Are Immigrants More Financially Responsible Than Native-Born Americans?

Background: Recent research suggests that there is an immigrant paradox, where despite immigrants severe economic and social disadvantage, they tend to be healthier than and engage in less problem behavior than native-born U.S. citizens. However, little is known about whether the immigrant paradox holds for economic and financial-related behaviors. Thus, the goal of the present investigation is to take advantage of a large-scale data source to examine economic responsibility of immigrants compared to native-born persons. It is hypothesized that immigrants will be more likely to demonstrate economically responsible behaviors, compared to native-born individuals.

Methods: The study utilized data from waves I & II of the National Epidemiologic Survey on Alcohol and Related Conditions  (NESARC). Respondents were asked several financial responsibility questions, such as if they had experienced any major financial crisis, any debt, etc. The data also identified whether the respondent was native-born or an immigrant. There are 42,942 participants in NESARC data, where 7,320 reported being born outside of United States (immigrant).  Using STATA version 13, logistic regression analysis was used to compare the association between nativity (immigrant versus native-born) with respect to financially responsible behaviors while controlling for age, income, marital status, education and race.

Results: Results indicate that immigrants are significantly less likely to engage in financially irresponsible behaviors compared to native-born, despite lower levels of income, less education, and residing in urban areas. Specifically, immigrants were significantly less likely to report that they have “failed to pay debt” compared to native-born Americans (AOR=.35, 95% CI=.29-.42). Immigrants were also significantly less likely to “experience a major financial crisis” and as a result be unable to pay their bills (AOR=.61, 95% CI=.56-.67). Immigrants were found to be less likely to “scam someone for money” compared to native-born (AOR = .24, 95% C= .17-.34). Immigrants were also less likely to report that they have in the past been in “financial trouble and needed help from family and friends” (AOR=.39, 95% CI=.18-.81).

Conclusions: This study builds on previous research by extending the immigrant paradox to financially responsible behavior. Immigrants are known to exhibit healthier and less risky behaviors compared to native-born Americans. Therefore, keeping track of finances and not falling into debt can be seen as additional prosocial behaviors that immigrants are contributing to society. Despite this, immigrants often encounter difficulties obtaining loans due to lack of credit history, which makes them vulnerable to predatory lending and being exploited.  This study provides a better understanding of financial behaviors of immigrants and further research on this topic can provide empirical insights that can aid in the formation of rational immigration policies. Research on this topic can inform policies for better loan opportunities for immigrants to help them achieve their dreams of a better life in the United States.