Federal Policy and Asset Building

Michael Sherraden’s (1991) groundbreaking idea of building assets for low-income persons has made remarkable progress at the federal level in the United States (U.S.) over the last decade, for three reasons. First, policymakers have easily grasped both the distinction between income and assets, and the importance of assets. Second, the idea debuted and progressed as the nation and policymakers were highly receptive to new ideas for ending welfare and poverty. And third, data generated (Schreiner et al., 2000 and 2001) showed that poor people could save, thus overcoming the principal doubt among politicians and others whether asset building and Individual Development Accounts (IDAs) could work.

Today, while the “income paradigm” still dominates antipoverty policy and analysis, the “assets paradigm” has made its mark and is now seriously considered in policymaking circles at all levels. It may, thus, be helpful to review the progress of federal asset-building efforts over this first decade and, reflecting on those efforts, offer some ideas for moving forward. Following a brief discussion of inequality in the U.S., which provides the broader context and rationale for asset-building policies, this paper: (1) summarizes the status of asset building at the federal level; (2) offers some broad principles and guidelines for designing and advancing more ambitious policies to build assets; and (3) proposes nine concrete policy options to build assets inclusively.

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