Asset Accumulation Among Low-Income Households

Stacie Carney and William G. Gale


We examine patterns and correlates of asset accumulation among low-income households
and other demographic groups using a series of cross-sections from the Survey of Income and Program Participation. We find that 20 percent of American households, including 45 percent of black households, do not maintain a transactions account. In addition, households in the bottom half of the income distribution tend to maintain very low discretionary financial asset holdings. Our regression analysis suggests that income, age, education and marital status are significantly correlated with the level of net worth and financial assets. However, despite controlling for a series of other variables, we find that black households and those who receive public assistance have lower wealth than others. Examining net worth versus financial assets revealed somewhat different patterns of accumulation. This suggests that the process by which these two are accumulated may be different, at least for lower-income households. We also show
that, controlling for other factors, not having a transaction account is correlated with economically and statistically significant effects on the ownership of net financial assets, housing, and vehicles. Along with previous work, they provide a set of facts to help frame and motivate analyses of public policies to assist low-income households in accumulating assets.