Pathways Out of Poverty: Asset Building in Puerto Rico

Traditional social welfare policies focus on providing a monthly income flow to support a minimum level of consumption. However, as Michael Sherraden, one of the leading experts on welfare policy in the United States, has stated, “very few people manage to spend their way out of poverty.” Poverty is overcome by savings, investment and asset accumulation rather than through spending and consumption.

Asset accumulation is particularly significant because assets have important welfare effects in addition to deferred consumption. Research in the United States shows that assets have significant positive non-economic effects on children, families, and neighborhoods. In general, there is growing evidence that assets are associated with greater household stability, higher educational attainment, local civic involvement and increased levels of health and satisfaction among adults. Assets are also associated with decreases in both marital dissolution and intergenerational poverty transmission.
 
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