Asset-Based Antipoverty Programs

THE PUBLICATION OF Michael Sherraden's Assets and the Poor ushered in an era in which the focus of poverty scholars and policymakers broadened so that income no longer served as the sole basis for conceptualizing poverty. The basic arguments of the literature covering asset-based antipoverty strategies are that income is a narrow measure of the economic resources that any given family has; that owning assets can confer economic and sociopsychological benefits, such as creating an orientation toward the future, increasing self-ef-ficacy, and enhancing individuals' sense of belonging to society; and that this can have spillover effects for society in addition to the positive effects it has on the individual who owns the asset.

U.S. policies to provide social support to the poor traditionally have focused on income maintenance, that is, ensuring that families are able to obtain enough goods and services to meet a minimal consumption standard. This policy focus has been implemented via programs that provide cash transfers, such as the former Aid to Families with Dependent Children (AFDC) program, which was once commonly known as welfare, or through programs providing in-kind assistance, such as the food stamp program and public housing.

The primary criticisms that proponents of asset-based strategies have of these types of policies are that the asset tests of the traditional income maintenance programs have been restrictive historically, and that focusing on income maintenance does not allow one to focus on capacity-building, which might lift people out of poverty. For example during the 1970s, 1980s, and 1990s many states did not allow the poor to have much in a savings account if they wanted to be eligible for public assistance. This can be seen as discouraging savings and limiting opportunities for individuals to take steps that might permanently remove them from poverty, such as saving enough money so they can acquire additional schooling. Proponents of asset-based policies argue that not only should public policy not discourage asset accumulation among the poor, it should be proactive in encouraging asset accumulation. The best example of the way this philosophy has been implemented is the passage of national legislation in 1996 to fund state-level programs promoting individual development accounts or IDAs.

IDAs are saving accounts that eligible individuals maintain at a financial institution, where the individ-ual's contributions to the account are matched with funds from the government and private sources. De facto, this means that these savings accounts carry an above-market interest rate (one that is subsidized by the program). Funds can be withdrawn without penalty for specific purposes. Permissible uses typically include education, acquiring a home, and starting a business. It is argued that helping individuals to accumulate these types of assets—human capital, property, and business equity—can be transformative, allowing them to make changes in their lives that might provide an escape route from poverty in the long run.

The movement toward asset-based antipoverty strategies has not occurred without controversy. While those on the political right have lauded the new programs because they are consistent with an emphasis on private ownership, individual responsibility, and self-help, some on the political left have expressed concerns that the switch marks the beginning of an erosion in public support for helping others.

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