Beyond Net Worth: Racial Differences in Wealth Portfolios and Black-White Health Inequality across the Life Course

Abstract

A large body of research links wealth and health, but most previous work focuses on net worth. However, the assets and debts that comprise wealth likely relate to health in different and meaningful ways. Furthermore, racial differences in wealth portfolios may contribute to racial health gaps. Using longitudinal data from the Panel Study of Income Dynamics (PSID) and mixed effects growth curve models, we examined the associations between various wealth components and multiple health outcomes. We also investigated whether black-white differences in wealth portfolios contributed to racial health inequality. We found that savings, stock ownership, and homeownership consistently improve health, but debt is associated with worse health, even after adjusting for total net worth. We found little evidence that home equity is associated with health. Findings also revealed differential health returns to assets by race. These findings provide new insights into the complex relationship among race, wealth, and health.

Keywords: assets; debt; life course and aging; racial health disparities; wealth.

Figure 1.. Racial Disparities in Net Worth

Notes: Estimates based on last observation of each individual in PSID subsample (Years=2005–2011; n=11,039 individuals) and inflated to Consumer Price Index 2015.

Figure 2.. Parameter Estimates of Associations between Wealth Components and Health Outcomes.

Note: Parameter estimates based on Model 4a (in Table 2 and Appendix A), shaded based on statistical significance (Black = p<.05) and standardized to reflect the association between a one standard deviation change in each independent variable with a one unit change in each dependent variable.

Figure 3.. Racial Disparity in Self-Rated Health

Note: Predicted Black-White disparity in self-rated health with no adjustment for wealth (based on Model 2a of Table 2) and with adjustment for total net worth and the wealth components (Model 4a of Table 2).

Figure 4.. Racial disparities in health by savings

Note: Racial disparities in predicted health by level of savings. Zero (indicating no racial difference) is reference line. In creating plots, we use parameter estimates from Model 4b and follow the approach proposed by Long and Mustillo (2018) for calculating differences in predicted probabilities (self-rated health)/predicted outcomes (psychological distress) and marginal effects.