Summary
An expansive amount of research from across the political spectrum demonstrates the importance of owing assets, particularly for minorities, women and low-income populations. Owning assets fosters better citizens.
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Asset ownership is crucial to reducing poverty over time. Researchers have noted that owning assets is both life- and community-changing. Ray Boshara of the Corporation for Enterprise Development (CFED) has attested “that owning assets fosters better citizens: Owners take better care of their homes, neighborhoods and schools; they’re more likely to plan for their and their kids’ futures; [and] more likely to vote and be engaged in community affairs.”
The most important element in achieving the above is not merely possession of the asset itself, but ownership of the asset. While the term “ownership” has become politicized and muddied, the central tenet is the same: Property rights and possession of assets are instrumental to poverty alleviation. Ownership of assets, in fact, results in greater community and civic participation, contrary to claims by critics that focusing on ownership breaks down communities and fosters an “everyman-for-himself” attitude.
An expansive amount of research from across the political spectrum demonstrates the importance of owing assets, particularly for minorities, women and low-income populations. A brief literature review on asset building, wealth and poverty highlights the following:
Homeownership is among the most studied areas of asset building. Its effects on children, savings, neighborhood and civic involvement, marital stability and economic security are among the central areas that have been studied.
- Residential stability acts as the conduit for increased child well-being, primarily because of stable educational and social opportunities.
- Home-owning parents are more likely to affect their children positively, particularly in terms of homeownership. Parents are also more likely to help their children financially, creating a positive intergenerational effect.
- Asset holdings and domestic violence are inversely related, meaning that homeowners tend to have less experience with domestic violence.
Savings accounts also show positive impacts on families.
- A test of parental saving and spending behaviors shows that parental savings patterns are reflected by teens who save.
- High school graduation rates are higher for children of single mothers with over $3,000 in savings than children of single mothers without savings.
Wealth refers to the stock of assets (e.g.: savings, property, investments), as opposed to just income from wages or other income transfers.
- Savings leads to risk-avoidance, planning for the future and self-confidence.
- The effect of income is less significant than that of assets in the form of savings. Wealth and investment income have greater impact on test scores and education than income.
- Lack of parental assets increases the likelihood that their children will remain in poverty, particularly among adult daughters.
- Research shows that better long-term outcomes for children, including cognitive development and physical health, are influenced by wealth.
- Assets have a lessening effect on depression and alcohol use and a positive effect on life satisfaction.
Interestingly, research also shows that the assets do not need a specific value in order to have the above positive impacts. Research from the United Kingdom found that the monetary value is less important than the actual ownership of the asset. The type of asset also plays an important role in affecting behavior and helping families become self-sufficient. Education, savings accounts, cars and homes, for example, each have a significant impact on reducing long-term poverty for families in unique and interconnected ways.
Many families are benefiting from the growing area of asset building through ownership of a savings account called an Individual Development Account (IDA) and other savings mechanisms for children, education and retirement. As more asset ownership programs are established, it is vital to the health of our communities that ownership is not viewed through political or narrow terms, but instead that ownership is a significant part of income equality, poverty reduction and self-sufficiency.
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Nancy Wheaton
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