THE GENWORTH INDEX · The second dimension relates to households’ expectations for their own...

THE GEN WORTH INDE X

M E A S U R I N G C O N S U M E R F I N A N C I A L V U L N E R A B I L I T Y A N D S E C U R I T Y I N 1 8 C O U N T R I E S

ME

ASURING CONSU

ME

R

FIN

AN

CIAL

VULNERABILIT

Y •

T heGENWORTH

INDEX

Volume 4 – 4th Quarter 2010

1

CONTENTS

The Genworth Index of Consumer Vulnerability: Key Findings

2

Consumer vulnerability in Europe & beyond: an introduction to the Genworth Index 3

Creating the Genworth Index: in brief

4

Consumer vulnerability persists in 2010

5

Deconstructing the Genworth Index

6

Four-year trend of vulnerability in Europe 7

Country reports

8

Endnotes

26

Appendix tables 26

About Genworth Financial

30

Our research partners 31

2

THE GENWORTH INDEX OF CONSUMER VULNERABILITY, SUMMER 2010 K E Y F I N D I N G S

Welcome to this fourth edition of The Genworth Index. The Index in 2010 has tracked consumer financial

vulnerability in 14 countries in Europe, three in North America and Australia in a survey of nearly 14,000

households. With an average Index score of 19 points across all 18 countries the balance remains tipped slightly

towards relative consumer financial vulnerability rather than security. No change in the average Index score for the

14 European countries since 2009 conceals considerable change for some individual countries.

In summary:

Greece worsened to become the most financially vulnerable country of all 18 surveyed in 2010, with a high

relative vulnerability score of 76 on the Index.

Portugal saw a deterioration in households’ situations similar in magnitude to Greece; Spain, in contrast,

experienced no change on the Index.

For the first time, Ireland saw an improvement both in real terms (falling 27 points on the Index) and relative to

other countries (improving five places).

Mexico, USA and Canada fared better than much of Europe due largely to greater optimism in these North

American countries.

With an Index score of 23, newcomer Mexico stands mid-table alongside Turkey, France and Great Britain.

Australia shadows the USA, both countries scoring just above zero on the Genworth Index.

Canada joins the Nordic countries, scoring below zero – indicating relative financial security – on the Index.

Since the Index baseline edition in 2007, experience of financial difficulty has increased significantly in Europe,

compounded by a doubling in the rate of householders’ pessimism for their own financial futures.

3

CONSUMER VULNERABILITY IN EUROPE & BEYOND: AN INTRODUCTION TO THE GENWORTH INDEX

The Genworth Index has been developed to provide a clear and robust estimate of households’ general financial

situations. It can be used to compare – at a glance – levels of consumer financial vulnerability across different

countries and to track change in individual countries over time. Now in its fourth edition, the Index encompasses 18

countries, 14 from Europe, three from North America and Australia. Of these, ten European countries have been

included since the very first edition, enabling a year-on-year cross-national comparison.

Countries included in all years Countries introduced since the baseline

Denmark, France, Germany, Great Britain, Ireland, Italy,

Norway, Portugal, Spain, Sweden

Finland, Poland (since 2008); Greece, Turkey, USA

(since 2009); Australia, Canada, Mexico (since 2010)

The Index score itself provides a snapshot of the overall level of relative financial vulnerability in a given country or

group of countries. The Index incorporates two separate dimensions of consumer financial vulnerability into its

design: a measure of the level of financial difficulty experienced by the household (a proxy for over-indebtedness);

and the household’s expectations for their own future financial position. A vulnerable household is one that has

experienced financial difficulty frequently in recent times and which does not expect the situation to improve in the

coming months. Conversely, a secure household is one which has rarely experienced financial difficulty in the

recent past and which expects its situation to improve further.

The Index score is simple conceptually. It represents the ratio of households within a country that are financially

vulnerable to those that are financially secure. It is also simple to repeat year on year. However, this simplicity is

underpinned by extensive developmental work and an underlying sophistication in the Index’s original design.

The Genworth Index is the result of a developmental project commissioned in 2007 amid growing concern about

rates of consumer borrowing and over-indebtedness. The purpose of the project was to devise an internationally-

relevant, standardised and timely measure of consumer financial vulnerability. This involved an initial survey of ten

countries in Europe using a suite of questions designed to measure over-indebtedness and rigorous exploratory

analysis of these data.

To policy-makers, financial vulnerability can be seen as an early indicator of severe financial stress and over-

indebtedness among households. Relative financial vulnerability, as captured by the Genworth Index score,

provides the barometer by which policy-makers can gauge the overall balance between vulnerability and security

within a given nation state, enabling comparisons to other countries and over time. The measure is sensitive both

to the net movement of households in and out of financial vulnerability and in and out of financial security.

Financial security is important to households. It provides a foundation on which they can make financial and

potentially life-changing decisions. Financial vulnerability meanwhile signifies how difficult households are finding

simply meeting their existing day-to-day financial commitments, with commensurate difficulties in planning for the

future. Whether or not households’ expectations for their own future financial well-being prove accurate, these

expectations nonetheless play a vital role in driving current financial behaviour and decision-making.

The global financial crisis that emerged in 2007 and which has been followed by a deep recession in many

countries has sadly meant that many of the earlier concerns have been realised. In previous editions, the Genworth

Index has highlighted how the effects of the crisis – and Government responses to it – have been felt among

households in Europe. Ireland’s gradual shift from relative financial security in summer 2007 to the country with the

highest level of relative vulnerability in autumn 2009 heralded troubles in the macro economic situation there. The

effects of these difficulties on individuals and their families are underlined by an increase in that period in the

number of clients helped by the national free and independent Money Advice and Budgeting Service.1 And

Greece’s introduction to the Index as the third most vulnerable country in 2009 hinted at the financially straitened

times that have since culminated and have led to severe austerity measures and considerable civil unrest.

