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The Expanding Prosperity Impact Collaborative (EPIC), an initiative of the Aspen Institute’s Financial Security Program, is a first-of-its-kind, cross-sector effort to shine a light on economic forces that severely impact the financial security of millions of Americans. Now that EPIC’s focus on income volatility is coming to a close, we wanted to recap some of the field’s most notable research achievements, as well as recommend what we see as important and needed opportunities for further work.
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EPIC’s project on income volatility was built, in part, to create an audience for powerful, emerging research that sought to understand how fluctuating cash flows undermine the overall financial health of Americans. The U.S. Financial Diaries (USFD),3 JPMorgan Chase Institute,4 Federal Deposit Insurance Corporation,5 Urban Institute,6 Economic Policy Institute,7 Federal Reserve,8 Pew Charitable Trusts,9 Brookings Institution,10 and scores of academic researchers11 had all been working on this issue for some time. EPIC’s objective was to synthesize and advance what had been a disparate research literature and make those research findings accessible to a larger lay audience.
Despite the immense progress that has been made, there is still important work to be done. A number of key research questions remain unanswered, and a number of proposed solutions remain untested. Answering these questions and evaluating potential solutions will likely require leveraging new data sources. This section will identify what we view as the most pressing research questions, the most promising solutions to test, and the most revealing data sources, providing the beginning of a roadmap for the field.
- Exactly how do workers experience intra-year volatility?
- What is the effect of income volatility on public benefit eligibility?
- What is the effect of volatility on social networks and, conversely, how can social networks mitigate volatility’s ill-effects?
- What is the effect of volatility on children’s development?
- What is the interplay between income and expense volatility?
- Is there a relationship between household volatility and the macro-economy?
More can and should be done to study the still-unanswered research questions and still-untested proposed solutions outlined above. This memo has tried to identify the most pressing needs for the field, as well as a few creative methods to achieve these research aims.
When just one person in a community experiences a drop in income, dozens of people in that person’s kin and social network can be impacted, often negatively. On the other hand, those with strong kin and social networks are more likely to be able to cope with volatility when it inevitably requires the affected individual to juggle work, child care, schooling, and other obligations. Understanding these network effects is critical to understanding the full consequences of volatility.