Net worth poverty and adult health

Abstract

This study broadens the traditional focus on income as the primary measure of economic deprivation by providing the first analysis of wealth deprivation, or net worth poverty (NWP), and adult health. Net worth poverty-having wealth (assets minus debts) less than one-fourth of the federal poverty line-likely exacerbates the negative effects of income poverty (IP). In 2019, one-third of US households were net worth poor, with substantially higher rates among Black (60%) relative to White (25%) households. We estimate longitudinal growth curve (i.e., linear mixed effects) models to test how NWP, IP, and the interaction of the two predict a diverse set of health measures. We also consider whether NWP resulting from either low assets or high debts is more predictive of health outcomes and test for heterogeneous associations by race. Data come from Panel Study of Income Dynamics on 8,962 individuals ages 25 to 64, observed between 2011 and 2019 (n = 26,776). Adjusting for income poverty, net worth poverty, relative to no poverty, was associated with a one-quarter to one-third increase in the likelihood of reporting poor self-rated health, psychological distress, and work limitations. Simultaneously experiencing both NWP and IP was associated with the largest deficits. Both asset-driven (low asset) and debt-driven (high debt) NWP reduced health, but asset-driven NWP had stronger associations (e.g., a 5-percentage point increase of being in poor health, twice that of debt-driven). White, relative to Black, adults exhibited statistically larger associations for psychological distress (4.3 vs 1.1 percentage points) and work limitations (3.7 vs. 1.5 percentage points). White and Black adults who were jointly net worth and income poor exhibited the most disadvantage. Findings underscore how wealth is a critical component of financial deprivation and that wealth deprivation, particularly the lack of assets, merits attention in socioeconomic studies of health inequalities.

Keywords: Assets; Debts; Net worth; Poverty; Wealth.

Figure 1:

Estimated Margins from Regressions of Poverty Status on Health Outcomes Notes: Black bars represent 95% confidence intervals. Covariates in regression models include race-ethnicity, marital status, age, age squared, sex, educational attainment, presence of children in household, and year of survey. Estimates weighted. Sample size: self-rate health n=26,765; psychological distress n=18,718, and work limitation n=26,754 observations.

Figure 2:

Estimated Margins from Regressions of Poverty Status on Health Outcomes Notes: Black bars represent 95% confidence intervals. Covariates in regression models include race-ethnicity, marital status, age, age squared, sex, educational attainment, presence of children in household, and year of survey. Estimates weighted. Sample size: self-rate health n=26,765; psychological distress n=18,718, and work limitation n=26,754 observations.