4

CREATING THE GENWORTH INDEX: IN BRIEF

The survey on which the Index results are based reaches out to a nationally representative sample of around 1,000

households in each country that is included.2 The Index questions are asked only of householders – an adult in

whose name the accommodation is owned or rented, or his or her partner – aged 18 or over in order to provide

meaningful data from those with financial responsibilities. The resulting sample size totalled nearly 14,000

households across 18 countries for this 2010 edition. All data were collected during June 2010.

For each edition, the Index is calculated in a standardised way. Exploratory data analysis for the baseline edition

identified two underlying dimensions to consumer financial vulnerability as conceived by the project team.3

The first of these dimensions concerns current experience of over-indebtedness, which takes into account

households’ level of consumer borrowing and savings, self-reported difficulty in meeting ongoing financial

commitments and default on household bills and other commitments in the last 12 months due to a lack of money.

Statistical analysis showed that a single self-reported measure of the frequency of current financial difficulties

adequately represented this dimension. The second dimension relates to households’ expectations for their own

future financial well-being and is captured using a question that asks householders’ directly about this.

The result is an Index that is derived from responses to the following two key questions:

Thinking about the general financial position of your household, how often do you experience financial

difficulties?

Looking ahead over the next 12 months, do you think the financial position of your household will improve, stay

the same or get worse?

The response options to these two questions produces 12 possible combinations of answers. Further rigorous

statistical analysis for the baseline edition drew on the information provided by the remaining measures to identify

how the 12 combinations of answers were best grouped together. This found that four distinct groups could be

identified from the combinations of responses to the two key questions alone, as shown below.

Expectations of the future financial position of the household

Get better Stay the same Get worse

Frequency of experiencing financial difficulties

Often or always B A A

Sometimes B C A

Hardly ever D C C

Never D C C

These four groups are defined as follows:

Group A, ‘Financially Vulnerable’, comprises households that have been experiencing financial difficulties

often or all the time and who feel that their situation is unlikely to improve.

Group B, ‘Strivers’, is a relatively small group of households who tend to have experienced financial

difficulties relatively frequently but who now feel more confident (that is, they are expecting their situation to

improve). These households are neither financially vulnerable nor financially secure.

Group C, ‘Circumspect’, is a large group who have not often experienced difficulties, if at all, and who tend to

expect their situation to remain the same. These are, again, neither financially vulnerable nor secure.

Group D, ‘Financially Secure’, is made up of households that have rarely experienced financial difficulties, if

at all, and who expect their financial situation to improve.

The Genworth Index takes the ratio of the percentage of people who are financially vulnerable relative to the

percentage of those who are financially secure. The resulting value is rescaled so that a score of 100 indicates

maximum possible relative financial vulnerability and a score of -100 indicates maximum relative financial security.4

5

CONSUMER VULNERABILITY PERSISTS IN 2010

A Genworth Index score for 2010 of 19 points across all 18 countries surveyed indicates a slight tendency towards

relative financial vulnerability across Europe, North America and Australia. The average Index score for the 14

countries of Europe stands at 31 points, similar to the average in 2009. Compared with this, the three North

American countries surveyed in 2010 scored favourably, averaging 10 points, with Australia scoring a similar 6

points on the Index. Individual country scores varied considerably, more than in any previous year, from 76 in

Greece to as low as -43 in Norway.

Genworth Index score for 18 European countries, 2010

At 76 points, relative financial vulnerability was highest in Greece in 2010. Greece had previously scored 52 in

2009, placing it as the third most vulnerable country of those surveyed at that time. Portugal and Poland also

scored highly on relative financial vulnerability in 2010, with 66 and 65 points respectively. This reflects an increase

in vulnerability of 21 points for Portugal, but only a marginal increase for Poland.5 Italy, along with Germany, moved

one place higher than in 2009, due to modest increases in relative vulnerability in these countries.

Compared with the other Southern European countries, Spain scored only 32 points on the Index. Although this

indicates a moderately high rate of relative vulnerability, this has barely changed since 2009. Ireland saw the most

improvement of any country, falling some 27 points to 36 points on the Genworth Index.

Turkey, France and Great Britain along with Index newcomer Mexico all scored very similarly on the Index, with

moderate levels of relative financial vulnerability of between 19 and 23 Index points. USA and Australia, also

introduced to the Index this year, fared better, with 8 and 6 points respectively.

As in previous years, the Nordic countries scored most favourably on the Index. All scored below zero, indicating

relative financial security, albeit only nominally so for Finland. Index newcomer Canada joined these countries with

a score of -4 points. Norway was the least vulnerable country, scoring -43 points on the Genworth Index. Norway

has in fact been rated as the most secure country in the last two editions of the Index.

19

10

31

-43

-27

-25

-4

-4

6

8

19

22

23

23

32

36

41

52

65

66

76

-80 -60 -40 -20 0 20 40 60 80

All 18 countries

3 North American countries

14 European countries

Norway

Denmark

Sweden

Canada (new to '10)

Finland

Australia (new to '10)

USA

Great Britain

France

Mexico (new to '10)

Turkey

Spain

Ireland

Germany

Italy

Poland

Portugal

Greece

Relative security Relative vulnerability

52

45

60

40

33

63

31

32

-

24

10

15

-

-7

-

-20

-25

-48

28

-

-

Score in 2009

6

DECONSTRUCTING THE GENWORTH INDEX

Examination of the component groups that are identified in the construction of the Genworth Index shows that the

average Index score of 19 points for the 18 countries surveyed is the result of many more households being

vulnerable financially, than secure. Some 24 per cent of households overall were vulnerable financially. In other

words, nearly a quarter were in considerable financial difficulty and did not expect their prospects to improve any

time soon. In contrast, only one in ten were financially secure.

