How Can We Promote Economic Security in Vulnerable Populations?
(Poverty and Income Policy)
*Names in bold indicate Presenter
Even in periods of economic growth and strong employment, the experience of financial vulnerability is common. This vulnerability can manifest in many different ways. It can involve not having enough in savings to cover even modest financial emergencies like a car repair—as is the case in two-thirds of low-income households (Federal Reserve, 2016); exposure to the increasing levels of employment instability in the U.S. (Kalleberg, 2009); lacking access to basic financial tools that can help build savings or manage emergencies (Beverly & Sherraden, 1999); or facing substantial hardships during large-scale shocks like economic recessions or natural disasters.
Concerns around financial vulnerability are often central to policymakers, practitioners, and researchers. Evidence for this comes from the rapid growth of nonprofit programs aimed at building low- and moderate-income households’ savings and credit health, and in the charges of various public agencies to promote financial security in their target populations. Despite this encouraging focus, more evidence is needed to understand what tools and strategies can buffer households against economic volatility and support their financial health.
To that end, this this panel presents four papers focused on that both understanding the drivers of financial security in the vulnerable populations and the policy remedies that may increase financial resilience in these households.
The first paper tests how opportunities to access and use financial products and services intersect with financial knowledge, skills, and behaviors to influence financial well-being. A key finding of this paper is that financial knowledge is predictive of financial well-being only when households have access to financial services—a relationship that is stronger for low-income households.
The second paper uses a novel dataset combining administrative tax data and longitudinal survey data on low- and moderate-income households to present the first in-depth analysis of the CFPB’s financial well-being scale using panel data. This paper assesses the stability of financial well-being over time, and also explores the key demographic and financial predictors of large changes in financial well-being.
The third paper examines how natural disasters impact residents’ financial health, with the goal of providing evidence to support individual and community resilience planning and help them better cope after disasters hit. Using longitudinal credit data combined with data from FEMA and the American Community Survey, this paper examines how the effect of natural disasters on financial health differs by severity and type of disaster, as well as by the demographic and economic characteristics of those affected.
The fourth paper conducts a qualitative examination of the financial realities of low-income Washington, D. C. residents, including their financial well-being, the degree to which financial service providers meet their needs, and potential solutions for helping to build their economic resilience. In providing a first-hand examination of residents’ financial challenges, this paper outlines the gaps and opportunities that exist in D.C.’s financial landscape.
Taken together, the papers on this panel will provide insight toward the potential tools or mechanisms policymakers and practitioners can leverage to build economic resilience in the populations that need it the most.