Jacob Hernandez | Stephen Klineberg | July 8, 2015
What accounts for differences in people’s evaluations of their financial well-being, both with regard to their current circumstances and their outlooks on the future? In this analysis, we measure the individual impact of gender, age, ethnicity, education, income, religiosity, and political party affiliation in accounting for the ways area residents assess their financial situations. Do the predictors of individual differences in respondents’ assessments of present circumstances also predict their expectations for the future?
The Kinder Houston Area Survey measures current financial assessments with this question: “During the last few years has your financial situation been getting better, getting worse, or has it stayed about the same?” It measures outlooks on one’s financial future by asking, “What about three or four years down the road? Do you think you’ll be better off, worse off, or about the same as today?”
We conducted logistic regression analyses with all seven factors listed above to determine the most significant individual predictors of answers to these two questions. Figure 1 depicts the three most powerful factors that are associated with respondents’ assessments of their current circumstances. For each predictor, the number shown is the probability that individuals with that characteristic will report that their financial situations have been “getting better,” when the effects of the six other factors are controlled.
Thus, as seen in the figure, the respondents aged 18 to 29 have a 60 percent likelihood of indicating that their financial circumstances have been “getting better,” compared to just a 17 percent probability for those aged 60 and older, once the effects of gender, ethnicity, education, income, religiosity, and political party affiliation are controlled. Household income, not surprisingly, is a most powerful predictor: At increasing levels of income, people are more likely to report that their personal financial situations have been getting better. Age, as we have seen, is associated with decreasing feelings of well-being, and women are less likely than men to report that their financial circumstances are improving.
Figure 1: THE MOST POWERFUL PREDICTORS OF RESPONDENTS’ ASSESSMENTS OF THEIR CURRENT FINANCIAL SITUATIONS (2015).
Figure 2 presents the probabilities associated with the three most powerful predictors of outlooks on one’s personal financial future. Age is once again negatively associated with these evaluations, but the effects on expectations for the future are stronger than for assessments of current circumstances. African Americans and Hispanics are more likely than Anglos to be optimistic about their future prospects. Income predicts assessments of current finances, but education (and not income) is associated with perspectives on the future: The respondents with college degrees are significantly more likely than those with less education to believe that better times are coming.
Figure 2: THE MOST POWERFUL PREDICTORS OF RESPONDENTS’ OUTLOOKS ON THEIR PERSONAL FINANCIAL FUTURES (2015).
These are interesting findings: Women are more negative than men in their assessments of their current financial circumstances, but not in their expectations for the future. Age is negatively associated with evaluations of current finances but has a stronger impact on assessments of future prospects. Income predicts the present, but education predicts the future. And ethnic minorities are more inclined than Anglos to believe that better times lie ahead.
Hernandez, who graduated from Rice this spring, assisted in developing and analyzing the 2015 Kinder Houston Area Survey.








