Excerpts from a 1995 Report
There are two key issues relating to our measurement of levels of consumer debt versus levels of
equity (total assets). The first is the accuracy of the methodology used to track these levels, and
the second is whether, in an historical perspective, the levels are truly significant. Are they
nothing but a transitory phenomenon which will be erased by the next wave of inflation?
I cannot speak to the empirical accuracy of the research due to a lack of control and other
independent data. I can address the consistency of the methodology to produce relative accuracy,
as well as a limited historical perspective in the following narrative.
The first time I analyzed consumer debt/equity relationships in a survey was in 1972-3 for a
small study testing the market and applications for the Instant Transaction card (IT), being test-
marketed in Syosset, NY for the Hempstead Bank. As I recall, the level of negative equity was
insignificant - probably below 1% for the Nassau and Suffolk County communities being tested.
In subsequent market analysis for Security National Bank, King’s Lafayette Bank and Chemical
Bank, debt/equity measurements were not included in my work, until a 1979 survey for Plymouth
Federal Savings and Loan Association. From that point on, it has not only been a consumer
market qualifier for every banking study I have designed, but, since 1993, I have been including
it in other consumer surveys where I have had reason to believe that debt/equity levels could
provide additional insight on current and planned purchase patterns and consumption.
In the 1979 and 1980 local surveys of the towns of Plymouth, Kingston, Carver and Duxbury,
MA, levels of negative equity were less than 1%. A Plymouth County Study conducted in 1982,
however, produced a level of 4%, split between the 18-34 and 65+ age groups.
Starting in 1985 the survey was expanded to include all homeowners in Southeastern
Massachusetts and was overlaid (updated) in