Helping people improve their financial circumstances first requires understanding those circumstances, which can be accomplished in part by measuring consumers’ financial well-being. Despite the widespread adoption of scales that measure financial health and well-being, we do not yet know how administering scale measures of these constructs may influence individuals’ motivations and intentions to enact financially healthy behaviors. Across three experimental studies and an internal meta-analysis conducted on over 12,000 participants, we develop and confirm the hypothesis that completing a self-report, subjective financial scale reduces intentions to enact financially healthy behaviors by roughly 5% across studies and measures. This scale order context effect replicated across three distinct study samples, three financial health and well-being scale types, variations in experimental design, and subgroups of participants based on household income. We find that this reduction is caused, in part, by the scale’s mediating effect on participants’ belief that they can change their own financial well-being. We discuss the theoretical and applied consequences of these findings, namely, that choosing to measure financial well-being early in an engagement may unwittingly discourage individuals from enacting financially healthy behaviors. Second, our results raise a potential obstacle for researchers who use financial well-being questionnaires as pre- and post-measures to evaluate the effectiveness of a financial intervention.

A crucial first step in helping consumers improve their financial lives is understanding their financial circumstances and well-being. The Financial Well-Being (FWB) scale measures a consumer’s subjective well-being related to aspects of their financial circumstances. It is available in standard-length (10-item) and abbreviated (5-item) versions, but no research has compared how completing either version may alter consumers’ responses. Notably, the 5-item scale includes a higher share of reverse coded (i.e., negatively framed) items. We hypothesize that the difference in item framing between scale versions influences participants’ feelings about their financial situation, predicting that completing the 5-item FWB scale will result in more negative responses compared to completing the 10-item FWB scale. To test this hypothesis, we implement a randomized survey experiment using the Understanding America Study. In our experiment with nearly 6,000 participants, we find that completing the 5-item versus the 10-item FWB scale reduces FWB scores (average decline in the 5-item FWB score of 0.9 points, 95% CI [–1.552,–0.249]), and increases the share with a “low” 5-item FWB score by 5.0 percentage points, 95% CI [0.028,0.071]), responses to individual scale items, and self-rated FWB. This pattern is strongest among lower-income respondents (average decline in FWB score of 2.3 points, 95% CI [–3.385,–1.171], and increases the share with a “low” 5-item FWB score by 8.1 percentage points, 95% CI [0.041,0.121]). These findings highlight that financial well-being scale choice can have unexpected consequences. We discuss the implications for research on financial well-being and on the measurement of well-being more broadly.

We address a question at the center of many policy debates: how effective is the US safety net? Many existing studies evaluate the effect of one program on economic hardship in isolation, though families typically participate in multiple programs. Using 1992-2011 data from the Survey of Income and Program Participation, our analyses examine the simultaneous effect of participation in three programs, TANF, SNAP, or Medicaid/SCHIP, on a set of outcomes of intrinsic importance-measures of material hardship. We find that a 10 percentage point increase in participation in any of these three safety net programs by low-to-moderate income families with children reduces their average number of hardships by 0.11 (-0.41 elasticity), and the incidence of food insufficiency by 1.7 percentage points (-1.27 elasticity). This analysis suggests that hardship would be even more prevalent in the United States without the existence of the current safety net programs.

Many families live on the financial edge, but a natural disaster can throw even better-situated families into financial turmoil. Comparing the financial outcomes of residents in areas hit by natura...

Building savings is key for individuals and families to protect and improve their financial well-being. Even small amounts of savings can increase financial security; households with a savings cushion of only $250 to $749 are less likely to be evicted, miss a housing or utility payment, or receive public benefits after an income shock (McKernan et al. 2016).1 And savings can help families build additional wealth, making it possible for them to invest in assets such as a home or small business. Many families with low incomes, however, lack savings or good opportunities to save, leaving them financially vulnerable and with limited ability to invest in their futures. To address this disadvantage, a range of policies and programs, including incentivized savings and assetbuilding programs, seek to support savings, reduce hardship, and build assets for families with low incomes.

Using credit reporting firm records on 7 million individuals in the United States, we first demonstrate that debt in collections varies significantly across the country; specifically, the South and West regions have higher shares of individuals with debt in collections than other regions. Second, we identify local factors that are strongly related to debt in collections. Results from our regression models show that neighborhoods with higher rates of debt in collections are more likely to have (1) lower health insurance coverage; (2) lower home values and homeownership rates, (3) a higher share of delinquent and underwater mortgages, (4) lower household incomes, and (5) a higher share of African Americans and Latinos. While our analysis does not identify the causal mechanisms that determine financial distress, the analyses developed here can facilitate research on such mechanisms.

