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Comment by dotnet00 | Hacker News Reader

That 50% number is, IIRC a popular misinterpreted statistic. The statistic came from phone interviews asking how people would cover a $1000 emergency expense, where ~45% said they'd pay from savings. This got twisted into "~55% don't have enough savings to pay a $1000 emergency expense".

But, the second most popular option was to pay via credit card, and this does not preclude having the money in savings. Given the popularity of credit cards in the US, this makes sense too. If faced with a sudden large expense, I too would put it on credit and pay it off at the end of the cycle instead of pulling from savings, despite being able to afford the latter.

Similarly, the third most popular option was to pay the bill and cut other expenses, which also doesn't exclude savings and would be a pretty normal thing to do too.

IIRC only ~15% said they'd take a loan or borrow from friends/family.

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I don't know the source for the above stat, but for another frequently-mentioned one, "40% of Americans can't cover a $400 unexpected expense" it looks like the fed accounted for that:

>When faced with a hypothetical expense of $400, 63 percent of all adults in 2022 said they would have covered it exclusively using cash, savings, or a credit card paid off at the next statement (referred to, altogether, as “cash or its equivalent”). The remainder said they would have paid by borrowing or selling something, or said they would not have been able to cover the expense.

https://www.federalreserve.gov/publications/files/2022-repor...

That 37% makes sense in that is roughly the percentage of the population where ordinary expenditures match income (per BLS). This has some elasticity though, since the scope of "ordinary" is much larger than "necessary" e.g. spending on luxury cars, food, clothes, etc is included as an ordinary expense even if it is profligate, so there is a latent surplus that is available and people do adjust their ordinary spending when necessary.

Per another Federal Reserve study I saw, the percentage of the population where income does not exceed necessary expenditures -- people with no income surplus, latent or otherwise -- is something like 12%. Which sounds about right and is still a lot of people.

Thanks for the link. Interesting that in the same report they have this snippet on the next page:

...the 2022 SHED included a new question asking what is the largest emergency expense people could handle using only savings. Sixty-eight percent of adults said they could pay an expense of at least $500 using only their current savings (table 12). This is a somewhat larger share than the 63 percent of adults who said they would pay an unexpected $400 expense with cash or the equivalent, suggesting that some people do choose to pay with other methods, even if they have cash savings available to them.

That’s astounding. I see statistics like this all the time.

The more shocking the headline, the more important to interrogate primary sources.

> Lawmakers who opposed the bankruptcy bill cited a 2005 study by Himmelstein, Thome, Warren, and Woolhandler finding that approximately half of bankruptcies were medical-related. Supporters of the bankruptcy bill countered with a court record analysis conducted within the Department of Justice (DOJ). According to the DOJ analysis, over half of the sample (54%) had no medical debt at all, the average medical debt among those with any such debt was under $5,000, and medical debt comprised only 5.5% of the total unsecured debt of the sample.

Just throw out any statistic that does not offer distribution information. Quintiles should be the minimum standard, but deciles are preferable.

Source? No offense, but if I’ve been burned by this fact once, I can be burned again.

The article by CNBC which makes the claim that 56% can't afford a $1000 emergency expense, with the interpretation I mentioned: https://www.cnbc.com/2022/01/19/56percent-of-americans-cant-...

The source of their statistics, which has a separate section which clearly asks about how much savings people have (granted, in terms relative to their living expenses instead of absolute numbers), rather than pulling 56% out of the statistic about how they would pay for an expense: https://www.bankrate.com/banking/savings/emergency-savings-r...

This finds that ~22% of Americans don't have emergency savings. Which is still a lot, but certainly not as crazy and eye catching as 56%.

Note that the second link is the 2023 version, CNBC references the 2021 stats, but those don't seem to be accessible anymore (which is a strange arrangement).

Lots of reports around this one, lots of ways to cut the data but this is one of the most rigorous approaches to collecting the info:

https://www.bankrate.com/banking/savings/emergency-savings-r...

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