This work proposes a new approach to welfare: a social policy that goes beyond simple income maintenance to foster individual initiative and self-sufficiency. It argues for an asset-based policy that would create a system of saving incentives through individual development accounts (IDAs) for specific purposes, such as college education, homeownership, self-employment and retirement security. In this way, low-income Americans could gain the same opportunities that middle- and upper-income citizens have to plan ahead, set aside savings and invest in a more secure future.
Over the past three decades, average household wealth in the United States has declined among all but the richest families, with a near 80 percent drop among the nation's poorest families. Although the national debate about inequality has focused on income, it is wealth—the private assets amassed and passed on within families—that provides the extra economic cushion needed to move beyond mere day-to-day survival. Assets for the Poor is the first full-scale investigation into the importance of family wealth and the need for policies to encourage asset-building among the poor. Assets for the Poor shows how institutional mechanisms designed to encourage acquisition of capital and property favor middle-class and high-income families. For example, the aggregate value of home mortgage tax deductions far outweighs the dollar amount of the subsidies provided by Section 8 rental vouchers and public housing. Banking definitions of creditworthiness largely exclude minorities, and welfare rules have made it nearly impossible for single mothers to accumulate savings, let alone stocks or real estate. Due to persistent residential segregation, even those minority families who do own homes are often denied equal access to better schools and public services. The research in this volume shows that the poor do make use of the assets they have. Cash gifts—although small in size—are frequent within families and often lead to such positive results as homebuying and debt reduction, while tangible assets such as tools and cars help increase employment prospects. Assets for the Poor examines policies such as Individual Development Account tax subsidies to reward financial savings among the poor, and more liberal credit rules to make borrowing easier and less costly. The contributors also offer thoughtful advice for bringing the poor into mainstream savings institutions and warn against developing asset building policies at the expense of existing safety net programs. Asset-building for low-income families is a powerful idea that offers hope to families searching for a way out of poverty. Assets for the Poor challenges current thinking regarding poverty reduction policies and proposes a major shift in the way we think about families and how they make a better life. A Volume in the Ford Foundation Series on Asset Building
The authors analyze the ownership and use of income-generating assets, as well as access to them. Where there are market imperfections, they propose policies to ease the constraints faced by the poor in accumulating the human, physical and social capital they need to generate greater income."--BOOK JACKET.
Many policymakers argue that the best poverty policy not only provides cash to the poor for subsistence but also incentives and structures that encourage long-term social and economic improvement. As part of this, they make the case for Individual Development Accounts (IDAs), a new policy proposal designed to help the poor save and to build assets. This book explores IDAs to determine their effectiveness. IDAs are matched savings accounts targeted on low-income, low-wealth individuals. Savings in IDAs are used for home ownership, post-secondary education, small business development, and other purposes. Do IDAs work? If they do, for whom? And does how an IDA is designed determine savings outcomes? This volume is the first analysis of matched savings by the poor to use data from monthly bank statements. It comes at a critical time, as debate rages over the merits of individual social security accounts. IDAs also respond to policy that is becoming more asset based and less inclusive of the poor. The authors argue for the efficacy of IDAs to counter this tendency. They find that while savings outcomes vary among participants, no characteristics (such as low income or public assistance) preclude saving. They examine effects of IDA design (the match rate, savings targets, and the use of automatic transfer) on savings results and analyze factors that influence varying rates of saving and spending over time. They conclude that financial education and other support services, though costly, improve savings performance. To address the issue of cost they suggest a two-tier system of IDA design, one with broad access and simple services and the other with targeted access and intensive services. Can the Poor Save? offers a wealth of lessons to those interested in saving and asset accumulation among the poor. It not only breaks new ground in the scientific study of savings behavior, but also offers concrete, evidence-based recommendations to improve policies designed to encourage the poor to save and how to make such policies more inclusive.
The report is based on a multi dimensional approach to poverty following ADB's poverty reduction strategy, which defines poverty as a deprivation of essential assets. The analytical framework of the country poverty analysis blends a more traditional analysis of income poverty with an assessment of access to five different types of assets. Taken from the sustainable livelihoods approach, these assets are human, physical, natural, financial and social capital.
Inclusion in the American Dream brings together leading scholars and policy experts on the topic of asset building, particularly as this relates to public policy. The typical American household accumulates most of its assets in home equity and retirement accounts, both of which are subsidized through the tax system. But the poor, for the most part, do not participate in these asset accumulation policies. The challenge is to expand the asset-based policy structure so that everyone is included.