Individual development accounts (IDAs) help low‐income families save by providing a savings account and a potential match toward personal savings for specific investments, such as a first home, business capitalization, or postsecondary education and training. The Assets for Independence (AFI) program uses AFI IDAs—commonly coupled with financial education—with the goal of helping low‐income households achieve greater self‐sufficiency. Using a randomized controlled trial, we evaluate the impact of AFI after one year and find that the median level of liquid assets was $657 higher for the treatment group than the control group (before matching funds). We also find that the treatment (vs control) group experienced less material hardship (by 34%) and was less likely to use nonbank check‐cashing services (by 39%).

The MyAccountCard provides tax filers with a low-cost prepaid card account for the electronic delivery of their tax refunds. Under the pilot, 808,099 low-income individuals were randomly assigned to one of eight treatment groups that differ along three dimensions: (1) no monthly fee vs. $4.95 monthly fee, (2) savings account vs. no savings account, and (3) convenience vs. safety messaging. We find that individuals are price sensitive, the savings account (as designed) was not valuable, and that messaging did not influence behavior. The $4.95 fee (vs. no fee) decreased MyAccountCard take-up by 42% and the likelihood of depositing a tax refund into the card account by 50%. Individuals with the highest propensity to be unbanked were three times more likely to take up the card and nearly 2.5 times more likely to use it to receive a tax refund as those with the lowest propensity to be unbanked.

What does the long-term picture look like for children? How does it look for ever-poor children— those who are poor for at least one year before their 18th birthday? Following children from birth through age 17 shows a much greater prevalence of poverty than the annual figures would suggest. Four of every 10 children (38.8 percent) are poor for at least one year before they reach their 18th birthday (figure 1). Black children fare much worse: fully three-quarters (75.4 percent) are poor during childhood. The number for white children is substantial, yet considerably lower (30.1 percent).

Wealth inequality in the United States increased over the last several decades and worsened as a result of the Great Recession, which reduced the average wealth of families by nearly 30 percent. In new research, Signe-Mary McKernan and Caroline Ratcliffe, with Gene Steuerle and Sisi Zhang, measure disparities in wealth accumulation and loss. They argue that social welfare and tax policies pay too little attention to wealth building and mobility relative to consumption and income. Reforming America’s regressive asset-building policies would help

This paper uses over two decades of Survey of Consumer Finances data and a pseudo-panel technique to measure the impact of the Great Recession on wealth relative to the counterfactual of what wealth would have been given wealth accumulation trajectories. Our regression-adjusted synthetic cohort-level models find that the Great Recession reduced the wealth of American families by 28.5 percent—nearly double the magnitude of previous pre-post mean descriptive estimates and double the magnitude of any previous recession since the 1980s. The housing market was only part of the story; all major wealth components fell as a result of the Great Recession. The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration.This research was funded by the Russell Sage Foundation, the Ford Foundation, and the Low-Income Working Families project, which is currently supported by the Annie E. Casey Foundation. We thank them for their support and acknowledge that the findings and conclusions presented are those of the authors alone, and do not necessarily reflect the opinions of the foundations, the Urban Institute, its board of trustees, or its sponsors. The authors are grateful to Doug Wissoker for excellent econometric advice and for the valuable audience participant input at the Russell Sage Foundation seminar, Federal Deposit Insurance Corporation 3rd Annual Consumer Research Symposium, and the Urban Institute Low-Income Working Families and Opportunity and Ownership seminar. Impact of the Great Recession and Beyond With few assets to draw from in case of a financial emergency, many American families were in a vulnerable position at the onset of the Great Recession. The precipitous drop in home values and the sharp rise in unemployment that came about with the Great Recession made matters worse. By 2010, one out of every five US families (20 percent) was asset poor, up from 16 percent in 2007.1 Many families lost their homes through foreclosure. Family wealth was also lost through the stock market decline, and some families made early withdrawals (or made fewer deposits) from retirement savings to weather unemployment. Each of these events further weakened the economic security of American families. This paper uses over two decades of Survey of Consumer Finances (SCF) triennial data to examine wealth changes in the context of the life cycle and compare the Great Recession with prior recessions. We use synthetic cohorts to construct pseudo-panel data based on the SCF’s repeated cross-sections to measure the impact of the Great Recession on wealth relative to the counterfactual of what wealth would have been given wealth accumulation trajectories. We examine changes in total wealth, as well as its major components, to better understand which components drove the total wealth changes. Wealth accumulation patterns differ across generations and racial/ethnic groups, so we estimate the effect of the Great Recession on different cohort groups (i.e., generations) and by race/ethnicity. In a literature dominated by studies using pre-post descriptive methods, this paper contributes by measuring the impact of the Great Recession on family wealth (1) within the context of life cycle wealth accumulation, (2) relative to prior business cycles, (3) by major wealth component, and (4) while controlling for educational attainment and other socioeconomic characteristics. 1 A family is categorized as asset poor if it does not have enough resources, measured as total wealth, to live at the federal poverty level for three months. This translates into $5,580 for a family of four in 2010 (Ratcliffe and Zhang 2012).

