Editor’s Note: This column is sponsored by the AARP Thought Leadership and International team. Thought Leadership and International seeks to position AARP as a global thought leader by identifying emerging trends around the world, cultivating and elevating new ideas and sparking new solutions that empower people around the world to make the most of a longer and healthier life.
Lifespans—and, importantly, healthy lifespans—have been steadily increasing in many countries across the globe since the beginning of the Industrial Revolution, and yet the news is not all good. In the United States, the trend has tended to benefit only certain people—specifically, higher class White individuals. Meanwhile, longevity continues to stagnate for people of color and lower net worth White individuals, who were already stuck at lower levels before the COVID-19 pandemic.
Why do some people benefit from healthy longevity, while life expectancy remains stubbornly stuck for others? This is an important question to grapple with, particularly in today’s context of ever-widening wealth inequality, especially along racial and ethnic lines.
The State of Wealth Inequality in the United States
To understand recent longevity trends, it’s important to understand today’s wealth trends. Wealth is typically defined as the value of one’s assets, minus liabilities. Certain schools of thought might suggest our current state of wealth inequality is somewhat justified. Isn’t wealth a result of one’s effort in life?
To an extent, yes. Or, perhaps better stated, it is one of a few factors, for while income is an important contributor to wealth, it’s hardly the only one. Take, for example, wealth that is passed on to the next generation. It gives that next generation greater financial strength coming out of the gate. It is possible to have a high level of wealth with only a moderate income through an inheritance, even from just one home that might have been in the family. Conversely, one might have a high income and little wealth if, say, one doesn’t invest in a home, stocks or other wealth-generating assets.
Median White wealth was $184,000 in 2019, compared with $23,000 for Black households and $38,000 for Hispanic households.
Researchers at the Federal Reserve Bank estimate that between 26 percent and 51 percent of wealth can be accounted for by intergenerational transfers, and in fact today more and more wealth within White households is passed on through generations. Much of White household wealth stems from generational transfers and home value appreciation—both of which are much smaller for Black households and other households of color. Median White wealth amounted to $184,000 in 2019, compared with $23,000 for Black households and $38,000 for Hispanic households.
The reasons behind these disparities vary. Black households have historically been excluded from government support for wealth-generating activity, such as homeownership (through redlining and other policies) and post-secondary education (through exclusions in implementation of the GI Bill). These historic exclusions affect present-day home equity and wealth. Higher levels of student loan debt among households of color—taken on to cover ever-growing tuition expenses—also prevent these households from achieving the promise of post-secondary education. Our tax policy helps middle-class and wealthier households and individuals maintain and grow their wealth through supports like the mortgage interest deduction, lower rates of taxation on capital gains than wage income, and tax-free gifts to family up to a certain level.
While the benefits have compounded over time in many White families, the exclusions have compounded for Black families and other households of color, leading to a wide divide that has increased in the last couple of decades. In particular, the Great Recession’s real estate impact hit them hardest, in the form of large drops in home values and, worse, loss of homes altogether.
Black families experienced a delayed economic recovery from the recession and were just starting to see home values recover to pre–Great Recession levels when the COVID-19 pandemic hit. The gap in homeownership rates between White and Black households has persistently hovered around 30 percentage points. In 2018, the gap between White and Latinx households was 26 percentage points.
The Longevity Link
So what does all this have to do with longevity trends? Simply put, in the United States, as wealth gaps widen, so do longevity gaps. Wealth provides security for families in a way that income does not. It frees mental bandwidth and enables people to think and plan for the long term. Wealth also is associated with taking financial risks, such as starting a business. Wealth and health have a proven connection, but until recently, the connection between longevity and wealth had not been explored.
A recent study published in JAMA Health Forum explored the association between wealth and longevity at midlife, and found a clear connection. Building on previous research showing a connection between income and life expectancy, the study is particularly important given that wealth inequality is rising much faster than is income inequality. During the COVID-19 recession, the number of billionaires in the United States grew, and their wealth grew by 62 percent, at a time when millions of Americans lost their jobs.
Black families were just starting to see home values recover to pre–Great Recession levels when the pandemic hit.
As Dr. Finegood and his co-authors point out in the study, it’s likely that the opportunities that wealth affords—such as access to health practitioners, as well as reduced stress—lead to better health, rather than wealth in and of itself. And while it is important that we understand what it is about wealth that leads to improved health and longevity, the statistically significant association (which doesn’t prove causation) provides further cause for us to take action today to reduce wealth inequality.
Now That We Are Aware of this Connection, What Do We Do About It?
There are no easy solutions for countering wealth inequality. First, we must understand and acknowledge that our policy decisions have led to large and widening disparities. We can then consider ways to more equitably share in economic growth and ensure that race, ethnicity and ZIP codes at birth don’t continue to be predictors of not only wealth, but also of health and longevity. We could consider creating wealth-building mechanisms for people with low- and moderate- incomes—a down payment assistance program could be one example—so that those mechanisms don’t funnel exclusively to people who already have assets but to households historically excluded from homeownership. There are many good policy proposals being put forward to address wealth inequality, and recent overtures from the private sector toward addressing inequality are promising. We will need effective policy changes and the support of the private sector to take on this issue long term. Perhaps growing evidence on the connections between wealth and longevity will add fuel to the fire.
Melissa Grober-Morrow, MPA, is director of Thought Leadership–Financial Resilience at AARP in Washington, DC.