A new way forward for sustainable quality of life in cities of all sizes Strong Towns: A Bottom-Up Revolution to Build American Prosperity is a book of forward-thinking ideas that breaks with modern wisdom to present a new vision of urban development in the United States. Presenting the foundational ideas of the Strong Towns movement he co-founded, Charles Marohn explains why cities of all sizes continue to struggle to meet their basic needs, and reveals the new paradigm that can solve this longstanding problem. Inside, you’ll learn why inducing growth and development has been the conventional response to urban financial struggles—and why it just doesn’t work. New development and high-risk investing don’t generate enough wealth to support itself, and cities continue to struggle. Read this book to find out how cities large and small can focus on bottom-up investments to minimize risk and maximize their ability to strengthen the community financially and improve citizens’ quality of life. Develop in-depth knowledge of the underlying logic behind the “traditional” search for never-ending urban growth Learn practical solutions for ameliorating financial struggles through low-risk investment and a grassroots focus Gain insights and tools that can stop the vicious cycle of budget shortfalls and unexpected downturns Become a part of the Strong Towns revolution by shifting the focus away from top-down growth toward rebuilding American prosperity Strong Towns acknowledges that there is a problem with the American approach to growth and shows community leaders a new way forward. The Strong Towns response is a revolution in how we assemble the places we live.
In Rethinking Poverty, James P. Bailey argues that most contemporary policies aimed at reducing poverty in the United States are flawed because they focus solely on insufficient income. Bailey argues that traditional policies such as minimum wage laws, food stamps, housing subsidies, earned income tax credits, and other forms of cash and non-cash income supports need to be complemented by efforts that enable the poor to save and accumulate assets. Drawing on Michael Sherraden’s work on asset building and scholarship by Melvin Oliver, Thomas Shapiro, and Dalton Conley on asset discrimination, Bailey presents us with a novel and promising way forward to combat persistent and morally unacceptable poverty in the United States and around the world. Rethinking Poverty makes use of a significant body of Catholic social teachings in its argument for an asset development strategy to reduce poverty. These Catholic teachings include, among others, principles of human dignity, the social nature of the person, the common good, and the preferential option for the poor. These principles and the related social analyses have not yet been brought to bear on the idea of asset-building for the poor by those working within the Catholic social justice tradition. This book redresses this shortcoming, and further, claims that a Catholic moral argument for asset-building for the poor can be complemented and enriched by Martha Nussbaum’s “capabilities approach.” This book will affect current debates and practical ways to reduce poverty, as well as the future direction of Catholic social teaching.
Climate change is the defining development challenge of our time. More than a global environmental issue, climate change and variability threaten to reverse recent progress in poverty reduction and economic growth. Both now and over the long run, climate change and variability threatens human and social development by restricting the fulfillment of human potential and by disempowering people and communities in reducing their livelihoods options. Communities across Latin America and the Caribbean are already experiencing adverse consequences from climate change and variability. Precipitation has increased in the southeastern part of South America, and now often comes in the form of sudden deluges, leading to flooding and soil erosion that endanger people s lives and livelihoods. Southwestern parts of South America and western Central America are seeing a decrease in precipitation and an increase in droughts. Increasing heat and drought in Northeast Brazil threaten the livelihoods of already-marginal smallholders, and may turn parts of the eastern Amazon rainforest into savannah. The Andean inter-tropical glaciers are shrinking and expected to disappear altogether within the next 20-40 years, with significant consequences for water availability. These environmental changes will impact local livelihoods in unprecedented ways. Poverty, inequality, water access, health, and migration are and will be measurably affected by climate change. Using an innovative research methodology, this study finds quantitative evidence of large variations in impacts across regions. Many already poor regions are becoming poorer; traditional livelihoods are being challenged in unprecedented ways; water scarcity is increasing, particularly in poor arid areas; human health is deteriorating; and climate-induced migration is already taking place and may increase. Successfully reducing social vulnerability to climate change and variability requires action and commitment at multiple levels. This volume offers key operational recommendations at the government, community, and household levels with particular emphasis placed on enhancing good governance and technical capacity in the public sector, building social capital in local communities, and protecting the asset base of poor households.
Drawing on the groundbreaking U.S. Financial Diaries project (http://www.usfinancialdiaries.org/), which follows the lives of 235 low- and middle-income families as they navigate through a year, the authors challenge popular assumptions about how Americans earn, spend, borrow, and save-- and they identify the true causes of distress and inequality for many working Americans.