Using over two decades of Survey of Consumer Finances data and a pseudo-panel technique, we measure the impact of the Great Recession on US family wealth relative to the counterfactual of what wealth would have been given wealth accumulation trajectories. Our synthetic cohort-level models find that the Great Recession reduced average family wealth by 28.5 percent-nearly double the magnitude of previous pre-post mean descriptive estimates and double the magnitude of any previous recession since the 1980s. The housing market was only part of the story; all major wealth components fell as a result of the Great Recession.

How do private transfers differ by race and ethnicity, and do such differences explain the racial and ethnic disparity in wealth? Using the Panel Study of Income Dynamics, this study examines private transfers by race and ethnicity in the United States and explores a causal relationship between private transfers and wealth. Panel data and a family-level fixed-effect model are used to control for the endogeneity of private transfers. Private transfers in the form of financial support received and given from extended families and friends, as well as large gifts and inheritances, are examined. We find that African Americans and Hispanics (both immigrant and nonimmigrant) receive less in both types of private transfers than whites. Large gifts and inheritances, but not net financial support received, are related to wealth increases for African American and white families. Overall, we estimate that the African American shortfall in large gifts and inheritances accounts for 12 % of the white-black racial wealth gap.

This study examines whether small minority- and women-owned enterprises (MWEs) use computers less than white-male-owned enterprises and whether higher levels of computer use increase productivity. We use data from a new telephone survey of roughly 1,100 firms and 45 in-depth interviews with business owners. The results suggest that: (1) Small MWEs show no tendency to use computers less than small firms owned by white men; and (2) Using computers for more business functions and/or more intensively for these business functions can raise the productivity and profitability of small MWEs.

A primary objective of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) is reducing single mothers' dependence on the welfare system. This objective is sought not only through increased work, but also through changes in household structure — particularly encouraging healthy marriages and the formation and maintenance of two-parent families. Indeed, moving from a one-parent to a two-parent family may have positive implications for the economic well-being of families with children.This literature review focuses on the relationships between welfare reform, household structure, economic well-being, and resource sharing. In particular, we address two questions:Have changes in welfare policies in the 1990s affected household structure? What are the effects of household structure on economic well-being and intra-household resource sharing? Studies examining these research questions have used qualitative and quantitative (both nonexperimental and experimental) methods. The qualitative studies reviewed are based on in-depth interviews with relatively few respondents; the nonexperimental quantitative studies are, for the most part, carried out with large-scale nationally representative data sets; and the experimental quantitative studies use both state administrative and welfare client survey data, and are based on random assignment designs. The effects of welfare reform on living arrangements have been examined using nonexperimental quantitative and experimental quantitative methods, while studies of the effects of living arrangements on economic well-being and resource sharing have used qualitative and nonexperimental quantitative methods.

