An Overview of Asset-Building Research
By Ethan Geiling on 01/12/2012 @ 01:00 PM
Assets are tangible and intangible economic resources – a home, savings in a bank account, a college education – that can produce value for their owner. “Asset building” as a strategy to help families escape poverty emerged in the early 1990s, inspired by researcher Michael Sherraden’s assets-based approach to poverty alleviation articulated in Assets and the Poor. If you haven’t already, take a look at CFED founder Bob Friedman’s recent blog post about Michael Sherraden and Assets and the Poor.
The essential insight from Sharraden’s work was that assets can matter economically, socially and psychologically in ways that income alone does not. More recent research has reinforced this insight: that income –by itself – is necessary, but not sufficient, to allow families to escape poverty, achieve financial stability and move up the economic ladder.
CFED’s Policy & Research team created a short fact sheet that provides an overview of research on assets and their effect on financial stability and economic opportunity. Many research studies have shown that:
- Assets create a financial buffer to weather emergencies
- Assets can promote success in the labor market
- Assets can promote long-term thinking, planning and psychological well-being
- Assets can promote economic mobility for single mothers
- Assets can enhance the well-being and life chances of children
- Assets can increase the likelihood of going to and succeeding in college
The asset-building field is constantly expanding. To keep up to date on everything that’s happening, CFED posts the latest research papers and reports in our Assets Research Library. Resources are organized across four topics: Savings & Financial Security, Affordable Housing & Homeownership, Entrepreneurship and Economic Development.
Some examples of recent additions to the Assets Research Library:
- Financially Fragile Households: Evidence and Implications (The George Washington University School of Business, Princeton University, Harvard Business School, March 2011) This paper examined households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. Almost half of Americans report that they are incapable of coming-up with the funds necessary to deal with an ordinary financial shock.
- Private Transfers, Race, and Wealth (The Urban Institute, August 2011) This study examined how private transfers – including financial support received and given from extended families and friends, as well as large gifts and inheritances – explains racial and ethnic disparities in wealth. African Americans and Hispanics receive less in private transfers than non-Hispanic whites.
- Accounting for the Role of Habit in Regular Saving (The Ohio State University, May 2011) This study explored the relationship between savings habit development and IDA programs. The study found that habit strength increased over time during participation in an IDA program, and savings habits reduced the stress of financially difficult situations.
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