Why do the Dutch feel more financially secure than other Europeans?

People in the Netherlands experience less financial stress than residents of many other Western countries, according to research by savings platform Raisin, as reported by Dutch financial newspaper Het Financieele Dagblad. What explains the Netherlands' high ranking? We gave APG Chief Economist Thijs Knaap a quick call.

With a score of 55, the Netherlands ranks above the ten other Western countries included in Raisin's Financial Security Index. Why do the Dutch, on average, feel so financially secure?
"I think that can largely be traced back to the country we live in and the economy in which we determine our financial situation. That economy has been performing well and steadily for years. Unemployment is low, and economic setbacks here are often relatively mild compared to those in other countries. One reason is that we have a service-based economy that is broadly diversified. We trade with many different countries, which makes us less vulnerable if something goes wrong somewhere. That stability provides reassurance. In a country like Germany, the economic focus is much more on industry, and that sector has struggled recently. Just look at the difficulties facing the German auto industry.

People in the Netherlands also benefit from a good education system at the start of their lives. In addition, we have a strong social safety net, making it less likely that people will end up in serious financial trouble. And the Netherlands has a good pension system, which is certainly not something every country can take for granted. That provides reassurance as well. If you add all that together, it is possible to avoid a lot of financial stress in the Netherlands without having to do anything extraordinary to keep things financially on track.

That said, all of this is relative to other countries and only reflects a snapshot in time. And, of course, an average says nothing about individual situations. There are certainly groups in the Netherlands that do experience a great deal of stress. That may include people with low incomes, people who do not own a home, or people whose qualifications are less in demand. So it's not as if everyone is doing well. But on average, the Netherlands is in a fairly strong position."

The Dutch also report a relatively high degree of control over their finances. What distinguishes the Netherlands in this respect from other countries?
"I can imagine that this feeling of control partly comes from a broader sense that things are financially going quite well. If you don't constantly feel that you're being hit by financial shocks from all sides, you may also feel less need for additional control.

The stability of the financial sector probably plays a role as well. In the Netherlands, it's relatively easy to open a bank account, borrow money, invest, and manage your finances. There is deposit protection, and banks are supervised. Since the financial crisis of 2008, we've often been critical of our banks, but viewed internationally, we actually have a fairly good banking sector that operates reliably at relatively low cost. One of the pleasant things about living in the Netherlands is that many financial matters are simply well organized. That reduces uncertainty and stress.

Compare that with the United States. Average wealth there is much higher than it is here, yet Americans score lower on financial security. That shows that averages don't tell the whole story. Inequality is much greater, and people have to arrange much more for themselves, including their retirement savings. That can create financial uncertainty."

The Netherlands has also experienced relatively high inflation in recent years. Shouldn't that lead to more financial stress?
"You would indeed expect the high and unpredictable inflation we've seen in recent years to lead to more financial stress. Yet that doesn't show up in this index. Apparently, other factors carry more weight than inflation when it comes to people's sense of financial security.

In that context, it's worth noting that the Netherlands is among the eurozone countries with the highest net wealth per capita. That includes savings, investments, and pension assets. Compared with a country like Germany, the Dutch on average have considerably more wealth. That contributes to financial confidence."

As an economist, what is your main takeaway from this research?
"A lot of economic research focuses on measurable things such as income, wealth, or hours worked. This research asks a different question: how do people actually feel? Do they experience financial stress or not? I think that's valuable.

You can try to determine how people are doing in all kinds of indirect ways, but you can also simply ask them. And then you see that hard economic data does not always match how people feel. A country may be wealthy on paper, but that doesn't automatically mean its residents feel more financially secure. Just look at the United States. Ultimately, well-being should be the goal of what an economy is trying to achieve. That's why I hope we'll see more research like this in the future."