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Net Worth and Asset Ownership of Households: 1998 and 2000

Written by:
Report Number P70-88


Two of the most important defining factors of economic status in the United States are income and net worth. When considered alone, income—the resources a household or person receives from a job, transfer program, or other source—provides an incomplete picture of economic well-being. Only when the wealth or net worth—the difference between assets and liabilities—a person or household has at any given time is considered in conjunction with income does a better understanding of economic health and well-being emerge.1

This report compares the levels of wealth and asset ownership, such as equity in a home, savings accounts, certificates of deposit, vehicle ownership, and mutual funds, with various socioeconomic factors, including monthly household income, in late 1997 and early 1998, and in late 1999 and early 2000 (“1998” and “2000” in this report).2 The data are from the 1996 panel of the Survey of Income and Program Participation (SIPP) and represent information collected from December 1997 through March 1998 and December 1999 through March 2000.3 SIPP collects liability and asset data as a supplement to its core questions about labor force participation, income, demographic characteristics, and program participation. The previous report in this series presented data for 1995 collected in February-March 1995.4

1 For a further discussion of the relationship between wealth and income, see Arthur B. Kennickell, 1999, “Using Income to Predict Wealth” available at www.federalreserve.gov/pubs/oss/oss2/method.html.

2 See box “Key Definitions and Explanations” on page 3 for the definitions of the concepts (for example, net worth) used throughout this report. The estimates in this report are based on responses from a sample of the population. As with all surveys, estimates may vary from the actual values because of sampling variation or other factors. All comparisons made in this report have undergone statistical testing and are significant at the 90-percent confidence level unless otherwise noted.

3 The sample of households in SIPP is divided into four interview groups called “rotation groups.” Each month, one of the four rotation groups is interviewed about the previous 4 months (the reference period); each cycle of interviews from all four groups is called a “wave.” The asset and liability data in this report were collected in the sixth and twelfth waves of the 1996 SIPP panel. For the “1998” figures in this report, data were collected from the first rotation group in December 1997 and refer to the last day of November 1997; the second rotation group was interviewed in January of 1998 and their data refer to December 1997, and so on. As a result, the data represent a composite of the assets and liabilities of the civilian noninstitutionalized population of the United States (excluding people in group quarters) in November and December, 1997, and January and February, 1998. Similarly, the “2000” figures were collected from the first rotation group in December 1999 and refer to the last day of November 1999; and so on. Accordingly, the “2000” data represent a composite of the assets and liabilities of the civilian noninstitutional population (excluding people in group quarters) in November and December, 1999, and January and February, 2000.

4 Data for 1995 were published in the report: P70-71 “Household Net Worth and Asset Ownership: 1995.” This series of reports from SIPP began with the publication of P70-7, “Household Wealth and Asset Ownership: 1984.” Data for 1991 and 1993 were published in P70-34, “Household Wealth and Asset Ownership: 1991,” and P70-47,”Asset Ownership of Households: 1993,” respectively.

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