Strivers were also a minority (16 per cent). Like the vulnerable households, these were also in a fair amount of

financial difficulty, but differed in the respect that they were optimistic about their situation improving in the next 12

months. Households that were circumspect – not in difficulty but equally not expecting their circumstances to

improve – made up the largest of all four groups, representing 50 per cent of the population.

As the country reports show, the proportions falling into each of the segments varied considerably from this

average for individual countries. As we might expect, a considerable majority of households in Greece were

vulnerable (65 per cent) as were a half of households in Portugal (51 per cent). Around a third of households were

vulnerable in Poland, Italy, Spain and Turkey. Approaching one in five households in Norway, Sweden and

Denmark were secure, and despite their middle-ranking positions both Turkey and Mexico had relatively high

proportions of secure households (12 and 10 per cent respectively). The biggest groups of strivers were found in

Turkey (31 per cent) and Mexico (28 per cent). These results are summarised in Appendix Table A.1.

Percentage of households in each group, 2010

Compared with the overall picture, the distribution of households across these four groups differed somewhat for

the European and North American averages. The higher Index score of 31 points for the 14 European countries

surveyed is explained by a slightly higher proportion of vulnerable households there (27 per cent) than in the North

American countries (21 per cent), as well as a slightly lower percentage of secure households (7 per cent and 13

per cent respectively).

Coupled with the lower proportion of strivers and a larger group of circumspect households in Europe than in North

America, this shows that Europeans were on average more likely to have experienced financial difficulty than the

North American households. However, the main driver of the differences between these European and North

American countries was a higher propensity for optimism among households in the North American countries.

The average sizes of the four groups defined in the construction of the Index have changed little for the European

countries since 2009, when all 14 were also included in the Index. Seven per cent of European households in both

2009 and 2010 were financially secure. And 11 per cent in 2009 and 12 per cent in 2010 were classed as strivers.

There has been a small movement of households on aggregate into the vulnerable group, from 24 per cent in 2009

to 27 per cent in 2010, and this is matched with a similarly small net movement out of the circumspect group (58

per cent in 2009 to 55 per cent in 2010).

24 2721

16 11 23

50 55 43

10 713

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

All 18 countries 14 European countries 3 North American countries

Secure

Circumspect

Strivers

Vulnerable

7

FOUR-YEAR TREND OF VULNERABILITY IN EUROPE

A subset of ten European countries, as listed on page 3, have been included in all four editions of the Genworth

Index. This provides an indication of the overall trend in levels of consumer financial vulnerability since summer

2007. Despite fluctuating year to year, the picture has been one of low to moderate levels of relative financial

vulnerability in all four years.

Genworth Index score, 10-country average, 2007 to 2010

For these ten original Index countries, relative financial vulnerability has ranged from a low of 7 points in 2007 to a

high of 31 in 2008. The score of 29 recorded in summer 2010 is almost twice as high as it was in 2009 (15 points). Percentage of households falling into each group, 10-country average, 2007 to 2010

The greater number of vulnerable households in 2010 (25 per cent) compared with 2009 (20 per cent) largely

explains the most recent increase in the Index score. Meanwhile, there is both a larger proportion of vulnerable and

a smaller proportion of secure households in 2010 compared with the 2007 baseline year that explains the fairly

considerable differences in Index scores between these two years.

Underlying this is a moderate increase in the numbers of households who had experienced financial difficulties at

least sometimes, from 42 per cent in 2007 to 52 per cent in 2010, combined with a near-doubling of households

who were pessimistic about their future financial situation (from 14 per cent to 26 per cent; see Table A.2).

Looking ahead, it is reasonable to expect relative financial vulnerability to remain moderately high in 2011. In

particular, while widespread fears exist of a double-dip recession it seems unlikely that the number of financially

secure households will return to 2007 levels. The spending cuts planned or already in train in many countries

across Europe – from Greece to Germany to Ireland – will add to these concerns and are likely to exacerbate the

experience of financial difficulties of households in real terms.

29

15

31

7

-80 -60 -40 -20 0 20 40 60 80

2010

2009

2008

2007

Relative security Relative vulnerability

1528

20 25

11

810

9

63

5863 59

11 6 7 6

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2008 2009 2010

Secure

Circumspect

Strivers

Vulnerable

8

GREECE

Of all 18 countries surveyed for this fourth edition, Greece has the highest level of relative financial vulnerability on

the 2010 Genworth Index. Its score of 76, some 24 points higher than in 2009, is among the highest scores

recorded since the Index began in 2007. Vital statistics, Greece

Percentage (%) in each group

Financially vulnerable

Strivers Circumspect Financially

secure Position (of total)

2007 - - - - -

2008 - - - - -

2009 45 15 36 4 3rd

(15)

2010 65 5 28 2 1st (18)

The 2010 Index score for Greece stands at 76 in summer 2010, a fairly substantial increase from 52 in 2009.

This moves Greece above Poland to replace Ireland as the most financially vulnerable country in 2010.

The number of households falling into the financially vulnerable group increased from 45 per cent in 2009 to

65 per cent in 2010; unsurprisingly, this is the largest proportion of vulnerable households of any country.

