Coping with Costs : Big Data on Expense Volatility and Medical Payments

In this report, the JPMorgan Chase Institute assembled a de-identified data asset of over 250,000 Chase customers between 2013 and 2015 in order to study how consumers' expenses vary over time and how their financial behavior changes when faced with extraordinary medical payments. We organize our results into five findings. First, we find that expenses fluctuated by nearly $1,300 or 29 percent on a month-to-month basis for median-income households. Second, expense volatility was high across the income and age spectrum. While older families typically had less volatile incomes, they exhibited a larger range of income and expense volatility. Third, almost four in ten families per year — particularly middle-income and older families — made an extraordinary payment of over $1,500 related to medical services, auto repair, or taxes. Fourth, extraordinary medical payments were more likely to occur in months with higher income and specifically during tax season. Finally, prior to a major medical payment, families garnered substantial liquid assets but did not recover financially within 12 months after the payment. These findings highlight the critical role liquid assets play in managing expense spikes and the need for policies and solutions to promote emergency savings