Index Development and Methodology
Index Development Process and Model
The Index has been peer-reviewed and validated by organizations such as Statistics Canada and leading Financial Institutions and is a highly robust model.
The Index was developed over five years based on an iterative process to regressing and evaluating over 30 potential indicators against self-reported “financial resilience” or “financial stress” measures using the multiple linear regression technique. In the end, nine variables were determined to account for 57 percent of the variance in the financial resilience construct as of June 2021 and 64 per cent of the variance in the financial resilience construct as of February 2021. The regression model has indicators which are significant at a 95% confidence interval, meaning that their p-values are less than 0.05.
The regression model was validated against 2017, 2018 and 2019 survey data, which revealed consistency in results, represented both by a strong R-squared as well as similar weights of the independent variables as predictors of financial resilience. Note: weightings for the model are based on their overall contribution to the dependent variable in the model and are not equal.
Based on 2017 and 2018 data, six out of the nine index model independent variables were available, and in the 2019 data 7 of the independent variables were available. All 9 variables including the composite variable are available based on the 2020 data for February 2020. There were four stages of index development and validation:
- Identification of potential indicators
- Data collection for Index development
- Indicator selection and
- Model Validation.
Index tracking is conducted at least annually, with tracking every four months in 2020 and 2021. Tracking is conducted based on the needs of our clients and partners.
As a proprietary regression model, the Index builds on over five years’ of national longitudinal financial well‐being data from the 2017‐2022 Financial Well‐Being studies. This is a 15‐minute online survey conducted with 5,000 adult Canadians from a representative sample of the population by province, age, gender, and household income, with respondents recruited through the Angus Reid Forum.
The Financial Well-Being studies and Index build on the Financial Well-Being Framework developed by Seymour Consulting in 2016.
Financial Well-Being Framework
Why we Created the Index
As the leading independent authority on financial health, our goal is to help build a financial resilient, inclusive and equitable Canada.
In our uncertain world, this is more needed than ever. We are passionate about the need to foster financial inclusion and financial empowerment, and help individuals, families, businesses and future generations to understand, maintain and/or improve their financial resilience through stressors and shocks in their life.
Seymour Consulting was the first organization to measure the impact of financial stress on different well-being elements of Canadians, with measurement and tracking dating back to 2017 through the longitudinal Financial Well-Being studies.
Index creation was motivated by results confirming that financial stress and financial vulnerability have been mainstream issues for many households since well before the pandemic.
For more information check out our Original Index Release Report
Through the Financial Well-Being studies, households’ challenges and needs in terms of access to financial products, services, information, help and advice are tracked for Canadians and specific populations. We also track peoples’ needs, challenges and sentiments, reported consumer and financial behaviours, financial and debt stressors and the extent to which financial stress impacts the overall well‐being of households. The extent to which tier one Financial Institutions are helping to improve the financial wellness (and financial resilience) of their customers – and those who are more financially vulnerable – is also being tracked based on independent customer data.
Customized studies and analytics allow for targeted research and measurement by organizations. Longitudinal benchmarking data allows for trended analytics and impact measurement over time.
Original Index Release Reports
Statistics Canada - Seymour Consulting Report
Low-Income Canadians Financial Vulnerability Report
C.D. Howe Intelligence Memo
Find out more about Index applications or contact us to learn more.