The sizes of the secure, circumspect and strivers groups have all fallen substantially since 2009, indicating a

net movement of households from these into the financially vulnerable group.

Only 2 per cent of households were secure in 2010, and only a further 28 per cent were circumspect.

These dramatic changes are largely explained by the increase in the number of households who thought their

own financial situation would get worse. This rose from 33 per cent in 2009 to 69 per cent in 2010.

Nonetheless, some 45 per cent of households reported constant or near-constant difficulty at the time they

were interviewed, with a further 37 per cent sometimes experiencing difficulties (see Table A.2).

52

76

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Index s

core

9

PORTUGAL

Portugal's Index score of 66 in 2010 moves it two places to become the 2nd

most vulnerable country on the

Genworth Index. Despite showing signs of improvement in 2009, Portugal now has similarly high levels of relative

consumer vulnerability to those observed in 2008 when it was the most vulnerable country surveyed.

Vital statistics, Portugal





2007 32 5 56 7 2nd

(10)

2008 61 5 31 2 1st (12)

2009 39 8 48 5 4th

(15)

2010 51 9 38 3 2nd

(18)

At 66 points, Portugal's Index score has risen substantially since 2009.

Portugal's position in 2010 is 2nd

on the Index, with only Greece placed higher out of all 18 countries.

Clearly, levels of financial vulnerability have increased dramatically here since the baseline year, when

Portugal had an Index score of 34, although this pattern is typical of the average.

The sizes of the Index groups have also changed dramatically, with 51 per cent of Portuguese households

now classed as financially vulnerable, from 32 per cent in 2007 and 39 per cent in 2009.

As in Greece, the increase in Portugal's Index score since autumn 2009 can be explained by a shift in the

number of people who expected their household financial situation to get worse. Only 18 per cent thought this

would be the case in 2009, compared to 44 per cent in 2010.

Still, eight in ten households had ‘often’ or ‘always’ experienced financial difficulty (40 per cent) or had done

so ‘sometimes’ (41 per cent).

34

70

45

66

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Index s

core

10

POLAND

Closely matching Portugal’s score of 66, Poland’s score of 65 points on the Genworth Index places it as the 3rd

most vulnerable country in 2010. This ranking represents an improvement of one position since 2009, due entirely

to the higher rates of deterioration experienced in Portugal and Greece.

Vital statistics, Poland





2007 - - - - -

2008 27 17 51 5 6th

(12)

2009 46 8 43 3 2nd

(15)

2010 36 11 51 2 3rd

(18)

Poland's Index score of 65 in 2010 reflects a marginal increase of 5 points from 2009.

Despite this, there has been some change in the relative composition of the groups defined by the Index.

While 36 per cent of households were financially vulnerable in 2010, 9 percentage points higher than in 2008

when Poland entered the Index, this has in fact dropped from 46 per cent in 2009.

The Index remains high, however, because so few households (2 per cent) were financially secure, from 3 per

cent in 2009 and 5 per cent in 2008.

Underpinning the changes in Poland is both declining optimism about households' future financial positions

since the baseline and an increase in the number reporting being in financial difficulty 'often or always'.

38

60 65

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Ind

ex s

co

re

11

ITALY

Following some improvement in 2009, Italy has climbed both 12 points to 52 and one place on the Index. Still,

relative to other countries Italy’s position remains favourable compared with 2007, when it ranked as the most

vulnerable country.

Vital statistics, Italy





2007 29 7 59 5 1st (10)

2008 38 6 54 3 2nd

(12)

2009 25 8 63 4 5th

(15)

2010 36 6 55 3 4th

(18)

Italy's Index score in 2010 stands at 52, which reflects an increase of 12 points since 2009 and is approaching

its 2008 score of 58 points.

This ranks Italy as the 4th

most vulnerable country on the 2010 Index, out of the 18 countries surveyed.

Like many countries, Italy's Index score of 52 is rather higher than it was in the baseline year when it was 39.

The change in score since 2009 is mainly attributed to the substantial increase in the proportion of

households classed as financially vulnerable.

In turn, this is because many more Italian households had experienced financial difficulties 'often or always' in

2010 (25 per cent) compared with the previous year (19 per cent).

39

58

4052

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Ind

ex s

co

re

12

GERMANY

Germany's situation on the Genworth Index worsened in 2010, due to an increase in the number of households

that were financially vulnerable. This takes the Index score from 33 points in 2009 to 41 in 2010, and due to

Ireland’s considerable improvement, places it as the 5th

most vulnerable country in 2010.

Vital statistics, Germany





2007 15 7 71 7 3rd

(10)

2008 29 5 63 3 4th

(12)

2009 19 5 72 4 6th

(15)

2010 25 5 66 4 5th

(18)

Germany's Index score for 2010 is 41, a rise of 8 points from 2009 which places it 5th

on the Index.

Looking across the groups that are defined by the Genworth Index, the change in the score since 2009 is

explained by a net movement of households from the circumspect to the vulnerable. These groups decreased

and increased in size, respectively, by some 6 percentage points.

The number of German households in the financially vulnerable group has increased substantially over time,

from 15 per cent in the baseline year of 2007 to 25 per cent in 2010.

Meanwhile, the number of financially secure households remains lower than in the baseline year.

The moderate rise in Germany’s Index score since autumn 2009 can be attributed at least in part to the

increase in the number of people who expect the future financial position of their household to get worse, from

16 per cent to 27 per cent.

