Household Finance And Consumption Survey (HFCS)

The Household Finance and Consumption Survey (HFCS) is a comprehensive survey coordinated by the European Central Bank (ECB) that collects detailed data on the financial behaviour and conditions of households in the euro area and some additional European countries. The HFCS provides insights into household wealth, income, consumption, and indebtedness, making it a critical tool for understanding the economic well-being of households and for informing monetary policy and financial stability assessments.

The primary goal of the HFCS is to collect harmonized micro-level data on the financial situation of households, focusing on assets, liabilities, income, consumption, and intergenerational transfers. This data helps policymakers and researchers understand wealth distribution, household resilience to economic shocks, and the broader financial conditions in the euro area.

The HFCS is conducted in euro area countries as well as in some additional European Union (EU) and non-EU countries. The survey covers households, gathering information from all household members aged 16 and over. The survey is designed to represent the entire population, including both wealthy households and those with low incomes or assets.

The survey caters to the following key areas:

• Assets: The survey collects detailed data on both real assets (such as property and vehicles) and financial assets (such as bank accounts, stocks, bonds, and pension plans).
• Liabilities: Information is gathered on household debts, including mortgages, consumer loans, and other types of credit.
• Income: The HFCS records data on different sources of income, including wages, pensions, social benefits, and income from investments.
• Consumption and Expenditure: The survey examines household spending patterns, including regular expenses and large, infrequent expenditures.
• Intergenerational Transfers and Gifts: Data on inheritances, gifts, and other transfers between family members are also collected.
• Demographic and Socioeconomic Characteristics: The HFCS includes information on the composition of the household, education, employment status, and other relevant characteristics of household members.
• Net Wealth: The difference between total household assets and liabilities, providing a measure of financial security.
• Wealth Distribution: The survey provides detailed insights into how wealth is distributed across different households, including by income level, age, and other demographic factors.
• Debt-to-Income and Debt-to-Asset Ratios: These indicators help assess the sustainability of household debt and the potential risks to financial stability.
• Household Consumption and Savings: The HFCS measures how households allocate their income between consumption and savings, shedding light on economic behaviour and potential vulnerabilities.

The HFCS is conducted every three years, with each wave collecting data from a representative sample of households in each participating country. The survey employs a harmonized methodology across countries, ensuring comparability of data. This includes common definitions, questionnaires, and data processing procedures. Data collection is typically carried out through face-to-face interviews, supplemented by self-administered questionnaires for more sensitive topics.

The HFCS data is crucial for the European Central Bank and other policymakers in understanding how households might respond to changes in interest rates or other monetary policy measures. By analyzing the distribution of wealth and debt, the survey helps identify potential risks in the financial system, such as high levels of indebtedness among certain groups of households. The HFCS informs policies aimed at reducing wealth inequality, improving access to credit, and supporting household financial resilience.

Wealth data, particularly in terms of asset ownership and liabilities, provides a more complete picture of economic well-being than income data alone. The HFCS helps in understanding the role of housing, both as an asset and a source of debt, in the overall financial health of households. The survey also highlights differences in financial behaviour and risk exposure across countries, helping tailor national and EU-wide economic policies.

The Household Finance and Consumption Survey is essential for understanding the economic conditions of households in Europe. It provides valuable data for assessing the financial resilience of households, analysing the distribution of wealth, and understanding how households interact with the broader economy. This information is crucial for developing policies that promote financial stability, economic growth, and social equity in the euro area and beyond.