jobs; other current job plans from which loans or withdrawals can be made; and accounts from past jobs from which the family expects to receive the account balance in the future. This definition of employer-sponsored plans is intended to confine the analysis to accounts that are portable across jobs and for which families will ultimately have the option to withdraw the balance. IRAs and Keoghs may be invested in virtually any asset, including stocks, bonds, pooled investment funds, options, and real estate. In principle, employer-sponsored plans may be invested in a similarly broad way, but, in practice, individuals’ choices for investment are often limited to a narrower set of assets. 

"Two common and often particularly important types of retirement plan are not included in the assets described in this section: Social Security (the federally funded Old-Age and Survivors’ Insurance program, or OASI) and employer-sponsored defined-benefit plans."

Cash Value Life Insurance [CASHLI] Cash value life insurance combines an investment vehicle with insurance coverage in the form of a death benefit.22 Some cash value life insurance policies offer a high degree of choice in the way the policy payments are invested.

Other Managed Assets [OTHMA] 
other managed assets — personal annuities and trusts with an equity interest and managed investment accounts.  To quote Recent Changes, "The survey encourages respondents who have trusts or managed investment accounts that are held in relatively common investments to report the components. Of the 4.2 percent of families that reported having any kind of trust or managed investment account in 2004, 45.1 percent of them reported at least one of the component assets separately. Of families that detailed the components in 2004, 87.2 percent reported some type of financial asset, 11.0 percent reported a primary residence, 13.4 percent reported other real estate, 3.6 percent reported a business, and 2.7 percent reported another type of asset  ...   In this article, the trust or managed investment accounts included in other managed assets are those in which families have an equity interest and for which component parts were not separately reported.  ... In 2004, 79.0 percent of families with trusts or managed investment accounts had an equity interest in those accounts. Annuities may be those in which the family has an equity interest in the asset or in which there is an entitlement only to a stream of income. The wealth figures in this article include only the annuities in which there is an equity interest.

Other Financial Assets [OTHFIN] — a heterogeneous category including oil and gas leases, futures contracts, royalties, proceeds from lawsuits or estates in settlement, and loans made to others

Nonfinancial Assets [NFIN] includes Vehicles, Primary Residence (also known as Houses), Other Residential Real Estate, Equity in Nonresidential real estate, Business Equity and Other nonfinancial assets. [VEHIC+HOUSES+ORESRE+BUS+OTHNFIN.]

Vehicles [VEHIC] "
The definition of vehicles here is a broad one that includes cars, vans, sport-utility vehicles, trucks, motor homes, recreational vehicles, motorcycles, boats, airplanes, and helicopters. Of families owning any type of vehicle in 2004, 99.8 percent had a car, van, sport-utility vehicle, motorcycle, or truck. The remaining types of vehicle were held by 13.3 percent of families." A Rolling Tide used these words to define it: "Market value of all personally owned automobiles, trucks, motor homes, campers, motorcycles, boats, airplanes, helicopters, and miscellaneous vehicles."

Primary Residence [HOUSES] — Market value of principal residences

Other Residential Real Estate [ORESRE] residential real estate besides a primary residence (second homes, time shares, one- to four-family rental properties, and other types of residential property); Market value of residential real estate other than principal residences

Net Equity in Nonresidential Real Estate (NNRESRE): Net equity in real estate other than HOUSES and ORESRE.

Net Equity in Privately Held Businesses (BUS) Net equity in closely held businesses. "The forms of business in this category are sole proprietorships, limited partnerships, other types of partnership, subchapter S corporations and other types of corporation that are not publicly traded, limited liability companies, and other types of private business. If the family surveyed lived on a farm or ranch that was used at least in part for agricultural business, the value of that part net of the corresponding share of associated debts is included with other business assets." " In the survey, self-employment status and business ownership are independently determined. Among the 11.5 percent of families with a business in 2004, 69.9 percent had a family head or the spouse or partner of the head who was self-employed; among the 15.0 percent of families in which either the head or the spouse or partner of the head was self-employed, 53.5 percent owned a business (data not shown in the tables)."

