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How Does Asset Poverty Affect Winston-Salem and Forsyth County?

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Core Measures of Local Asset Poverty

Literature Review Findings

Financial Effects of Asset Poverty

Assets may raise a family’s income through the following channels: [1]

  1. Assets such as stocks bring passive investment income;
  2. Physical assets can allow people to pay less for services (people with cars do not have to pay for taxi / Uber);
  3. Help extend job search (having a car) or invest in human capital such as education;
    1. Car ownership increases employment and hours worked. [2]
  4. Functions as an insurance stock that allows job seekers to take more risks in the job market or relocate.

Asset poverty may negatively impact a family’s income through higher financial stress, which relates to increased absenteeism at work. [3]

Effects of Asset Poverty on Children

Higher family assets are associated with both college attendance and college graduation of children within the family, even when controlling for parents’ income.  Along these same lines, assets are associated with parents’ educational expectations of their children. There is a positive relationship between assets and parental education expectations, even when controlling for income.  High asset families had higher expectations for their children. [7]

Higher family liquid assets (stocks and bonds) are associated with higher school-aged children math and reading scores, even when controlling for income.  The authors, “speculate that this maybe partly due to a stronger future orientation or the financial savvy of parents who invest in these kinds of assets.” In this study, higher assets was also associated – albeit weakly – with higher cognitive development of school-aged children. [8]

Families with more assets can make bequests to children, increasing social mobility. [9]

Reviewing the literature, Grinstein-Weiss et al. note the following ways that assets impact children:

  1. Provide cushions to families, lessening the impact of hardship or distress;
  2. Reduce parental stress, which could manifest itself on children;
  3. Help parents invest in children’s educational and occupational opportunities.
  4. Change children’s attitudes and expectations of themselves. [10]

Additional Reading

Lerman, R. I., & McKernan, S. M. (2008). The effects of holding assets on social and economic outcomes of families: A review of theory and evidence. The Urban Institute, November.

Aratani, Y., & Chau, M. M. (2010). Asset poverty and debt among families with children.

Health Effects of Asset Poverty

Even when controlling for income and education, wealth is associated with better self-rated health. [4]

Assets are associated with a reduction in family stress generally. [5]

High debt is associated with mental disorders, and the relationship between debt and mental disorder is much stronger than the relationship between income and mental disorder.  However, the study does not attempt to disentangle which way causation runs: does debt cause mental disorder, do those with mental disorders rack up more debt, or is it a little of both? [6]

Effects of Asset Poverty on Future Expectations

Results support the proposition that assets have a positive effect on expectations and confidence about the future; influence people to make specific plans with regard to work and family; induce more prudent and protective personal behaviors; and lead to more social connectedness with relatives, neighbors, and organizations.” [11]

Effects of Asset Poverty on Home Ownership

Homeownership relates to the following positive factors (not necessarily causal):

  1. Higher high school graduation; [12]
  2. Provides residential stability; [13]
  3. A hedge against rising rent; [14]
  4. Homeownership is related to variables indicating social capital (voting, being part of local organizations, working to solve local problems, etc) and the relationship might be causal.  The authors claim the causal relationship might be because homeowners are more stable; [15]
  5. Children exhibit fewer behavioral problems. [16]


[1] Lerman, R. I., & McKernan, S. M. (2008). The effects of holding assets on social and economic outcomes of families: A review of theory and evidence. The Urban Institute, November.

[2] Raphael, S., & Rice, L. (2002). Car ownership, employment, and earnings. Journal of Urban Economics, 52(1), 109-130.

[3] Kim, J., Sorhaindo, B., & Garman, E. T. (2006). Relationship between financial stress and workplace absenteeism of credit counseling clients. Journal of Family and Economic Issues, 27(3), 458-478.

[4] Pollack, C. E., Cubbin, C., Sania, A., Hayward, M., Vallone, D., Flaherty, B., & Braveman, P. A. (2013). Do wealth disparities contribute to health disparities within racial/ethnic groups?. J Epidemiol Community Health, 67(5), 439-445.

[5] Rothwell, D. W., & Han, C. K. (2010). Exploring the relationship between assets and family stress among low‐income families. Family Relations, 59(4), 396-407.

[6] Jenkins, R., Bhugra, D., Bebbington, P., Brugha, T., Farrell, M., Coid, J., … & Meltzer, H. (2008). Debt, income and mental disorder in the general population. Psychological medicine, 38(10), 1485-1493.

[7] Zhan, M., & Sherraden, M. (2003). Assets, expectations, and children’s educational achievement in female-headed households. Social Service Review, 77(2), 191-211. Shanks, T. R. W., & Destin, M. (2009). Parental expectations and educational outcomes for young African American adults: Do household assets matter?. Race and Social Problems, 1(1), 27-35. Conley, D. (2001). Capital for college: Parental assets and postsecondary schooling. Sociology of Education, 59-72.

[8] Yeung, W. J., & Conley, D. (2008). Black–white achievement gap and family wealth. Child Development, 79(2), 303-324.

[9] Lerman, R. I., & McKernan, S. M. (2008). The effects of holding assets on social and economic outcomes of families: A review of theory and evidence. The Urban Institute, November.

[10] Grinstein-Weiss, M., Shanks, T. R. W., & Beverly, S. G. (2014). Family assets and child outcomes: Evidence and directions. The Future of Children, 147-170.

[11] Yadama, G. N., & Sherraden, M. (1996). Effects of assets on attitudes and behaviors: Advance test of a social policy proposal. Social Work Research, 20(1), 3-11.

[12] Aaronson, D. (2000). A Note on the Benefits of Homeownership. Journal of Urban Economics, 47(3), 356-369.

[13] Id.

[14] Sinai, T., & Souleles, N. S. (2005). Owner-occupied housing as a hedge against rent risk. The Quarterly Journal of Economics, 120(2), 763-789.

[15] DiPasquale, D., & Glaeser, E. L. (1999). Incentives and social capital: Are homeowners better citizens?. Journal of Urban Economics, 45(2), 354-384.

[16] Haurin, D. R., Parcel, T. L., & Haurin, R. J. (2002). Impact of homeownership on child outcomes (pp. 427-446). Brookings Institution Press.

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