By Abigail Hiller

The researchers then use their index to analyze the extent of financial exclusion across the US as well as its effects on households. They find that households in areas with greater financial inclusion tend to have higher incomes and are more likely to own homes and possess real estate wealth. Greater financial inclusion is associated with a higher probability of creating an estate, building intergenerational wealth, and breaking the poverty cycle among married individuals and those with higher levels of educational attainment.

Greater financial inclusion is also associated with better health and life satisfaction. People in counties with greater financial inclusion report more satisfaction with their work and family, lower stress, and fewer drug-related problems. Among African American households living in financially inclusive counties, chronic stress and reports of drug-related issues are 92 percent lower than in counties that are not financially inclusive. The analogous decline for White households is 21 percent, suggesting that financial inclusion may contribute to reducing racial gaps.

Greater financial inclusion is also linked to an increase of over 3 percentage points in the likelihood of women living to the age of 85 and is associated with an increase in the share of married couples and in self-reported satisfaction with earnings.

Source National Bureau of Economic Research