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I completed my MBA Master’s Thesis in March 2006. Basically, I took a subjectively defined variable called perceived financial condition and determined what demographic and attitudinal characteristics affect it. I constructed two models to represent married and single personnel. I utilized a survey data set from 1999. Yeah, it’s a bit dated; however, it was a good survey. Monetary values can be roughly adjusted for inflation by multiplying by 1.13.
Perceived financial condition (PFC), was constructed via measuring frequency of response to each of five choices: 1) in over your head; 2) tough to make ends meet; 3) occasionally have some difficulty making ends meet; 4) able to make ends meet without much difficulty; and 5) very comfortable and secure. Categories one and two were collapsed into a single “adverse” PFC tier. Categories four and five were collapsed into a single “best” PFC tier.
STATISTICALLY SIGNIFICANT BENEFICIAL VARIABLES
Single Model Variables (% Lower Likelihood of Being in Worst PFC Tier, Relative Base Case), Less Than 0.1 Significance Level
(a) Satisfied w/ Occupation (6.0)
(b) Black (4.1)
(c) Some College (3.7)
(d) Savings (3.6 per one unit increase)
(e) Other Race (3.4)
(f) Hispanic (3.4)
(g) Female (2.5)
(h) Income (0.8 per one unit increase)
Married Model Variables (% Lower Likelihood of Being in Worst PFC Tier, Relative Base Case), Less Than 0.1 Significance Level
(a) Hispanic (7.4)
(b) Spouse Employed (7.1)
(c) (4.6 per one unit increase)
(d) Satisfied w/ Occupation (3.5)
(e) Income (1.6 per one unit increase)
STATISTICALLY SIGNIFICANT ADVERSE VARIABLES
Single Model Variables (% Higher Likelihood of Being in Worst PFC Tier), Less Than 0.1 Significance Level
(a) Thirties Age Bracket (7.1)
(b) Twenties Age Bracket (7.1)
(c) Single w/ Dependents (4.6)
(d) Unsecured Debt (2.4 per one unit increase)
Married Model Variables (% Higher Likelihood of Being in Worst PFC Tier), Less Than 0.1 Significance Level
(a) Married w/ Dependents (8.7)
(b) Dissatisfied w/ Occupation (7.6)
(c) Own Primary Residence (3.2)
(d) Unsecured Debt (2.6 per one unit increase)
Principal differences between the “single” and “married” models included the effect of age and education. Single personnel in their thirties had a 7.1 percent higher likelihood of being in an adverse PFC tier. In contrast, Married personnel in their thirties had a 3.6 percent lower likelihood of being in an adverse PFC tier. Education was only significant in the single model.
There were many similarities between the married and single models. Single and married personnel who were satisfied with their occupation were 6.0 percent and 3.5 percent less likely to be in an adverse PFC tier, respectively. Single personnel of Hispanic, black, or other non-white race/ethnicity were between 3.4 percent and 4.1 percent less likely than whites to be in an adverse PFC tier. Married Hispanics were 7.4 percent less likely than whites to be in an adverse PFC tier. Finally, the pecuniary variables of savings, income and debt affected PFC similarly in the married and single models.
PERCUINARY VARIABLE TIERS
Household total gross income:
(a) $1-$2,000; (b) $2,001-$3,000;
(c) $3,001-$4,000; (d) $4,001-$5,000;
(e) $5,001-$6,000; (f) $6,001 and up
Net household savings:
(a) $0 - $5,000; (b) $5,001-$10,000
(c) $10,001-$20,000; (d) $20,001-$50,000
(e) $50,001 and up
Total unsecured debt
(a) None - $5,000; (b) $5,001-$10,000
(c) $10,001-$20,000; (d) $20,001 and up
BASE CASE (MARRIED/SINGLE)
Base case:
(a) White
(b) E7 to E9
(c) Male
(d) Neither satisfied nor dissatisfied
(e) High School Graduate
(f) Spouse High School Graduate
(g) Over 39 years old
(h) Owns primary residence
(I) No dependents
(j) No time away from homeport
(k) $2,000 or less gross monthly income
(l) $5,000 or less in savings
(m) $5,000 or less in unsecured debt
By the way, there were a few statistically significant military specific variables; however, these were omitted from my blog entry because they don’t related directly to this blog’s primary audience.
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