SAVINGS AND FINANCES OF THE UPPER INCOME CLASSES1

Survey Methodology. It is our conclusion that we can successfully sample the upper income or wealth classes at a more intensive rate than has been done in most previous Surveys. If the sample is properly chosen—and this is entirely feasible—we can penetrate much more deeply into the upper strata. For example, more people with incomes of £4,000—£10,000 a year can definitely be included. In this way significant improvements as regards both bias and efficiency can be made. Two problems on which we have not made adequate progress in the Experimental Survey are the apparent underreporting of property income and the need for a more complete treatment of the general finances of self‐employed businessmen. Although we may have succeeded in obtaining higher estimates of the share of property income in total income than in previous Surveys, we do not reach the estimates shown in surtax returns. As to the problems involved in the treatment of self‐employed businessmen, we made no contributions in this study, for such persons were not included in our main sample lists. Otherwise, we conclude that the Savings Surveys of earlier years appear to have elicited the right information from those included in the sample but simply did not sample enough people in the top groups.When the upper strata of the population are interrogated about their financial affairs, they must be asked specific questions about a number of transactions or types of holdings and debts that are not applicable to most people. Particular questions on legacies, estate duties, trust funds, covenanted gifts on the side of both donor and recipient, the finances of private companies owned, expense accounts, and the accrual of surtax liability must be included in some detail in the interviewing schedule. When these items are added to an already lengthy and complicated savings questionnaire, we find that individual interviews are time consuming and difficult to execute. The average cost per interview for upper income recipients is much higher, perhaps by 100 per cent, than for other respondents. On the basis of our experiment, however, we feel that the extra research costs are more than compensated for by the additional information received.We came to realise fully in our investigation that there are definite limits to the applicability of the survey method among wealthy individuals. It is not the tool for finding out about the savings and finances of millionnaires nor indeed those of other rich people whose affairs are very complicated. A single interview of one or two hours is hopelessly inadequate for understanding the finances of the very richest persons in the nation. For such persons to complete our usual questionnaire, it would be required that they invest a very considerable effort in the preparation of relevant quantitative data on their assets, liabilities, income sources, etc. For those few cases in which extremely rich persons agreed to see our interviewers, it was quickly found out that it would not be possible to supply the necessary detail in a reasonable period of time. Therefore our main area of improvement lies in a much more intensive sampling of the so‐called upper middle classes covering people with gross incomes of £2,000—£6,000 (possibly up to £10,000) or with assets up to £100,000.Substantive findings. In spite of the small sample size, limited occupational coverage, and restricted geographical area included, we feel that our results have some degree of generality. We can take account of the limitations due to sample size by computing sampling errors and interpreting our conclusions in the light of such measures. By comparison with cross‐section samples in previous Surveys we can discover our occupational biases and attempt to allow for them in assessing results. Finally, in spite of the fact that sampling was confined to London and the Home Counties, we are encouraged in interpreting our results generally by the consistency with known national data or the results of previous nationwide Surveys. A further element of encouragement is found by reference to the results of the Cambridgeshire Survey reported by Cole and Utting.1 They find distributions of savings, income, and other variables in Cambridgeshire similar to those estimated for all Great Britain in more broadly based surveys.The pessimistic economic outlook held by our sample respondents and the frequent complaints about inflation, high taxes, the cost of private education, and the strength of trade unions are not surprising. Our findings merely confirm suppositions on these points. The comparatively advanced age of our respondents is noteworthy and probably of some importance in studying the savings level among the upper groups.The dominant position of contractual elements in the total volume of savings has long been recognised, but discretionary savings grow in importance with income. From our sample data we are able to place the point of initial appearance of net positive discretionary savings in the income scale at about £3,000. This result lacks generality in that self‐employed businessmen, who were not included in our sample, are known to save in the form of retained earnings at much lower levels of income. Among the components of discretionary savings, the simultaneous occurrence of negative net investment in securities and (positive) reductions of indebtedness is symptomatic of the influence of the ‘ credit squeeze ’. In the sample as a whole, National Savings were being drawn down while other liquid assets were being increased.The personal worth of our sample has a vastly different composition from that for other types of income units. Liquid assets, though frequently held, are relatively unimportant. A large fraction own securities or a home. In comparison with the rest of the population, the people in our sample frequently have an overdraft but infrequently use hire purchase credit. Trust funds and inheritances were, in a relative sense, frequently encountered by our interviewers.