insight
Evidence type: Insight i
Qualitative research is more exploratory, and uses a range of methods like interviews, focus groups and observation to gain a deeper understanding about specific issues - such as people’s experiences, behaviours and attitudes.
Quantitative research uses statistical or numerical analysis of survey data to answer questions about how much, how many, how often or to what extent particular characteristics are seen in a population. It is often used to look at changes over time and can identify relationships between characteristics like people’s attitudes and behaviours.
Previous policy research into consumer financial wellbeing has often looked at objective financial outcomes, such as retirement savings, liquidity buffers and timely credit repayment, whereas survey-based consumer finance research has focused on measuring people’s subjective perceptions of their financial situation.
This study integrates the two approaches to understand how subjective financial wellbeing (consumers’ lived experience) fluctuates with the objective state of their finances. As well as overcoming potential biases in self-reports, a key benefit of an approach that uses detailed bank account data is the fine-grained view it allows of fluctuations in people’s finances over time.
The issue of how people respond to volatility of income and expenditure, and how this relates to financial wellbeing is of particular relevance in the light of recent economic disruption due to coronavirus and a shift towards more unstable forms of employment such as self-employment and zero-hours contracts.
The study takes the banking data from a sample of current account holders and combines it with survey data from the same people to create a matched dataset. The sample for the study consists of 2,695 adult current account holders in the UK, who had voluntarily participated in a telephone survey and had also consented to having their survey responses matched to their account data. For each account holder in the sample, the study accesses 11 months of data on item-level account transactions, running account balances, bank charges and remote logins (internet/mobile/phone banking), as well as demographic and account-level data, including whether the account included an arranged overdraft.
The survey uses a set of questions to determine subjective financial wellbeing, which were combined to create a single indicator of wellbeing, which was used as the dependent variable in the analysis for the study.
The study was commissioned by the Financial Conduct Authority, the regulatory body for financial services firms and financial markets in the UK.
Joe Gladstone, University College London, School of Management Jeroen Nieboer, FCA’s Economics and Design Unit Karthik Raghavan, FCA’s Economics Department.
Also Kevin James, kevin.james@fca.org.uk and Karen Croxson karen.croxson@fca.org.uk