Building Financial Capability and Assets to Advance Health Equity: Why and How Race Matters

Background. Evidence has documented racial wealth inequity as one of the key pathways linking structural racism and racial health inequity. Financial resources are fundamental for achieving and maintaining health across the life course. Although there is extensive research connecting wealth and health, most previous studies have centered on net worth. Nonetheless, it is probable that the various types of assets and debts that constitute wealth are associated with health differently. Furthermore, emerging research has documented that financial capability is a social determinant of health and financial capability and asset building (FCAB) programs and policies have the potential to improve individual and population health and wellbeing. This paper examines how US young adults’ components of wealth are associated with physical and mental health, as well as if the associations are moderated by race/ethnicity.

Methods. Data were obtained from the National Longitudinal Survey of Youth 1997. Health outcomes were measured by mental health inventory and self-rated health in 2015. Wealth components—including financial assets, nonfinancial assets, secured debt, unsecured debt, housing value, and homeownership—were measured when respondents were aged 30. Race/ethnicity was self-identified at the baseline and categorized into four groups: non-Hispanic Black, non-Hispanic White, Hispanic, and Other or multiracial non-Hispanic. Other socioeconomic position indicators that were controlled for included household income, education, and employment status, and parental education. Sociodemographic factors that were adjusted for included gender, census region, geographic area, marital status, number of children under 18, and health insurance. Logistic regressions and ordinary least square regressions and were used to assess association between wealth components at age 30 and physical and mental health in 2015.

Results. For every type of asset, the ownership rate and the amount were highest for non-Hispanic White respondents. Notably, racial/ethnic gaps in financial assets were the most salient: non-Hispanic White respondents had median financial assets of $7,630 —29 times higher than that of non-Hispanic Black households’ ($260). Non-Hispanic White respondents had high prevalence of owing all types of debt and had higher debt amount, compared to other racial/ethnic groups. Financial assets and secured debt were positively associated with self-rated health and mental health. Unsecured debt was negatively associated with mental health only. Racial/ethnic heterogeneities exist in these associations. Financial assets were positively associated with self-rated health and mental health inventory; however, the positive associations were significantly weaker for non-Hispanic Black respondents. Unsecured debt was protective of self-rated health for non-Hispanic Whites only. For respondents of color, unsecured debt was negatively associated with self-rated health. For Black, young adults, unsecured debt had more severe negative health consequences compared to other racial/ethnic groups.

Conclusions. This study provides a nuanced understanding of the complex relationship among race/ethnicity, FCAB, and health. This study’s findings suggest that FCAB policies may improve population health outcomes, in addition to economic well-being. The racial/ethnic differences found in this study suggest a critical race conscious lens should be embedded in financial capability policies and programs to address the historical legacies of racist policy and practice and reduce racial health inequality most effectively.