Do Asset Limits in Social Programs Affect the Accumulation of Wealth?

Brief

Do Asset Limits in Social Programs Affect the Accumulation of Wealth?

Abstract

In providing benefits to those without resources to support themselves, public assistance programs must define what counts as resources. Typically, programs consider assets and income in determining assistance eligibility. However, valuing assets can be difficult and asset tests create disincentives to save. In some cases, one additional dollar of assets can result in the loss of benefits worth thousands of dollars. Current practices raise two questions: are asset tests fair and do asset tests discourage asset accumulation? This brief identifies the population subject to asset tests, reviews existing research, considers strategies for meeting objectives, and offers suggestions for additional research.

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