Food stamp participation rates plummeted from 75 percent in 1994 to 59 percent in 2000 (Cunnyngham 2002, p. 3).1 In response to plummeting participation rates, and with the new flexibility brought about by the 1996 federal welfare reforms, many states are re-engineering their programs to improve accessibility (Rosenbaum 2000; Bell, et al. 2001). States are extending office hours, establishing automated call centers, and improving outreach, among other changes. But not all program changes are geared toward increasing participation rates. States have strong financial incentives to keep Food Stamp Program certification error rates low, a goal that often runs counter to improving participation rates. States are making policy decisions — which have strong implications for Food Stamp Program participation decisions — without the benefit of knowing the factors that make some eligible working persons choose to participate and others choose not to participate. This study will examine how low-income households' employment characteristics influence Food Stamp Program participation.The relationship between employment and Food Stamp Program (FSP) participation is of special interest for two reasons. First, characteristics of the food stamp caseload and the food stamp eligible population have changed to include more working low-income households. As Gleason et al. (2000) note, there has been a large increase in the proportion of food stamp participants with earnings. Among food stamp recipient families with children, the percentage working increased from 27 percent in 1993 to 42 percent in 1999 (Center on Budget and Policy Priorities 2001a, p. 1). Second, along with the declining participation rate has come a growing concern that eligible working low-income families are not participating in the Food Stamp Program. "Food stamps are crucial to helping low-wage working families make ends meet. A family of four supported by a full-time, year-round minimum wage worker will fall short of the poverty line by 25 percent (even after counting the earned income tax credit) if the family does not receive food stamps. Food stamps increase the typical monthly purchasing power of such a family by 39 percent" (Center on Budget and Policy Priorities 2001a, p. 4). Food stamp participation may reduce the chance that families are unable to financially meet basic needs and so use other forms of public assistance. It is important to understand how the Food Stamp Program works for the large fraction of the caseload that is employed, but it is even more important to understand why the Food Stamp Program does not work for low-income working persons who do not participate.The Food Stamp Program structure, with its numerous application rules, program requirements, and administrative practices, may be one reason that working low-income persons choose not to participate. As Besharov (2000) has argued, the Food Stamp Program was built around the non-working poor and the program for the working poor looks like an afterthought.Indeed, important aspects of the program do make participation difficult for the working low-income persons by effectively raising the monetary and nonmonetary costs of participation. For example, many individuals are required to appear in person at their local food stamp office to apply for food stamps and, in most cases, for periodic recertification. In-person application and recertification are more costly for the working low-income persons because the opportunity cost of their time is higher and they may have less available free time. It may be especially costly for people who work during traditional hours (for example, from 9 a.m. to 5 p.m.) because they have a smaller time window to get to the food stamp office and may need to be absent from work to apply or be recertified for benefits. Certification policies provide another example of the increased cost of participation for the working low-income persons. In the late 1990s, many states shortened the certification period for households with a history of earned income to reduce the number of errors in the Food Stamp Program (Gabor and Botsko 2001).2 As a result, working food stamp recipients were required to return to the food stamp office for recertification even more often than non-working persons (Dion and Pavetti 2000). Furthermore, since food stamp benefits decline with income, working low-income persons face higher costs to participation for a smaller benefit amount.To provide an understanding of the relationship between employment and FSP participation, this analysis examines the employment characteristics and patterns of the working food stamp eligible population. In particular, we address three research questions:What are the detailed employment characteristics of low-income, working food stamp participating and non-participating households? Do household members work traditional hours? Are there multiple jobholders in the household? How many hours do household members work? Do they change jobs frequently? How do detailed measures of employment characteristics affect food stamp participation? Does labor force attachment affect participation? Are persons who work non-traditional hours more likely to participate? Does holding more than one job decrease the likelihood of participation? Does working more hours decrease the likelihood of participation? Do frequent job changes decrease the likelihood of participation? How has the relationship between employment factors and Food Stamp Program participation changed since federal welfare reform? Understanding the factors that affect participation decisions among working low-income individuals is necessary to ensure access to program benefits. Identifying these factors will shed light on how the Food Stamp Program is currently operating for the working low-income individuals and how it might be changed to better accommodate these individuals.

This study was conducted by The Urban Institute over a six-month period from mid-May to mid-November 2003 and was commissioned by the Virginia Workforce Council (VWC). The VWC was created in 1999 as a policy body to assist the Governor in meeting workforce training needs in the Commonwealth. The VWC's vision is: …to have and promote a well-trained, well-educated, highly skilled and qualified workforce that understands and meets the needs of employers and that is actively engaged in lifelong learning.1 This study provides the VWC with information to help them make important incumbent worker policy decisions over the next several years. Major economic transformations are underway in the Commonwealth of Virginia and nationwide in terms of the changing demand for workers by businesses and the changing characteristics of the workforce. As the Commonwealth prepares for the workforce development and economic development challenges of the next few decades, the results of this study will contribute to an ongoing examination in Virginia of the various policy and programmatic strategies that can ensure a skilled, stable, and productive workforce to meet the needs of the future.