16

49

3341

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Ind

ex s

co

re

13

IRELAND

After topping the Index as the most financially vulnerable country in 2009, Ireland's score has dropped significantly

to 36 points and improved five positions on the ranking. However it is still placed firmly among the subset of

countries that are deemed financially vulnerable, in contrast to relative financial security back in 2007.

Vital statistics, Ireland





2007 8 9 66 17 6th

(10)

2008 34 4 58 3 3rd

(12)

2009 39 2 57 2 1st (15)

2010 25 6 64 5 6th

(18)

Ireland's Index score for 2010 is 36, a considerable improvement of 27 points from 2009.

Ireland's position on the 2010 Index stands at 6th

, out of all 18 countries surveyed, also a considerable

recovery of five places compared with 2009.

This is the result of a net movement of households from the vulnerable to all other groups.

Although Ireland's score has improved, still only 5 per cent of households were in the financially secure group,

compared to 17 per cent in the baseline year.

Similarly, while the percentage of financially vulnerable households has fallen since 2009, overall the figure

has increased from 8 per cent in 2007 to 25 per cent in 2010.

In contrast to all of the countries ranking more highly on the Index, the change in Ireland is explained by

increased optimism among householders since 2009 (from 4 per cent to 11 per cent) and a substantial

decrease in those who expected their financial position to get worse (from 45 per cent to 28 per cent).

-16

51

63

36

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Ind

ex s

co

re

14

SPAIN

Compared with its Southern European neighbours, Spain’s 2010 Index score of 32 points has remained remarkably

similar to its score of 31 points in autumn 2009. It also remains a middle-ranking country in this edition with an

Index score that is typical of the European average.

Vital statistics, Spain





2007 17 8 67 8 4th

(10)

2008 37 6 52 4 5th

(12)

2009 27 9 58 6 8th

(15)

2010 32 8 53 7 7th

(18)

Spain's Index score for 2010 is 32, reflecting no real change from its score of 31 points in 2009.

This places Spain as 7th on the Index, out of all 18 countries surveyed, representing a rise of one place from

2009 due to Turkey’s modest improvement since last year.

Levels of financial vulnerability are still much higher than they were in the baseline year, when the Index score

was 15.

The shares of the four groups have remained fairly similar to 2009, though there has been a shift since the

baseline year from the circumspect group to the financially vulnerable group.

The stability in Spain’s situation since 2009 is the result of no major change in patterns of response to either

Index question. However, there has been a subtle but significant shift (of around 7 percentage points) in

households’ expectations for their future, from expecting things to stay the same to expecting that their

situation will get worse, which may be an indication of future deterioration on the Index (see Table A.2).

15

47

31 32

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Ind

ex s

co

re

15

TURKEY

Turkey's second year on the Index shows encouraging signs that levels of relative financial vulnerability are

decreasing there.

Vital statistics, Turkey





2007 - - - - -

2008 - - - - -

2009 38 26 28 9 7th

(15)

2010 34 31 23 12 8th

(18)

Turkey's Index score of 23 for 2010 is slightly above the average of 19 points for all 18 countries, but below

the average of 31 points for Europe.

Turkey has experienced a marginal but promising improvement of 9 points from a score of 32 in 2009.

Turkey's position on the 2010 Index is 8th

, one place better than in 2009.

As a nation it is fairly polarised, however. Compared with similarly scoring countries (Mexico, France and

Great Britain), Turkey has relatively high rates of both financial security (12 per cent) and financial

vulnerability (34 per cent).

The improved Index score is the combined result of a small decrease in the size of the financially vulnerable

group since 2009 and a similar-sized increase in the financially secure group. There has also been some

decrease and increase in the sizes of the circumspect and strivers groups respectively.

In turn, this is due to an increase in optimism, with 43 per cent of householders in 2010 expecting their

financial situation to improve in the coming months, from 37 per cent in 2009.

3223

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Index s

core

16

MEXICO

This is Mexico's first appearance in the Genworth Index. With a score of 23, it is mid-table in the Index, ranking

better than countries including Spain, Germany and Ireland but worse than its North American neighbours.

Vital statistics, Mexico





2007 - - - - -

2008 - - - - -

2009 - - - - -

2010 28 28 34 10 9th

(18)

Mexico's debut Index score is 23, similar to the overall average of 19 points, but somewhat higher than the

average of 10 points for the three North American countries surveyed.

Mexico's position of 9th on the 2010 Index out of all 18 countries places it squarely mid-table.

While the numbers of Mexican households that were classed as financial vulnerable and secure are similar to

the all-country averages, Mexico has fewer circumspect and more striver households than the all-country

averages of 50 per cent and 16 per cent for these groups.

Mexico’s unusual profile is the combined effect of a relatively high proportion of households that had

experienced financial difficulties at least sometimes (79 per cent, compared with 56 per cent on average) and

that expected their household financial situation to get better (38 per cent, compared with 26 per cent).

23

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Index s

core

17

FRANCE

France’s score on the Index is remarkable only for its consistency. The Index score of 22 remains relatively

unchanged from 24 in 2009 and 2007, and it is again mid-table on the Genworth Index.

Vital statistics, France





2007 16 19 53 12 5th

(10)

2008 22 16 55 7 7th

(12)

2009 21 17 56 7 9th

(15)

2010 19 17 57 7 10th

(18)

Frances's Index score for 2010 is 22, reflecting no real change from the score of 24 from 2009.

France places 10th

on the Index, out of all 18 countries surveyed. Again, this is equivalent to its ranking of 9th

in 2009, prior to the introduction of Mexico to the Index.

