Financial Optimism Based on Age, Race and Income
The MediaAudit/ International Demographics, Inc recently released a study based on the results of the question "Do you expect to be better off six months from now?" The study concludes, says Bob Jordan, co-chairman of International Demographics, that "It's become apparent over the years that the answer to this question is influenced by factors other than area economics or even individual financial prospects."
For instance, fifty six percent of the adult residents of Colorado Springs are "financial optimists," the highest percentage in the 85 metro markets surveyed in 2002 by The Media Audit, vs. Pittsburgh, which has the lowest percentage, 37.3. And the rationale goes like this:
African-Americans and Hispanics have greater percentages of the financial optimists in their groups than do Caucasians and Asians. In addition, younger adults, ages 18-35, have a greater percentage of financial optimists than older groups. In Colorado Springs 31.1 percent of the population is over age 50 and 16.9 percent of all adults are African-American or Hispanic. In Pittsburgh, 45.3 percent of the population is more than 50 years old and just 8.6 percent of residents are African-American or Hispanic. Colorado Springs has the greatest number of financial optimists in the 85 markets served by The Media Audit and Pittsburgh has the fewest.
Jordan says, "...If we were to apply the Colorado Springs/Pittsburgh analysis to the New York City metro market we would expect NYC metro to have a level of optimism higher than Colorado Springs. But it has fewer people over 50 and more African-Americans and Hispanics, so only 41.5 percent think they will be better off in six months."
Markets with the highest percentage of financial optimists are: Colorado Springs, Atlanta, Charleston (SC), Columbia (SC), Memphis, Norfolk-Virginia Beach, Jacksonville, Las Vegas, Reno, and Houston-Galveston, all over 50%.
And markets with the lowest percentage of financial optimists are: Pittsburgh, Peoria, Madison, Des Moines, Hartford, Buffalo, Wichita, Spokane, New Haven, and, Columbia-Jefferson City (MO), all under 40%.
The aggregated numbers for all 85 markets show that 45.5 percent of all adults are optimistic, at least in the short-term, about their financial future. The percentage of optimists in each of six age groups shows a significant decline from the younger groups to the older groups:
- Among those who are 18-24, 58.6 percent are financial optimists
- In the 25 to 34 age group, 59.8 percent are optimists
- For the 35 to 44 age group, 52.4 percent expect to be better off in six months
- For the 55-64 age group, the number of optimists drops to 35.1 percent.
- Among those over 65, just 11.6 percent expect to see their personal financial position improve in six months
Race also has a significant impact on financial optimism. Of the 17,968,000 African- Americans in the 85 markets, 58.2 percent expect to be better off in six months. Among Hispanics, 54.7 percent are optimistic while only 41.3 percent of Caucasians and 39.9 percent of Asians are optimistic. Says Jordan, "African-Americans are still significantly less affluent than the general population, but are steadily becoming more affluent and that, we assume, is the basis for their high levels of financial optimism."
- 32.3 percent of those earning under $25,000 expect to be better off in six months
- When incomes are between $25,000 and 34,999 the percent of financial optimists is 41.3
- In the $35,000 to $49,999 income bracket there are 46.3 percent who expect to be better off in six months
- In the $50,000 to $74,999 bracket there are 49.4 percent
- Over $75,000 a year the percent is 52.6
- And over $100,000 is 54.4 percent
It comes as no surprise to find that income impacts an individual's financial optimism. What may come as a surprise is that the level of financial optimism among the young, ages 18-34, is higher (59.3 percent) than it is among those who earn $100,000 or more a year (54.4 percent).
You can find out more in this pdf from The MediaAudit.