Americans in all walks of life are unprepared for most emergencies, a team of researchers found. In answer to the question, “How confident are you that you could come up with $2,000 if an unexpected need came up next month?,” half of the respondents in a 2009 survey claimed they would not (“certainly” or “probably”).
Moreover, half of the thousands surveyed said they had no emergency fund, according to Joanne Yoong, who helped compile the results for the Rand Corporation and the Financial Literacy Center (FLC). The FLC is run by Rand, the Wharton School of Finance at the University of Pennsylvania and Dartmouth.
The FLC and Rand analyzed the results of an online survey conducted by TNS Global. TNS surveyed 9,000 people worldwide.
Among the countries in the Organization for Economic Cooperation and Development (OECD)—the U. S. led the pack in giving negative answers to the $2,000 question, Yoong noted in a conference here. That leaves the Germans, Greeks and French more confident than average Americans.
Although the information in the survey results relayed by Yoong is alarming, three vital points of fact are missing that would put it in context. The first of these was brought out by David Hogberg of Investor’s Business Daily.
He asked Yoong if any of the respondents had actually faced a $2,000 emergency. She agreed that it was an interesting question for which Rand and the FLC do not yet have an answer.
Similarly, Yoong did not give data from other years that would show whether people answered the same question the same way in good times and bad. Finally, the international comparisons are a bit deceptive.
Europeans may not be worried about coming up with $2,000 but probably should be. The carefree socialist breadbaskets they live in are starting to unravel.
Yoong spoke at a Capitol Hill symposium on September 20, 2011 that was co-sponsored by the Urban League, the National Bankers Association, the Hispanic Leadership Fund and the Competitive Enterprise Institute (CEI). One point made by several speakers at the event was that there are more similarities between personal finances and business financing than media coverage would indicate.
Yoong, for example, noted that both individuals and businesses alike prefer drawing on their own resources when faced with a financial crisis. Relatively recent laws such as the Sarbanes-Oxley Act, which makes it illegal for firms to finance one subsidiary from another, make it more difficult for businesses to do this.
Also, John Berlau of CEI pointed out that a surprising number of well-known industry leaders got their start by using a credit card to finance their efforts—Google, for instance.
Malcolm A. Kline is the Executive Director of Accuracy in Academia.
If you would like to comment on this article, e-mail mal.kline@academia.org
