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Worse Than Greece

Jonathan Clements  |  May 14, 2016

HOW DO OUR financial habits stack up? Academics Cristian Badarinza, John Y. Campbell and Tarun Ramadorai compared U.S. households with those of 12 other developed nations. Here are nine highlights:

  • Almost 50% of U.S. households are invested in the stock market, versus 34% in Finland, 25% in Spain, 24% in Germany and 23% in France.
  • Defined contribution retirement plans—think 401(k) plans and their ilk—are widespread in Australia, the U.K. and U.S., but are far rarer in continental Europe.
  • When investing outside a retirement account, folks in Australia, Spain, France, the U.K. and U.S. are far more likely to own individual stocks than mutual funds.
  • In 12 of the 13 countries, more than half of all households own their main residence. The outlier: Germany, where just 44% of households own their principal home.
  • Fixed-rate mortgages are the overwhelming choice of U.S. and German home buyers, while adjustable-rate mortgages are far more common in Australia, Finland, Italy and Spain.
  • Almost 75% of U.S. households are in debt—the highest of the 13 countries. Canada, Australia and the Netherlands aren’t far behind. Meanwhile, Italians are surprisingly prudent, with just 25% of households in debt.
  • Homeownership is widespread in Greece and Italy—but mortgage debt isn’t. Just 10% of Italians have a mortgage on their primary residence and just 14% of Greeks, versus 47% in the U.S.
  • Australian and U.K. households boast the highest median net worth, as measured by the value of their homes, financial accounts and other assets, minus all debts. What about those poor southern Europeans, with their rocky economies? Thanks to widespread homeownership and an aversion to debt, the typical household net worth in Spain, Italy and Greece is higher than in the U.S. or Germany. So where do the U.S. and Germany rank among the 13 countries studied? Citizens of these two economic powerhouses may enjoy relatively high incomes—but, if you look at the typical household, they’re at the bottom in terms of net worth.
  • While the typical U.S. household—meaning the family that’s halfway down the wealth spectrum—doesn’t look so good in terms of net worth, it’s a different story if you look at average net worth. This average, which measures total household net worth divided by the number of households, is boosted by the hefty holdings of America’s wealthy. Result: Among the 13 nations, the U.S. ranks 12th on typical household net worth—but fourth on average net worth.

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