In our prior piece, we introduced the 5th annual Survey of Household Economics and Decision making (SHED), conducted by the Federal Reserve Board’s Division of Consumer and Community Affairs (DCCA) from May 2017-May 2018.

More than 12,000 respondents, drawn from low and moderate-income population, were surveyed to gauge their financial well-being in a variety of measures, including employment, housing, retirement savings, and student loans. In today’s installment, we will examine perceptions about income volatility as well as how the national epidemic of opioid drug abuse is affecting Americans.


A stable income is central to a feeling of economic well-being and income volatility can be a source of hardship.

For seven in 10 adults, income was stable during the study period. For two in 10, it varied occasionally and for one in 10 it varied quite often. One-third of those with varying income, or 10 percent of all adults, reported struggling to pay bills at least once during the past year.

Income volatility creates more hardship for those lacking access to credit. Only six percent of adults who are confident they would be preapproved for a credit card have experienced hardship from income volatility while a quarter of those lacking confidence in the ability to obtain credit report hardship.


A more volatile income is likely to be more acceptable if net income is higher. The survey asked respondents to choose between two hypothetical jobs: the first pays their current annual income in stable monthly amounts and the second pays more but in variable periods.

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Generally, most people prefer a stable income, with six of 10 choosing the job with a stable income unless the job pays significantly more.


One hypothesis on the rise related to opioid addiction is known as the “deaths of despair.” It is based on local economic conditions and theorizes that the long-standing decline in economic opportunities causes people to turn to drugs.

The current Fed study links exposure to opioids with assessments of economic conditions and shows there are large differences in exposure to opioids by race and ethnicity and less by economic conditions.

One-fifth of white adults, regardless of educational level, have personally known someone who has been addicted to opioids or prescription painkillers. As the graph below demonstrates, the percentage is much higher than among blacks and Hispanics.


To further examine the “deaths of despair” hypothesis, the next figure compares assessments of local and national economic conditions to personal exposure to the opioid epidemic. Those who have personal exposure to opioids have a somewhat less favorable assessment of economic conditions, but among whites, the perception gap is much larger. However, local unemployment rates are similar in the neighborhoods where those exposed to opioids live and where those not exposed live. Subjective assessments of economic conditions do show more support for the “deaths of despair” hypothesis than objective outcomes, like local unemployment. Still, over half of adults exposed to opioid addiction say that their local economy is good or excellent. Altogether, this analysis suggests the need to look beyond economic conditions to understand the roots of the current opioid epidemic.


In the next installment of our series, we take a look at two other factors crucial to financial well-being: housing and employment.