Wealth and Its Distribution: A Look at Asian American Households in 2022

This is the second post in a two-part series on Asian Americans’ income and wealth based on new data from the Federal Reserve’s Survey of Consumer Finances.

In our previous post, we explored novel data in the Survey of Consumer Finances (SCF) and found that Asian American families typically had strong educational and earnings outcomes.Throughout this post, we will refer to this household group as “Asian.” This group does not include Native Hawaiian or Pacific Islanders; those respondents are included in a catch-all “Other” racial group in the SCF data. Though there is diversity within the Asian group (the five largest subgroups are Chinese, except Taiwanese; Asian Indian; Filipino; Vietnamese; and Korean), the survey does not release this information publicly, and therefore we cannot disaggregate results further. In this post, racial groups are non-Hispanic and single (not multi) race. While “Hispanic” or “Latino” is an ethnicity and not typically treated as a race, a legacy variable within the SCF allows respondents to identify “Hispanic/Latino” as their race. In addition, the SCF has a question on Hispanic or Latino ethnicity. Thus, the Hispanic group in our post includes all respondents who selected the Hispanic or Latino race or ethnicity. This post will explore how wealth (defined as net worth, which is the value of assets less liabilities) is distributed among Asian households in the U.S. and examine the types of assets that underpin their wealth.

Why is wealth important? For families, it serves two important roles: insurance against unexpected setbacks and an avenue to invest in the future. However, some demographic groups—such as Black and Hispanic people—face structural barriers to building wealth (PDF) that can hinder their financial well-being and the potential of the economy. Greater wealth equity among households could benefit the economy by increasing economic output and innovation.

Asian American Wealth Outcomes Were Higher Than Their Peers’ across the Wealth Distribution

The typical Asian household in the U.S. (that is, the household at the median, or midpoint in wealth distribution) had accumulated $553,000 of wealth in 2022. This was significantly higher than the wealth of white, Black and Hispanic households. For example, while half (50%) of Asian families had wealth of less than $553,000, the majority of households of other racial or ethnic groups had wealth under that amount; specifically, 65% of white households and nearly all Hispanic households and Black households, 89% and 91%, respectively, had wealth of less than $533,000.

While there is variability among Asian households, their stronger wealth position was not limited to the midpoint of the distribution. The table below shows estimated wealth levels across the wealth distribution for four racial or ethnic groups whose data are available in the SCF. In addition to the median, Asian Americans’ wealth was greater than the wealth held by households of other races and ethnicities at the 10th, 25th, 75th and 90th percentiles in their respective wealth distributions.

Another way to assess the distribution of wealth among racial and ethnic groups is to compare differences in wealth at the 25th percentile and 75th percentile. Doing so shows that the Asian wealth distribution was quite wide: close to $1.2 million separate the households at the 25th and 75th percentiles. In contrast, about $209,000, $237,000 and $825,000 separate the similarly situated households in the Black, Hispanic and white wealth distributions, respectively. These spreads highlight both the extent of wealth inequality in the U.S. and the diversity of financial situations within racial and ethnic groups. Unfortunately, publicly available SCF data do not allow us to meaningfully disaggregate wealth outcomes for subgroups within these racial and ethnic groups, such as Indian Americans or Chinese Americans within the Asian group.A 2016 article by Melany De La Cruz-Viesca and other researchers found diverse asset and wealth outcomes by ancestry and ethnic origin within the larger Asian racial group.

Identifying the Sources of Household Wealth

What types of assets make up these wealth balances? The next table shows that Asian households in the U.S. had significantly higher ownership rates of financial assets, such as stocks and 401(k) accounts, relative to other groups. In addition, they had ownership rates similar to those of white households for nonfinancial assets, such as a home and closely held business. In cases where asset ownership rates among Asian households and white households were similar (such as with homeownership), the typical value of those assets among Asian households was often greater. This is in sharp contrast to Black households and Hispanic households, which are less likely to own these types of assets and have lower-valued assets when they do. Over time, the high returns on assets such as housing or tax-advantaged investment accounts can be a powerful driver of long-term wealth accumulation.

Asian American Households Broadly Invest in Financial Markets

One notable characteristic for Asian households in the U.S. is their rate of participation in financial markets. Nearly three-quarters of Asian households have some form of defined contribution retirement account, such as a 401(k) or an IRA. Black households and Hispanic households were less than half as likely to have these accounts, and 62% of white households had them. These accounts can be a powerful tool to build personal savings to be drawn on during retirement.

Differentiating Asian households further is their ownership of financial investments—such as bonds, stocks and mutual funds—that are directly held (not invested via a tax-advantaged investment account). Half of Asian households owned these directly held investments, and among those households, the median value of these investments was about $57,600. (See the table below.) In contrast, 31.6%, 14.9% and 14% of white, Black and Hispanic households, respectively, owned these directly held investments, and among those households, the median value of these investments was $60,380, $5,380 and $12,800, respectively. Taken together, financial assets are broadly held by many Asian households.

