Inequality, Race, and Household Finance
Paper Session
Friday, Jan. 5, 2024 2:30 PM - 4:30 PM (CST)
- Chair: Vicki Bogan, Duke University
Setting the Record Straight on Racial Wealth Inequality
Abstract
The racial wealth gap in the United States is the object of much misrepresentation and misunderstanding. Our paper is intended to provide a corrective. We will address five major misconceptions: 1. The analytical and policy confusions produced by measuring the black-white wealth disparity at the median rather than at the conventional average, the mean. 2. The mistaken claim that the racial wealth gap narrows as people age. 3. The overemphasis given to homeownership disparities as the driver of net worth disparities. 4. The tendency to prioritize racial differences in indebtedness over racial differences in asset ownership in understanding the wealth gap. 5. The assertion that the racial wealth gap is primarily a product of racial earnings differences, rather than the racially uneven transmission of resources across generations.Beyond Cash: Racial and Gender Preferences in Consumer Payment Methods under Economic Uncertainty
Abstract
This paper analyzes the effects of high economic uncertainty on racial and gender preferences in payment methods. Using the Survey of Consumer Payment Choice and the Diary of Consumer Payment Choice that tracks US consumer transactions, we find that although females and underrepresented minority groups are more likely to exhibit high cash entrenchment during periods of economic uncertainty, these groups alter their choice of payment methods during periods of high uncertainty relative to non-Hispanic white males. We find females are significantly more likely to use debit cards and credit cards, while blacks and Hispanics are more likely to use credit cards and adopt online payment methods than whites. Our findings are consistent with behavioral choice models, which show that the perceived payment method costs (including fees, time to set up payment, ease of record keeping, and potential security threat) differ across racial and gender groups.High Deductibles, Health Savings Accounts, and Racial Inequalities in Wealth
Abstract
The 2003 Medicare Modernization Act established tax-favored health savings accounts (HSAs) for qualifying high deductible health plans (HDHPs). By design, this tax break favors those with higher incomes and more ability to save. Black and Hispanic populations in the US have both lower incomes and much lower levels of wealth than do white populations. These differences suggest that HSA tax benefits may exacerbate racial/ethnic disparities in accessing care beyond those associated with income alone.This paper evaluates racial inequalities in difficulty affording care among privately insured people by HSA status using data from the National Health Interview Surveys, 2007-2018 and restricted data on household net worth in the Medical Expenditure Panel Survey, 20011-2016.
Among privately insured people, relative to whites, Black and Hispanic individuals in the NHIS report higher odds of difficulty affording care. HSA holders exhibit larger racial disparities than non-HSA holders,
which tend to persist after controlling for indicators of household income and home ownership. Incorporating restricted data on household asset holdings, we find suggestive evidence that the HSA disparity is narrowed when we incorporate household net worth and financial assets, with no apparent effect for non-HSA holders.
HSA tax benefits are greatest for those with higher income and are paired with high-deductible insurance policies that rely on household liquidity. Given large racial/ethnic disparities in wealth, the structure may generate policy-related disparities in accessing care."
Discussant(s)
Vicki Bogan
,
Duke University
Raffi García
,
Rensselaer Polytechnic Institute
Chi Liao
,
University of Manitoba
Naomi Zewde
,
University of California-Los Angeles
JEL Classifications
- D1 - Household Behavior and Family Economics
- G5 - Household Finance