Relationships Between Assets and Perceived Economic Strain

Abstract

Income and wealth disparity continue to widen among U.S. households. Efforts to combat poverty generally consist of income-based policies while wealth creation involves asset-based policies. Asset theory suggests that an asset-based approach to poverty reduction will help increase the personal, social, and economic well-being of low-income households. As a result, Individual Development Accounts (IDAs), or dedicated savings accounts, were designed to help propel low- and moderate-income individuals out of poverty by building assets in the form of home ownership, small business development, and post-secondary education. One way in which IDAs are hypothesized to increase well-being is by improving household economic stability. This longitudinal study examined the relationships between asset building and perceived economic strain. Findings support the notion that IDAs are positively associated with perceptions of economic stability among households. In other words, it may be that assets help increase economic resources and well-being among low-income households.