Asset Poverty in the United States, 1984–99: Evidence From the Panel Study of Income Dynamics

Abstract

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Estimation of Joint Income-Wealth Poverty: A Sensitivity Analysis

“…Finally, since housing wealth represents the 9 largest share of a household's asset portfolio the decline in poverty rates is much higher when the value of the household's main residence is included than when non-housing wealth is only taken into account (e.g. Azpitarte, 2012;Brandolini et al, 2010;Caner & Wolff, 2004).…”

“…In existing studies the asset poverty threshold is generally set at one-fourth, which means that households need to have sufficient wealth to keep them at the income poverty line for at least three months. The rationale provided for this is that unemployment is regarded as the most important cause of economic hardship, for which the expected duration in the United States, prior to the financial crisis, was between two and four months (McKernan et al, 2012, Haveman & Wolff, 2004Caner & Wolff, 2004). However, expected unemployment duration is typically longer in Europe than in the US (OECD, 2014, p.96) and also longer as a consequence of the crisis.…”

“…A first approach integrates the two financial resources into one single dimension by converting wealth into yearly annuities (Brandolini et al, 2010;Short & Ruggles, 2005;Van den Bosch, 1998;Weisbrod & Hansen, 1968), while a second approach applies a two-dimensional framework by developing separate poverty lines for income and wealth (Kim & Kim, 2013;Azpitarte, 2012;Headey, 2008;Haveman & Wolff, 2004). The general findings of these approaches are (1) that poverty estimates including wealth are much lower than the traditional income-based measures; (2) that poverty rates of the elderly are much more affected than those of the non-elderly and (3) that the decline in poverty rates is much higher when the value of the household's main residence is included than when only non-housing wealth is taken into account (Azpitarte, 2012;Brandolini et al, 2010;Headey, 2008;Caner & Wolff, 2004;Van den Bosch, 1998). However, we may want to be careful about generalizing these findings of a limited number of studies.…”

Financially Fragile Households: Evidence and Implications

“…But many empirical studies, including one based on recent data from the Financial Capability Study (Lusardi, 2010), find that, in fact, many households hold few or no assets and no emergency funds and that they are very vulnerable to shocks (Caner and Wolff, 2004). Others have documented the paucity of assets among certain groups of the population (Oliver and Shapiro, 1995;Conley, 1999;Havemann and Wolff, 2004;Bucks, Kennickell, and Moore, 2004;Sherraden, 2005).…”

Early retirement and the financial assets of individuals with back problems

“…Accumulated wealth is typically used in retirement to finance both large financial commitments and also general daily consumption [31][32][33]. It also provides security against unexpected changes or events-such as deterioration of health-by providing a ''buffer stock of wealth'' [31,32].…”