This overall lack of change for France since 2009 is played out for each of the four groups that the Genworth

Index defines, for which there have been only negligible changes in size.

Reflecting the situation for most countries included in every edition of the Index, levels of relative financial

vulnerability in France are still notably higher than in the baseline year, when France scored 7 on the Index.

7

24 24 22

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Ind

ex s

co

re

18

GREAT BRITAIN

Despite remaining mid-table on the Genworth Index, Great Britain is one of the countries in which relative

vulnerability showed signs of getting worse in 2010.

Vital statistics, Great Britain





2007 7 12 64 17 7th

(10)

2008 22 8 62 8 8th

(12)

2009 14 15 62 9 10th

(15)

2010 20 9 63 8 11th

(18)

Great Britain's Index score in 2010 is 19, a marginal increase in relative vulnerability of 9 points from 2009.

It nonetheless ranks 11th

on the Index in 2010, with an Index score that is lower than the average for 14

European counties surveyed and similar to the 18-country average.

The apparent deterioration in Britain’s Index score is the result of a reversal of the situation in 2009, when we

observed a net movement of households from the financially vulnerable to the strivers group.

The number of households classed as vulnerable increased significantly between 2009 and 2010 to 20 per

cent, due primarily to an increase in pessimism about the future. Britain’s Index score would have been worse

had the number of secure households not held so steady.

Looking back at longer-term change, Great Britain’s Index score is some 39 points higher in 2010 than at the

baseline in 2007. The percentage of households classed as financially vulnerable has almost trebled, while

the financially secure group has halved.

-19

23

1019

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Ind

ex s

co

re

19

USA

In the USA's second year on the Index, there are encouraging signs of a decrease in levels of relative financial

vulnerability.

Vital statistics, USA





2007 - - - - -

2008 - - - - -

2009 20 20 49 10 -

2010 20 22 45 14 12th

(18)

The USA's Genworth Index score is 8 points for 2010, a negligible improvement of 6 points since 2009.

Although tipped just towards relative financial vulnerability, this is better than the all-country average of 19

points.

The USA's position on the 2010 Index is 12th

, with only the Nordic countries, Canada, and Australia

performing better.

A small shift from the circumspect group to the financially secure group since 2009 accounts for the improved

Index score. Otherwise there has been little overall change in the relative size of the four Index groups,

The apparent improvement in the Index score for the USA is due to the number of people reporting that they

never experience financial difficulties. This has increased from 14 per cent of US households in 2009 to 20

per cent in 2010.

148

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Index s

core

20

AUSTRALIA

One of the new countries to the Index, Australia has fared well with only Canada and the Nordic countries scoring

better. Still, at 6 points, the balance in Australia is tipped just towards relative financial vulnerability.

Vital statistics, Australia





2007 - - - - -

2008 - - - - -

2009 - - - - -

2010 21 12 51 16 13th

(18)

Australia is placed 13th

on the Genworth Index of Consumer Vulnerability, out of all 18 countries surveyed.

At 6 points Australia's score for 2010 is considerably lower than the overall average Index score of 19.

This score, which is close to zero, indicates a balance in Australia between vulnerable and secure

households, albeit tipped slightly towards vulnerability.

Compared with the average of 10 per cent in 2010, Australia had a larger share of financial secure

households, with 16 per cent of households falling into this category.

6

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Index s

core

21

FINLAND

For the third consecutive year Finland remains relatively financially secure, again registering a score of just below

zero on the Index.

Vital statistics, Finland





2007 - - - - -

2008 8 13 69 10 9th

(12)

2009 8 14 66 11 12th

(15)

2010 10 16 62 12 14th

(18)

Finland has recorded an Index score of -4 for 2010, very slightly tipped towards relative financial security.

Levels of financial security here have remained extremely stable over the three years that Finland has been

included on the Index.

Finland comes a very favourable 14th

on the Index, out of all 18 countries surveyed.

The size of each of the four groups has changed relatively little since 2009, though there seems to have been

a small shift from the circumspect group to all other groups.

The increase in the size of the financially vulnerable group since Finland’s first Index year in 2008 is partly

explained by an increase of people reporting that they often or always experience financial difficulties.

-5 -7 -4

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Ind

ex s

co

re

22

CANADA

Canada is another of the countries added to the Genworth Index in 2010. Matching Finland, it also scored -4. Only

three countries, all of them Nordic, recorded higher levels of financial security.

Vital statistics, Canada





2007 - - - - -

2008 - - - - -

2009 - - - - -

2010 13 21 51 15 15th

(18)

Canada's Index score for 2010 is -4, compared to an overall average Index score of 19.

Canada comes 15th on the Index, out of all 18 countries surveyed.

Only 13 per cent of the Canadian households were financially vulnerable, compared to an overall average of

24 per cent. This is mirrored by the findings that more households in Canada were financially secure (15 per

cent) than for all 18 Index countries as a whole (10 per cent).

Canada’s score and position reflect that both the experience of constant financial difficulties was lower and

levels of optimism for the future were higher than for the picture overall (Table A.1).

-4

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Index s

core

23

SWEDEN

Sweden again places near the bottom of the Index. Despite encouraging signs of improvement year on year since

2008, Sweden’s current score of -25 is still some distance from its auspicious baseline of -46.

Vital statistics, Sweden





2007 3 8 61 28 10th

(10)

2008 7 7 72 14 10th

(12)

2009 7 7 68 19 13th

(15)

2010 6 10 67 18 16th

(18)

Sweden's position on the 2010 Index is 16th

, out of all 18 countries surveyed.

