Two of the most important defining factors of economic well-being in the United States are income and net worth. When considered alone, income—the resources a person or household receives from a job, transfer program, or other source—provides an incomplete picture of economic well-being. A person’s or a household’s wealth or net worth—the difference between assets and liabilities—considered in conjunction with income, provides a better understanding of economic health and well-being.¹ In times of economic hardship, such as unemployment, illness, or divorce, a person’s or a household’s financial assets are a source of liquidity to pay expenses and bills. For individuals and households with a householder 65 years and older, wealth is an important source of postretirement income and consumption; simply examining their income in isolation would give an incomplete picture of their economic well-being.

In addition, as home ownership rates climb, more and more households can claim their homes as a source of wealth and, in the majority of cases, as their predominant asset. Also, as stock ownership rates rise, as well as participation in private retirement accounts, such as 401Ks, a larger number of households are now subject to the “ups and downs” of the stock market, thereby affecting their net worth. Hence, also examining how the composition of a household’s net worth changes is important in order to assess how a household’s economic well-being changes over time.

This report compares the levels of wealth and asset ownership, such as home equity, savings accounts, certificates of deposit, stocks and mutual funds, and vehicle ownership, by various socioeconomic factors, including monthly household income, in late 1999/early 2000 and late 2002.² The data are from the 1996 and 2001 Panels of the Survey of Income and Program Participation (SIPP) and represent information collected from December 1999 through March 2000 (labeled as “2000” in this report) and from September 2002 through December 2002 (labeled as “2002”).³ The SIPP collects asset and liability 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 1998 and 2000 collected in the December 1997–March 1998 and December 1999–March 2000 periods, respectively.⁴

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¹ For a further discussion of the relationship between wealth and income, see Arthur B. Kennickell, Using Income Data to Predict Wealth, 1999, <www.federalreserve.gov/pubs/oss/oss2/method.html>, and Daniel B. Radner and D. R. Vaughan, “Wealth, Income, and the Economic Status of Aged Households,” International Comparisons of the Distribution of Household Wealth, Edward Wolff, ed., Oxford, Claredon Press.

² See the text box “Key Definitions and Explanations” for definitions of the concepts (for example, net worth) used throughout this report.

³ The population represented (the population universe) is the civilian noninstitutionalized population living in the United States. The sample of households in the 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 twelfth wave of the 1996 SIPP panel and the sixth wave of the 2001 SIPP panel. For the 2002 figures in this report, data were collected from the first rotation group in October 2002 and refer to the last day of September 2002; the second rotation group was interviewed in November 2002, and their data refer to October 2002, 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 in September, October, November, and December 2002. 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 noninstitutionalized population in November and December 1999 and January and February 2000.

⁴ Data for 1998 and 2000 were published in the report P70-88, Net Worth and Asset Ownership of Households: 1998 and 2000. This series of reports from the SIPP began with the publication of P70-7, Household Wealth and Asset Ownership: 1984. Data for 1988, 1991, 1993, and 1995 were published in P70-22, Household Wealth and Asset Ownership: 1988; P70-34, Household Wealth and Asset Ownership: 1991; P70-47, Asset Ownership of Households: 1993; and P70-71, Household Net Worth and Asset Ownership: 1995, respectively. All of these reports are available at <www.census.gov/hhes/www/wealth/publications.html>.