Friday, 9 August 2013

Financial capability or what?



Great PR for the Money Advice Service’s new report The Financial Capability of the UK last week.  They even got the Daily Telegraph to consider some 26 million people struggling financially.  That’s no mean feat in the euphoria of rising house prices and low interest rates, but hey, between our live for now culture and poor financial skills, what do you expect?

However, a couple of things don’t quite add up.
 

If “Over half the population state they are struggling to keep up with bills and financial commitments”, how come “85% are still saving, with over half (53%) saving each month”, as suggested on page 10 of the report?  It doesn’t make sense to save money that’s needed for bills - so, poor financial skills maybe, but saving on this scale as a live for now culture - surely not?
 

Then there’s the survey question on page 36, “Look at the following list of loan and credit products, and select any that you currently have, either in your own name or jointly with someone else.”  Only 19% replied that they had a mortgage.   Home ownership has been falling, of course, but the 2011 Census recorded owner occupiers with a mortgage at 33% of households. This video from the Office for National Statistics sets the context.



To be fair, I’m not comparing like with like: 19% of adults sampled to represent the population are not the same as 33% of every single household in the country.  However, at Zero-credit, our quantitative methods tend to sample only one adult per household, and with fellow members of the Social Research Association employed at Ipsos MORI (the research agency commissioned), I’m fairly sure theirs do too.

That this sample of 5079 adults, comprising 4,000 online and 1079 face to face responses, has been weighted - I assume to represent the UK population - makes me all the more circumspect about the mortgage gap.  From the technical appendix, it is clear that “The Money Advice Service desired a statistically robust, cost effective survey returning a large sample to allow for analysis by a significant number of different subgroups, notably for adults and young people“.
 

Both the original sample and the weighting reflect an emphasis on young people:



% unweighted sample

% weighted sample

% UK population







18-24

17.1

22.7

12.0
25-34

15.1

15.0

17.0
35-44

17.1

15.6

17.7
45-54

16.8

15.3

17.6
55+

40.0

31.4

35.8

The good news is that Caroline Rookes, Chief Executive of the Money Advice Service, states “We have made the data set available and are keen to hear what others find of interest” (page 1).  My problem is that I cannot access this without signing up to a set of Terms and Conditions that do not allow me to question the research.  So much for open data, section 3 of the Social Research Association Ethical Guidelines and rules B49-61 of the Market Research Society Code of Conduct.
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