Comparing Military and Civilian Household Finances: Descriptive Evidence from Recent Surveys
Despite significant media and policy attention to the financial conditions of military and civilian households in American over the past few years, little is known about their relative standing and decision making. Using data from large national surveys, this analysis provides descriptive evidence on key differences for comparable young, low moderate income and education military and civilian respondents. I find that military members have more types of savings accounts, more problematic credit card behaviors, and equivalent use of alternative financial services. I briefly discuss directions for future research and some policy implications. In the United States, more than a decade of war and a struggling economy have generated substantial interest in the welfare of military families. Annual military compensation increases, new veterans' benefits (e.g. the Post 9/11 GI Bill) public and private sector commitments to reduce veteran unemployment, and military compensation reforms (e.g. the Military Compensation and Retirement Modernization Commission [MCRMC] suggest a strong commitment to military service members and their families. Yet despite significant media and government attention to these topics, there has been little scientific research on the household finances of military families, a fact highlighted by Carlson, Nelson and Skimmyhorn (2015) Survey evidence suggests that younger military members are more financially secure than their civilian peers (Morath 2014; FINRA Foundation 2013) though these reports fail to account for the many other potential differences between the groups. Academic researchers have evaluated specific outcomes for military members, including the effects of payday lending (Carrell and Zinman 2014; Carter and Skimmyhorn 2016) and the use of alternative financial services (AFS) more generally (Fox 2012) Economists' interest in financial education has included work evaluating its effectiveness for military members (Bell, Gorin and Hogarth 2009; Skimmyhorn 2016) There also exists some evidence on the effects of military deployments on household financial decisions (Bell 2013) Most importantly, to the author's knowledge there have been no multivariate comparative analyses between military members and their civilian counterparts. (1) Such comparisons can provide important initial insights into additional research questions and motivate appropriate policy review and development. The results below are particularly timely given recent two national level policy actions. First, the president's MCRMC has generated Congressional attention and motivation for significant reforms to military compensation and financial education over the next few years to the tune of billions of dollars for the former and hundreds of millions of dollars for the latter. Second, recent Consumer Financial Protection Bureau actions on payday lending demonstrate the potential for regulations (i.e. the ML A) in support of military service members to serve as a model for financial product regulation nationwide. In both cases, this study can help benchmark individuals' relative financial well being prior to the new policies taking hold. Using large national surveys of household financial decisions, I find that military members have more types of savings accounts, more problematic credit card behaviors, and equivalent use of AFS relative to comparable civilians. The paper proceeds as follows: In Section 2 I describe the data and in Section 3 I present the results. I discuss the research and conclude in Section 4. DATA: THE NATIONAL FINANCIAL CAPABILITY STUDIES This study uses data from the 2009 and 2012 National Financial Capability Studies (NFCS) sponsored by the Financial Industry Regulatory Authority (FINRA) Investor Education Foundation and developed in consultation with the Department of Treasury, the President's Advisory Council on Financial Capability, and leading academic researchers.