Research Paper FSA Consumer Research 79
The impact of life events on financial capability: evidence from the BHPS
01 Sep 2009
This report summarises analysis of the impact of life events on financial capability. The project focuses on the characteristics of individuals and the households in which they live that determine their ability to manage and take control of their finances (their ‘financial capability’). In this work we use data from the British Household Panel Survey (BHPS) to construct indices of financial capability based on the hypothesis that there is some underlying factor (financial capability) which is better captured by reviewing a range of indicators of a person’s current financial situation than by any of the specific items of information. We describe how financial capability varies according to individual and household characteristics, and then examine in detail which factors determine financial capability using multivariate statistical models.