Issue 15, Spring 1998

William A. McEachern, Editor

The Evidence File

In a nationwide survey by Phoenix Home Life Insurance of 1,200 students ages 12 to 21 from households earning $40,000 or more, 90% said they believed they are adequately educated about finances. Yet only 40% could define the term "budget" and only 34% could explain what "buying on credit" means. Among college students questioned, 41% could define mortgage, 12% life insurance, 5% mutual funds, and only 6% Social Security. Half said they expect to earn at least $30,000 in their first year after graduation. One in five expects to earn $40,000.

When I go grocery shopping, I pay attention to the price spread between name brands and house brands. This comparison is made all the easier because house-brand packaging typically apes the leading name brand. Sometimes the spread is a chasm. Exhibit A is a 12 ounce box of vanilla wafers. My local supermarket charges $1.39 for its house brand, in this case IGA. The same store charges $3.29 for the Nabisco brand, or 137% more than its house brand. You could discuss with students why many consumers are willing to pay more, sometimes much more, for name brands.

The AEA membership survey also gives us some idea of the racial composition of those who are U.S. citizens. Although total membership declined 0.6% between 1993 and 1997, those responding to questions about race and Hispanic heritage declined by 10.1%. I have adjusted the data for the declining response rate.

In 1993, 145 (1.2%) U.S. citizen respondents were African Americans-117 men and 28 women. By 1997, this group made up 164 respondents (1.4%)-134 men and 30 women. Since African Americans accounted for 12.7% of the U.S. population in 1997, their share of AEA membership was only about one-ninth their share of the U.S. population.

Asians grew from 447 (3.8%) of those U.S. citizens responding in 1993, to 459 (3.9%) in 1997. Since Asians accounted for 3.8% of the U.S. population in 1997, their AEA membership is in line with their representation in the wider population.

Those members who identified themselves as of Hispanic heritage (which is an ethnic, not a racial, classification) totaled 898 (7.6%) responding U.S. citizens in 1993. By 1997, this group totaled 959 (8.1%). Since those of Hispanic heritage accounted for 10.7% of the entire U.S. population in 1997, their share of AEA membership was three-quarters of their share of the wider population.Respondents identifying themselves as female rose slightly from 1,752 (14.8%) AEA members in 1993 to 1,795 (15.2%) in 1997. Since females represented 51.2% of the U.S. population in 1997, their share of AEA memberships is less than one-third their makeup of the wider population. The most underrepresented group is African American females, who accounted for 6.7% of the U.S. population in 1997, but just 0.25% of AEA members. Put another way, African American women account for 1 out of 15 Americans but only 1 out of 400 American members of the AEA. If African American women were represented in proportion to their presence in the U.S. population, there would be 800 such AEA members in 1997 instead of 30.

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