a couple points in that piece that i think are a bit misleading:
* all of the breakdowns in the piecharts make it seem like they're talking about all low- and middle-income households, but that's not the case. in fact, they are only talking about the 29% that qualified for their survey by being in bad debt in the first place. so, for example, when they say 29% of low/mid-income households have more than 10K of CC debt, what they really mean is 29% of 29% (of all low/mid-income households) = 8.4% have more than 10K debt. but they don't say this truth and leave the misleading 29%.
* they write, Quite simply, what
distinguishes low- and middle-income households with relatively
high levels of credit card debt from those with lower levels of debt
is chance and misfortune.
this is inconsistent with the strong income-bracket correlation of debt. HH's with 50K+ income had much higher mean and median debt levels than lower households had. since there is no reason to believe 50K+ earners were more unlucky than the poorer subjects, this suggests that debt is more strongly related to income (and by extension, spending habits, since higher earners spend more) than to misfortune. although it is easy to find plenty of unfortunate anecdotes, they have not proven their statistical significance as the primary cause of debt. which is kind of important since their whole theme is the "plastic safety net".
Our fi ndings illustrate that most debt-stressed low- and middle-income
consumers are trying to cover unavoidable expenses, not discretionary
purchases.
of course, once families get deep into debt, they will stop using credit for everything except "survival". but that doesn't mean the majority of the debt for the majority of the subjects came from necessities. also, the very nature of "necessity" is subjective. is a microwave oven a necessity? it is according to them, since a microwave is an appliance and purchasing an appliance on CC is "survival mode".
* interestingly, only 16% of the subjects, i.e. less than 5% of the ENTIRE group of low/mid-income HH's, reported feeling "greatly burdened" by their debt. if only 4.6% of the low/mid-income group is "greatly burdened" by their debt, that is pretty good news. |
