Stratified Lives: Wealth, Finances, and the Uneven Grounds of Access
Paper Session
Sunday, Jan. 4, 2026 10:15 AM - 12:15 PM (EST)
- Chair: Steve Pressman, Monmouth University
Inequality Not Illiteracy: Why Financial Literacy Measures are Bankrupt
Abstract
Over the past few decades, the personal finances of American households have become a matter of great concern. High debt has led to financial stress making households vulnerable to bouts of bad luck or a bad economy—consequently, personal bankruptcies are rising. In addition, most people are not saving enough, particularly for retirement. Without sufficient savings, people will encounter financial problems when (or if) they retire. For various reasons, all this weakens the macroeconomy. Financial literacy has become a popular policy solution to these problems. The belief is that people lack financial literacy and therefore make poor financial decisions leading to debt and bankruptcy. This line of argument, however, blames the victim. It also assumes that more financial knowledge alone can fix what is wrong with the finances of low- and moderate-income households. We argue that this is all incorrect. We use household survey data to explore the actual factors that drive financial knowledge and more importantly financial behavior. Our research highlights the role of failing social policies in the United States over the past few decades as the predominant factor affecting household finances. Many expenses in the past were heavily subsidized with public funding—healthcare, higher education, retirement savings (e.g., pensions vs. 401Ks). Over this time these responsibilities have shifted to individuals. As this happened, what were once social goods have become private consumption goods. Falling real wages led households to substitute expensive debt for the difference in earnings resulting from increased costs of education, retirement and healthcare. This analysis leads to two conclusions. First, if financial literacy is to blame, then it is public officials who are illiterate. Second, to measure financial literacy correctly, we must abandon the current financial literacy questions and come up with questions that are more relevant to the current situation facing struggling households.Generational Wealth and Contemporary Entitlements: Assessing their impacts on the Racial Wealth Gaps
Abstract
Many acknowledge the role of generational wealth – itself the product of centuries of White supremacist policies – in creating the contemporary racial wealth gaps among Whites, Black, and Latinx households. What is less recognized is the impact of current federal entitlements – those buried in the vast tax code.This paper reveals the consequential effects of these 12 tax deductions that function like entitlements. Unlike other entitlements, half of these have no limit on their benefits. Most have an asset requirement in that they require recipients own specific assets like a home or retirement account. In 2024 alone, these tax entitlements showered over $1.2 billion to mostly White and wealthy households, placing them only slightly behind Social Security.
This paper examines the role of generational wealth and these tax entitlements in widening the racial wealth gaps over the past 33 years. It does so by using evidence taken from the Survey of Consumer Finances and merging it with Joint Committee on Taxation estimates of federal tax expenditures. Consistent with the literature, family intergenerational transfers are estimated using two different methods. The distributional benefits of the dozen tax entitlements are estimated using household balance sheets.
Preliminary analysis indicates that intergenerational family transfers averaged from $244 to $284 billion annually depending on which method used while the entitlement benefits averaged around $589 billion annually. Further the entitlement benefits have grown more quickly than the increase in family transfers. To be sure, the estimates of family transfers represent a lower bound to the role played by generational wealth.
Minority Depository Institutions’ Community Development Dilemmas: Evolving Financial Technologies in an Era of Racialized Governance and Geo-Economics
Abstract
Minority development institutions (MDIs) constitute an institutional response to the historic systematic exclusion of racial/ethnic minorities in the US from equal access to land and finance. Their activities have always unfolded in economic landscapes shaped by powerful regional interests hostile to – or at best uninterested in – minority communities’ prosperity. This imbalance is now reinforced by a national government bent on systematically dismantling whatever mechanisms for subaltern minorities’ economic advance survived the neoliberal era.This paper explores the evolving situation of MDIs through a Los Angeles lens. LA’s history of race-based public investment and housing credit policies and practices, resulting in stark patterns of residential segregation, has led since the 1940s to the creation of a robust MDI sector owned and managed by members of the Black, Latino, and Asian Pacific Islander communities subjected to this exclusion.
LA’s MDIs have been concentrated in segregated spaces whose history of underinvestment and neglect often make them targets for revitalization. The region’s uneven but relentless inflows of money and wealth over the past 40 years have not only subjected many long-time residents to removal; they have also led to divergent trajectories for LA’s MDIs. Asian-American banks have played an important role in leveraging resources for the communities they serve, due in part to the stimulus provided by the US immigration-investment program (now called EB-5). Meanwhile, the very different geo-economic circumstances under which LA’s Black and Latino banks have operated have compromised their capacity to transform the circumstances of the people of the neighborhoods they have historically served. The challenge of overcoming these dynamics, already daunting, has been heightened during the second Trump presidency. His administration has swung the country back to the 1930s, vehemently denying that the national government should acknowledge, much less reverse, its past and present patterns of
Volatile Work, Vulnerable Minds: Evidence from the SHED Data
Abstract
This study examines how behavioral vulnerability and employment volatility jointly structure household scarcity responses and forward-looking financial insecurity. Using microdata from the 2022 Survey of Household Economics and Decisionmaking (SHED), the analysis integrates three behavioral domains of scarcity—hardship, inflation‐adaptation, and liquidity stress—with a composite measure of anticipatory financial insecurity. Across harmonized regression specifications, a consistent empirical architecture emerges: subjective financial fragility is the strongest predictor of all scarcity outcomes, loss aversion amplifies sensitivity to downside risk, and job‐market instability—especially involuntary shocks—substantially elevates both acute and anticipatory forms of economic vulnerability. Voluntary job separations exert limited influence on hardship and inflation adaptation but significantly heighten liquidity stress, revealing domain-specific pathways through which labor-market dynamics shape household financial behavior. The results show that employment volatility operates not only as a structural constraint but also as a behavioral catalyst that shapes expectations, coping strategies, and perceived resilience. The paper contributes to research on financial fragility by demonstrating that scarcity is organized around a unified behavioral–volatility mechanism that links present constraints to forward-looking economic insecurity.JEL Classifications
- D1 - Household Behavior and Family Economics
- D3 - Distribution