Other NonFinancial Assets [OTHFIN] —
nonfinancial assets (tangible items including artwork, jewelry, precious metals, antiques, hobby equipment, and collectibles)

DEBT: MRTHEL+INSTALL+OTHLOC+CCBAL+ODEBT. Liabilities

Mortgage and Home Equity Loan (Primary Residence)  [MRTHEL] -
debt secured by the primary residence (hereafter, home-secured debt);  in A Rolling Tide, this definition: "Amount outstanding on mortgages and home equity lines of credit secured by principal residences."

35. Home-secured debt consists of first-lien and junior-lien mortgages and home equity lines of credit secured by the primary residence. For purposes of this article, first- and junior-lien mortgages consist only of closed-end loans, that is, loans typically with a one-time extension of credit and a prearranged payment size and frequency. As a type of open-end credit, home equity lines typically allow credit extensions at the borrower’s discretion subject to a prearranged limit and allow repayments at the borrower’s discretion subject to a prearranged minimum size and frequency.
Other residential debt [RESDBT] Amount outstanding on mortgages secured by residential real estate other than a principal residence.

Installment Debt [INSTALL] Amount outstanding on installment debt. "
The majority of installment borrowing is related to the purchase of a vehicle (data not shown in the tables); in 2004, such borrowing accounted for 55.5 percent of the total amount owed (54.8 percent in 2001). The second-largest use of installment borrowing is for education-related expenses. Balances on loans for this purpose in 2004 made up 26.0 percent of total installment debt; the comparable figure for 2001 had been 22.2 percent.
39. The term ‘‘installment borrowing’’ in this article describes closed-end consumer loans, that is, those that typically have fixed payments and a fixed term. Examples are automobile loans, student loans, and loans for furniture, appliances, and other durable goods."

Other Lines of Credit [OTHLOC] Amount outstanding on lines of credit other than home equity lines of credit.

Credit Card Balance [CCBAL] - Amount outstanding on credit cards.
40. In this article, credit card balances consist of balances on bank-type cards (such as Visa, MasterCard, and Discover, and Optima and other American Express cards that routinely allow carrying a balance), store cards or charge accounts, gasoline company cards, so-called travel and entertainment cards (such as American Express cards that do not routinely allow carrying a balance and Diners Club), other credit cards, and revolving store accounts that are not tied to a credit card. Balances exclude purchases made after the most recent bill was paid.

Other Debt ODEBT "Amount outstanding on miscellaneous debts (e.g., debts to family members, borrowing against insurance policies or pension accounts, margin debt, etc.)."
From 2001 to 2004, the proportion of families that held other types of debt edged up 0.4 percent, to 7.6 percent.42 In 2004, 0.5 percent of families had a margin loan, 3.5 percent had a loan against a pension from a current job of the family head or that person’s spouse or partner, 1.6 percent had a loan against a cash value life insurance policy, and 2.7 percent had another miscellaneous type of loan (data not shown in the tables).
42. The ‘‘other debt’’ category comprises loans on cash value life insurance policies, loans against pension accounts, borrowing on margin accounts, and a miscellaneous category largely comprising personal loans not explicitly categorized elsewhere.

EQUITY: Total value of direct and indirect stock holdings (included in STOCKS and RETQLIQ).*
(*Direct holdings are those held outside of a managed asset such as mutual funds, trusts, managed investment accounts, annuities, and tax-deferred retirement accounts.)

INCOME: Total income for the year preceding the survey year. "To measure income, the interviewers request information on the family’s cash income, before taxes, for the full calendar year preceding the survey. The components of income in the SCF are wages; self-employment and business income; taxable and tax-exempt interest; dividends; realized capital gains; food stamps and other, related support programs provided by government; pensions and withdrawals from retirement accounts; Social Security; alimony and other support payments; and miscellaneous sources of income for all members of the primary economic unit in the household." (Recent Changes, footnote 2.)

FAMILY The definition of ‘‘family’’ used throughout this article differs from that typically used in other government studies. In the SCF, a household unit is divided into a ‘‘primary economic unit’’ (PEU) — the family — and everyone else in the household. The PEU is intended to be the economically dominant single individual or couple (whether married or living together as partners) and all other persons in the household who are financially interdependent with that economically dominant person or couple.

This report also designates a head of the PEU, not to convey a judgment about how an individual family is structured but as a means of organizing the data consistently. If a couple is economically dominant in the PEU, the head is the male in a mixed-sex couple and the older person in a same-sex couple. If a single individual is economically dominant, that person is designated as the family head in this report.

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