— Bucks, Brian K., Arthur B. Kennickell, and Kevin B. Moore. "Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances." Federal Reserve Bulletin. Washington, DC: Board of Governors of the Federal Reserve System, 2006. This report examines changes in American families' income and net worth from 2001 to 2004 using the Federal Reserve's Survey of Consumer Finance. From 2001 to 2004 median value of real family income and net worth rose about 1.5 percent. The mean value of income, however, fell 2.3 percent, and that of net worth rose 6.3 percent. Overall, income and net worth grew far faster from 1995 to 1998 and from 1998 to 2001. The authors attribute these changes from 2001 to 2004 to substantial growth in real estate holdings (through appreciation and the rate of homeownership), declines in stock ownership, and increased debt, mostly secured by real estate. Because of these developments, families now spend more money servicing their debt, despite lower interest rates, and the incidence of late payments has risen. — Duflo, Esther, William G. Gale, Jeffrey B. Liebman, Peter Orszag, and Emmanuel Saez. "Saving Incentives for Low- and Middle-Income Families: Evidence from a Field Experiment with H&R Block." CEPR Discussion Paper 5332. Social Science Research Network, 2005. This paper discusses the results of a field experiment on savings incentives conducted in 2005 on H&R Block clients living in predominately low- and middle-income neighborhoods in St. Louis. The study finds that take-up rates are 3 percent for no match rate, 10 percent for a 20 percent match rate, and 17 percent for a 50 percent match rate. In addition, the average contribution for those receiving a 20 and 50 percent match rate were four and eight times higher, respectively, than that of control group. The authors also compare the effectiveness of these different matching rates to the effectiveness of the saver's credit, in terms of their effect on participants' savings. The study argues that increasing the provision of information and the ease of saving can significantly increase IRA contributions among low- and middle- income households. — Oliver, Melvin L., and Thomas M. Shapiro. Black Wealth/White Wealth. New York: Routledge, 1997. The authors of this book analyze the racially polarized distribution of private wealth. They draw particular distinction between wealth as a stock of assets and income as a flow of money, and the different implications of these two indicators for opportunities, standards of living, and social status. For blacks, lack of state-sponsored investment opportunities, impediments to entrepreneurship, and past disadvantages have contributed to their low levels of wealth accumulation. Moreover, the disparity in wealth reveals racial inequality to be far greater than what income levels imply. Inheritance combined with appreciation in home values has and will continue to benefit whites far more than blacks. In order to counter the persistence of the disparity in wealth, the authors call for large redistributive policies for all poor households, with specific attention paid to African Americans. — Retsinas, Nicholas P., and Eric S. Belsky, eds. Building Assets, Building Credit: Creating Wealth in Low-Income Communities. Washington, DC: Brookings Institution Press, 2005. This book examines the high rates of credit growth for low-income households during the 1990s and its effects on rates of homeownership. With respect to this particular group, it argues that the potential benefits of this development have not come to fruition due to low take-up and the increased risk that accompanies increased credit. The authors discuss current critical issues for low-income households such as the use of alternative lending stemming from barriers to the mainline financial system, the relationship between credit scores or history and subprime mortgage rates, regulatory practices that aim to remove obstacles to mortgages for low-income households, and proposals to increase use of the mainline financial system. — Shapiro, Thomas M. and Edward N. Wolff, eds. Assets for the Poor: The Benefits of Spreading Asset Ownership. The Ford Foundation Series on Asset Building, 232-66. New York: Russell Sage Foundation, 2001. This book holds that antipoverty programs should not attempt to increase incomes but instead focus on a strategy to address low-asset accumulation. The editors claim that current policies, such as individual retirement accounts (IRAs), 401(k)s, medical and educational savings accounts, and mortgage interest deductions all benefit the wealthy and thus further skew the already inequitable income distribution. Authors of the different chapters in this volume explore the staggering rise in wealth inequality. Their findings include that intergenerational transfers, which vary greatly by income levels, account for half of all wealth; that of all American and black households, 20 percent and 45 percent, respectively, lack basic transaction accounts and, subsequently, these households must engage alternative sources of credit; that means-tested welfare benefits have prevented asset accumulation; and that homeownership is correlated with increased educational opportunities. The last section of the book examines and proposes particular policies to expand assets and credit for communities and social networks, as well as examining the saving behavior of the poor in the context of complicated incentives in federal programs. — Sherraden, Michael. Assets and the Poor: A New American Welfare Policy. New York: M.E. Sharpe, 1991. This study examines the broad range of welfare strategies and their implications for different groups. Sherraden draws a distinction between welfare programs that aim to increase consumption (that are direct and highly visible) and programs that encourage asset accumulation (that are indirect and less transparent). He finds that these indirect benefits accrue primarily to the middle and upper classes, because they are asset-based, but they are critical and underused tools for poverty alleviation. He calls for the development of IDAs, claming that asset holdings can significantly promote savings behavior. — Woo, Lillian G., F. William Schweke, and David E. Buchholz. "Hidden in Plain Sight: A Look at the $335 Billion Federal Asset-Building Budget." Washington, DC: Corporation for Enterprise Development, 2004. (PDF file) The authors of this paper provide a comprehensive analysis of federal asset-building policies. The study finds that in FY 2003, these initiatives cost $335 billion through direct outlays and through preferences and incentives (tax expenditures), with spending on the latter form dwarfing the amounts spent directly. Further, the authors note that federal policies disproportionately benefit the wealthy; over a third of the benefits go to the wealthiest 1 percent of Americans, and less than 5 percent reach the bottom 60 percent of taxpayers. The authors claim that the system lacks a coherent strategy, and they call for reform, particularly through better targeting of existing programs and more thorough coordination of federal policies. |