Sweden's Index score in 2010 is -25, a marginal improvement of 5 points from 2009.

Still, levels of financial security here were not as widespread in summer 2010 as they were in the baseline

year when Sweden scored -46 (and was placed as the country with the highest levels of relative financial

security).

The percentage of Swedish households in the financially vulnerable group has doubled (from 3 per cent to 6

per cent) since the baseline year.

Sweden's improved Index score can be partly attributed to fewer households expecting their financial situation

to get worse. 18 per cent of householders in 2009 said they thought things would get worse, but this has

fallen to just 10 per cent, reflecting baseline levels.

-46

-14-20

-25

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Ind

ex s

co

re

24

DENMARK For the fourth year running Denmark remains relatively financially secure, second only to Norway with a score of

-27 points on the Index.

Vital statistics, Denmark





2007 4 9 64 22 8th

(10)

2008 5 10 68 18 12th

(12)

2009 6 8 69 18 14th

(15)

2010 5 8 70 17 17th

(18)

Denmark places 17th

on the Index, out of all 18 countries surveyed.

Denmark's Index score of -27 for 2010 reflects no real change from the score of -25 from 2009.

The relative size of each of the four groups has also not changed since 2009.

Despite this, significantly more households had never experienced financial difficulties around the time they

were interviewed in 2010 (54 per cent) than in 2009 (46 per cent; Table A.2). In 2010, some 39 per cent of

householders alone reported that they never experienced financial difficulties and did not expect to do so in

the next 12 months.

Still, levels of financial security here are not as widespread as they were in the baseline year when Denmark

scored -37.

-37-28 -25 -27

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Ind

ex s

co

re

25

NORWAY

Norway is once again the best-performing country on the Genworth Index of Consumer Vulnerability. With a score

of -43, only 3 per cent of Norwegian households were vulnerable financially, while some 19 per cent were secure.

Vital statistics, Norway





2007 4 8 60 27 9th

(10)

2008 7 6 67 20 11th

(12)

2009 2 8 71 19 15th

(15)

2010 3 7 72 19 18th

(18)

For the second year running Norway is recorded as the most financially secure country on the Index.

Norway's Index score is -43, similar to 2009. Despite a negligible increase of 5 points on the Index since

2009, Norway's score is again substantially lower than any other country.

Levels of financial security in Norway are very similar to the 2007 baseline levels, the only country where this

is the case.

Looking back across the years there has been a net movement of households from the financially secure to

the circumspect. However, the number of vulnerable households has decreased, particularly since 2008.

Norway is particularly notable, because no householders in the 2010 sample reported that they had

experienced financial often or always and expected their household’s general financial situation to get worse.

-41

-24

-48-43

-80

-60

-40

-20

0

20

40

60

80

2007 2008 2009 2010

Ind

ex s

co

re

26

ENDNOTES

1. See http://www.mabs.ie/publications/media_resources/MABS_Pre_Budget_%20Sub_2010.pdf.

2. The survey is managed by Ipsos MORI. Results are weighted to be representative nationally (and cross-

nationally, where averages across multiple countries are reported).

3. The reports from this baseline study can be found at:

http://www.genworth.co.uk/content/genworth/uk/en/About_Us/research/The_Genworth_Index.html

4. The ratio is rescaled by taking the Log10 of the ratio and multiplying the resulting value by 50.

5. A change or difference that is described as ‘marginal’ or ‘negligible’ is unlikely to be statistically significant.

APPENDICES

T A B L E A . 1 O V E R V I E W O F T H E 2 0 1 0 G E N W O R T H I N D E X R E S U L T S B Y C O U N T R Y

Percentage in each group (row %)

Country (listed by Index score)

Financially vulnerable Strivers Circumspect

Financially secure

Index score

Greece 65 5 28 2 76

Portugal 51 9 38 3 66

Poland 36 11 51 2 65

Italy 36 6 55 3 52

Germany 25 5 66 4 41

Ireland 25 6 64 5 36

Spain 32 8 53 7 32

Turkey 34 31 23 12 23

Mexico 28 28 34 10 23

France 19 17 57 7 22

Great Britain 20 9 63 8 19

USA 20 22 45 14 8

Australia 21 12 51 16 6

Finland 10 16 62 12 -4

Canada 13 21 51 15 -4

Sweden 6 10 67 18 -25

Denmark 5 8 70 17 -27

Norway 3 7 72 19 -43

18 countries 24 16 50 10 19

http://www.mabs.ie/publications/media_resources/MABS_Pre_Budget_%20Sub_2010.pdf

http://www.genworth.co.uk/content/genworth/uk/en/About_Us/research/The_Genworth_Index.html

112003455

PDF Icon

27

T A B L E A . 2 R E S P O N S E S T O T H E I N D E X Q U E S T I O N S

Country (listed alphabetically) Column percentages (%)

