Association for Public Policy Analysis & Management

Traditional social welfare programs typically consider income and assets in determining assistance eligibility. A principal objection to including asset tests to determine eligibility is the concern that it will discourage households from holding assets or accumulating property, which is a form of security against unanticipated income shortages. While social policy literature has informed our understanding of the potential impacts of including asset tests in the Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP), it has neglected to evaluate how the inclusion of asset tests in the Low-Income Home Energy Assistance Program’s (LIHEAP) eligibility requirements impacts the program’s ability to assist low-income households pay for their home energy needs. As a result, this article aims to connect and advance the social policy and energy justice literatures by directly examining how the dollar value and inclusion of an asset test in LIHEAP’s eligibility requirements impacts participation in the program as well as the proportion of funds expended to administer the program. To examine this question, we created a panel data set from 2004 – 2014 and employed a two-way fixed effects model. We find that the inclusion of an asset test significantly and substantively reduces the proportion of the eligible population that is served by LIHEAP. We also find that the diminution in assistance is regressive, with the largest reduction in benefits impacting the poorest income strata tested. Our results also indicate that relaxing the dollar value of the asset test threshold benefits the lowest income strata the most, which further confirms the regressive nature of including an asset test in LIHEAP’s eligibility requirements. Lastly, we find that the inclusion of an asset test also increases the proportion of administrative funds spent on each eligible household and each household served. In general, our findings suggest that including an asset test diminishes LIHEAP’s ability to assist low-income households pay for their home energy needs.