Building Financial Capability and Assets to Reduce Poverty and Health Disparities: Race/Ethnicity Matters.

Abstract

Evidence has documented racial wealth inequity as one of the key pathways linking structural racism and racial health inequity. Most prior studies on the wealth-health relationship use net worth as the measure of wealth. This approach provides little evidence on the most effective interventions as various types of assets and debt affect health differently. This paper examines how U.S. young adults' wealth components (e.g., financial assets, nonfinancial assets, secured debt, and unsecured debt) are associated with physical and mental health, and if the associations differ by race/ethnicity. Data were drawn from the National Longitudinal Survey of Youth 1997. Health outcomes were measured by mental health inventory and self-rated health. Logistic regressions and ordinary least square regressions were used to assess the association between wealth components and physical and mental health. I found that financial assets and secured debt were positively associated with self-rated health and mental health. Unsecured debt was negatively associated with mental health only. The positive associations between financial assets and health outcomes were significantly weaker for non-Hispanic Black respondents. Unsecured debt was protective of self-rated health for non-Hispanic Whites only. For Black young adults, unsecured debt had more severe negative health consequences compared to other racial/ethnic groups. This study provides a nuanced understanding of the complex relationship among race/ethnicity, wealth components, and health. Findings could inform asset building and financial capability policies and programs to effectively reduce racialized poverty and health disparities.