Social policies put into place during the 20th century, both in the United States and abroad, are today in a period of strain, questioning, and, sometimes, revision. Although typically discussed in political terms—conservative or liberal, left or right—the sources of policy strain are primarily technological and economic. Social policies of the 20th century were designed for an industrial society with low-skilled and relatively stable labor markets. When a household was without labor income—due to death, disability, job loss, age, or some other factor—social policy was designed to provide income to support basic consumption. These policies were successful in many respects (notwithstanding the fact that America’s social policy was never as comprehensive or generous as most policies in Western Europe). In the 21st century, however, we live in a world where technological changes have produced very different labor markets. Greater skills are needed, jobs are less stable, and income inequality is growing. It is no longer clear that basic income support is a sufficient social policy response in these more demanding economic circumstances. As a result, industrial-era policies are being questioned and new policy directions are being considered and explored in many countries.
In this environment, an active discussion of asset-based policy arose in the United States (Oliver and Shapiro 1995; Sherraden 1991) and has led to a growing body of theory, research, policy innovation, and testing. In simple terms, asset-based policy suggests that individual, household, and community well-being (or “welfare”) is derived not solely from a certain level of income and consumption, but also from building assets to invest in life goals and to enhance long-term economic stability and social protections. In this book we seek to take the measure of asset-based policy. We gather the existing evidence, assess theory, examine data sources, and point to potential directions for research and policy.
Overall, theory and evidence suggest that asset-based policies may promote development of individuals, families, and perhaps communities and society as a whole. Yet traditional social policies that assist the poor have focused mainly on income and consumption. The United States and many other countries do have large asset-based subsidies, but the poor are frequently left out because (1) the subsidies operate through the tax system (e.g., the mortgage interest deduction, tax breaks for contributions to retirement and education accounts) and the poor have little or no tax liability; and (2) the poor are less likely to own homes, investments, or retirement accounts, where most asset-based policies are targeted. In addition, asset limits in means-tested transfer policies have the potential to discourage saving by the poor. In many respects, the poor do not have access to the same structures and incentives for asset accumulation as those who are not poor. This is unfortunate because saving and asset building for low-income households are activities that may enable a family to eventually move up and out of poverty.
The potential of asset building to promote long-term development of low-income households motivates this book. Asset Building and Low-Income Families provides a comprehensive assessment and critique of the knowledge base and policy potential of asset building for the poor. Specifically, the book evaluates what is known regarding the measures, distributions, determinants, and effects of asset holding; charts directions for future research; and sets the stage for future asset policies that may include low-income households.
While the focus of this book is on asset accumulation and asset-based policies for low-income individuals and families, the conceptual frameworks developed are not limited to low-income populations. This broad approach is an effective way to identify critical issues that relate to asset holding for all populations. Where appropriate, however, various chapters point out when the framework specifically applies to low-income, minority, and single-parent households. This distinction is important because these subgroups are particularly vulnerable to low asset accumulation. The definition of low-income used in this book is necessarily imprecise. The book reflects a broad research and policy synthesis and definitions of low-income are not uniform across studies, surveys, or public programs. For our purposes, low-income can be broadly thought of as affecting households in the bottom income quintiles.
References
Oliver, Melvin L., and Thomas M. Shapiro. 1995. Black Wealth/White Wealth: A New Perspective on Racial Inequality. New York: Routledge.
Sherraden, Michael. 1991. Assets and the Poor: A New American Welfare Policy. Armonk, NY: M. E. Sharpe.
