The purpose of this study was to investigate the differential rates of accumulating net worth among low- and high-income households. To achieve this objective, the authors, using a sample drawn from the 1998 Survey of Consumer Finances, investigated the degree of elasticity of household net worth (or wealth) to household income among five income quintiles of households. The major finding was that among the lowest quintile, the elasticity was less than zero, meaning that as income increased, net worth declined. The elasticity increased as the quintile moved from the first to the fifth quintile. On the basis of the regression results, the authors concluded that income is a powerful determinant of the accumulation of net worth. The higher the income quintile, the greater the rate of accumulation of net worth. Implications for policy are discussed.
All Science Journal Classification (ASJC) codes
- Sociology and Political Science
- Income class
- Low-income households
- Net worth