While Less Prevalent, Investments in Real Estate and Small Businesses Are Significant

Nonfinancial asset holdings were also important for Asian American households, although investment real estate and closely held businesses were owned by a much smaller share of Asian households—20% and 13%, respectively—relative to other asset types. Nearly three-quarters of Asian households own their own homes, similar to the rate for white households and well above that of Black households and Hispanic households.The publicly available version of the SCF data do not include any geographic information. This may obscure important differences in homeownership rates, house prices and house price appreciation for Asian Americans given the concentration of this population in coastal housing markets, where homes are often more expensive. Beyond their primary residence, 1 in 5 Asian households had equity in investment real estate, either residential or nonresidential. Among Asian households holding this type of asset, the median value was $438,000, more than double the value for white households.

Lastly, 13% of Asian households owned a closely held business. However, our calculated median for these businesses was statistically insignificant in relation to the median among white households.Statistically, the median value of closely held businesses owned by Asian households likely somewhere between $183,000 and $1.1 million. The range is wide because of uncertainty regarding businesses’ actual value, given a combination of how varied values are and how few households in the SCF sample owned these assets. Comparing a similarly calculated range for white households ($138,000 to $262,000) shows that we can’t determine whether there are meaningful differences between the typical value of businesses held by these two groups.

Asian American Wealth Outcomes Appear Strong by Most Measures

Similar to the relatively high educational attainment and income outcomes identified in our previous post, Asian households in the U.S. have accumulated significant amounts of wealth. Indeed, Asian household wealth is much greater than that of white, Black and Hispanic households at the middle (the median) of wealth distribution, even when controlling for several factors, such as education. This gap remained significant after accounting for differences in age, education, number of years in the U.S. (as a proxy for immigrant status) and the presence of children.We use quantile regression to explore the wealth gap between nonwhite households and white households at the median. In a baseline regression, the typical Asian household has around 93% more wealth than the typical white household. That advantage shrinks to 88% in the model that accounts for sociodemographic variables. In contrast, when accounting for these variables, the wealth held by typical households within the Black and Hispanic groups was 47% and 32% less, respectively, than the wealth of the typical white household.

We found that the assets which constitute Asian wealth are quite diverse. Asian households invest broadly and significantly in financial markets. At the same time, many are homeowners who have accrued significant equity in their homes. Investment real estate and entrepreneurship are also important for a smaller share of Asian households, and these assets are quite valuable, when present. While these experiences are not necessarily those of all members of this group, the data support the conclusion that the typical Asian household has accumulated substantial wealth that comprises diverse assets, especially relative to other racial and ethnic groups.

Notes

1. Throughout this post, we will refer to this household group as “Asian.” This group does not include Native Hawaiian or Pacific Islanders; those respondents are included in a catch-all “Other” racial group in the SCF data. Though there is diversity within the Asian group (the five largest subgroups are Chinese, except Taiwanese; Asian Indian; Filipino; Vietnamese; and Korean), the survey does not release this information publicly, and therefore we cannot disaggregate results further. In this post, racial groups are non-Hispanic and single (not multi) race. While “Hispanic” or “Latino” is an ethnicity and not typically treated as a race, a legacy variable within the SCF allows respondents to identify “Hispanic/Latino” as their race. In addition, the SCF has a question on Hispanic or Latino ethnicity. Thus, the Hispanic group in our post includes all respondents who selected the Hispanic or Latino race or ethnicity.
2. A 2016 article by Melany De La Cruz-Viesca and other researchers found diverse asset and wealth outcomes by ancestry and ethnic origin within the larger Asian racial group.
3. The publicly available version of the SCF data do not include any geographic information. This may obscure important differences in homeownership rates, house prices and house price appreciation for Asian Americans given the concentration of this population in coastal housing markets, where homes are often more expensive.
4. Statistically, the median value of closely held businesses owned by Asian households likely somewhere between $183,000 and $1.1 million. The range is wide because of uncertainty regarding businesses’ actual value, given a combination of how varied values are and how few households in the SCF sample owned these assets. Comparing a similarly calculated range for white households ($138,000 to $262,000) shows that we can’t determine whether there are meaningful differences between the typical value of businesses held by these two groups.
5. We use quantile regression to explore the wealth gap between nonwhite households and white households at the median. In a baseline regression, the typical Asian household has around 93% more wealth than the typical white household. That advantage shrinks to 88% in the model that accounts for sociodemographic variables. In contrast, when accounting for these variables, the wealth held by typical households within the Black and Hispanic groups was 47% and 32% less, respectively, than the wealth of the typical white household.