More than 63 percent of American children and 55 percent of Americans live in “asset” poverty, meaning they have few or no assets to rely on in the event of a financial shock such as a job loss, a medical crisis or the recent federal government shutdown, new research from Oregon State University indicates.
When families lack assets such as vehicles, homes, savings accounts or investments, weathering a financial crisis is that much more difficult, said Dr. David Rothwell, an assistant professor in Oregon State University College of Public Health and Human Sciences.
The study is believed to be the first to explore asset poverty among American children. It was published recently in the journal Children and Youth Services Review. Co-authors are Dr. Timothy Ottusch of the University of Arizona and Dr. Jennifer Finders of Purdue University.
A growing body of research suggests that parents’ asset levels predict academic achievement, educational expectations and likelihood of college enrollment and graduation. Families with assets that can be used when income is disrupted are also likely to experience less financial stress and strain.
Yet asset poverty is higher than income poverty for children and families. In a 2018 study of Canadian families, researchers, including Dr. Rothwell, found that asset poverty was two to three times more prevalent than income poverty. Families can have adequate day-to-day funds but be asset-poor and would likely struggle during a financial shock.
“Recessions, natural disasters, government shutdowns … these things happen,” Dr. Rothwell said. “What we’re looking at is what tools families have to respond when these events take place. It’s almost like an insurance mindset.”
Read more about the study on asset poverty.Tags: Friday Letter Submission