2007 2008 2009 2010

Australia Frequency of experiencing financial difficulties

Often or always - - - 21

Sometimes - - - 27

Hardly ever - - - 30

Never - - - 23

Expectations for future financial position

Improve - - - 28

Stay the same - - - 53

Get worse - - - 19

Unweighted base - - - 980

Canada Frequency of financial difficulties


Sometimes - - - 31


Never - - - 23


Improve - - - 36


Get worse - - - 10


Denmark Frequency of experiencing financial difficulties

Often or always 6 7 6 4

Sometimes 14 17 16 15

Hardly ever 26 33 32 26

Never 54 44 46 54


Improve 32 27 26 25

Stay the same 59 61 67 66

Get worse 9 11 7 10

Unweighted base 899 882 859 845

Finland Frequency of experiencing financial difficulties

Often or always - 11 10 14

Sometimes - 33 27 27

Hardly ever - 35 32 32

Never - 22 30 27


Improve - 23 25 28

Stay the same - 70 65 65

Get worse - 7 10 7

Unweighted base - 983 972 981

France Frequency of experiencing financial difficulties




Never 26 24 25 28


Improve 31 23 23 24


Get worse 13 27 19 20


Germany Frequency of experiencing financial difficulties




Never 29 13 17 17


Improve 14 8 9 8


Get worse 14 28 16 27


Great Britain Frequency of experiencing financial difficulties




Never 47 32 22 30


Improve 29 15 24 17


Get worse 6 36 13 30


28

Table A.2 continued 2007 2008 2009 2010

Greece Frequency of experiencing financial difficulties

Often or always - - 40 45

Sometimes - - 40 37

Hardly ever - - 11 12

Never - - 9 6


Improve - - 19 7

Stay the same - - 48 24

Get worse - - 33 69

Unweighted base - - 694 691

Ireland Frequency of experiencing financial difficulties




Never 46 19 17 18


Improve 26 8 4 11


Get worse 10 39 45 28


Italy Frequency of experiencing financial difficulties




Never 20 10 16 13


Improve 12 9 12 9


Get worse 26 35 20 29


Mexico Frequency of experiencing financial difficulties


Sometimes - - - 48


Never - - - 8


Improve - - - 38


Get worse - - - 16


Norway Frequency of experiencing financial difficulties




Never 57 50 52 50


Improve 35 27 27 25


Get worse 6 12 4 8


Poland Frequency of experiencing financial difficulties

Often or always - 26 38 31

Sometimes - 52 48 52

Hardly ever - 16 11 12

Never - 6 2 5


Improve - 22 11 13

Stay the same - 62 63 66

Get worse - 16 27 21

Unweighted base - 488 584 550

Portugal Frequency of experiencing financial difficulties




Never 17 2 6 5


Improve 12 8 13 11


Get worse 29 55 18 44


29

Table A.2 continued 2007 2008 2009 2010

Spain Frequency of experiencing financial difficulties




Never 35 25 27 23


Improve 16 11 15 15


Get worse 14 36 21 28


Sweden Frequency of experiencing financial difficulties




Never 58 46 47 46


Improve 36 21 25 28


Get worse 10 19 18 10


Turkey Frequency of experiencing financial difficulties


Sometimes - - 41 42


Never - - 5 7


Improve - - 34 43


Get worse - - 28 24


USA Frequency of experiencing financial difficulties


Sometimes - - 35 30


Never - - 14 20


Improve - - 31 35


Get worse - - 15 12


Average of 10 European countries


Often or always 14 20 18 19 Sometimes 27 34 33 33 Hardly ever 25 24 27 25 Never 33 21 22 24 Expectations for future

financial position Improve 22 14 17 16

Stay the same 64 54 65 59 Get worse 14 32 18 26 Unweighted base 6,848 7,565 7,373 7,636 Average for all 18 countries



Sometimes - - - 33


Never - - - 20


Improve - - - 26


Get worse - - - 20

Unweighted base - - - 13,752

Percentages are based on weighted data. Base excludes don't knows and refusals and is limited to those who answered both Index questions.

30

ABOUT GENWORTH FINANCIAL Genworth is a leading financial security company meeting the retirement, lifestyle protection, investment and

mortgage insurance needs of more than 15 million customers across more than 25 countries. For more information,

visit www.genworth.com

In Europe, Genworth focuses on Lifestyle Protection and Mortgage Insurance, working with banks, brokers,

advisers and other financial institutions.

Mortgage Insurance (MI) protects lenders and investors in the event that a mortgage borrower defaults on a loan

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lenders to provide the end borrower with earlier and potentially more affordable access to home ownership by

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For more information on The Genworth Index, please refer to genworth.com, select the relevant country page and

then click on ‘Research and Publications’.

31

OUR RESEARCH PARTNERS P E R S O N A L F I N A N C E R E S E A R C H C E N T R E

The preparatory work that informed the development of the Genworth Index and the final Index design was

undertaken by Andrea Finney. Andrea is a Research Fellow in the Personal Finance Research Centre (PFRC), an

independent research centre based at the University of Bristol which specialises in social policy research across all

areas of personal finance, mainly from the consumer’s perspective.

Andrea joined PFRC in January 2007 having previously worked on the Wealth and Assets Survey at the Office for

National Statistics, and at the Home Office where she focused mainly on national crime surveys and studies of

alcohol-related crime. Andrea has particular expertise in the design and multivariate analysis of complex surveys

and their application to promoting understanding of patterns of saving, borrowing and over-indebtedness. She is

co-author of a report to the European Commission on the nature and causes of over-indebtedness, has undertaken

a review of the evidence on saving among lower-income households and, more recently, has prepared the report

on the results of the interim evaluation of the Child Trust Fund for HM Revenue & Customs.

The Personal Finance Research Centre at the University of Bristol in the UK has a national and international

reputation for policy-focused research encompassing all areas of personal finance, inlcuding over-indebtedness

and debt advice, financial capability and financial inclusion. PFRC has considerable expertise in designing,

undertaking and analysing both large-scale quantitative and in-depth qualitative research, with a particular

emphasis on methodological studies and Index construction. It has conducted research for government

departments, trade associations, regulatory bodies, charities and the private sector. The work of the centre has

been influential in shaping policy, and several members of PFRC act as technical and policy advisers to

government departments and other organisations.

32

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