Can the Poor Save?: Saving and Asset Building in Individual Development Accounts

Can the Poor Save?: Saving and Asset Building in Individual Development Accounts

by Mark Schreiner, Michael Sherraden
     
 

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Many policymakers argue that the best poverty policy not only provides cash to the poor for subsistence but also incentives and structures that encourage long-term social and economic improvement. As part of this, they make the case for Individual Development Accounts (IDAs), a new policy proposal designed to help the poor save and to build assets. This book

Overview

Many policymakers argue that the best poverty policy not only provides cash to the poor for subsistence but also incentives and structures that encourage long-term social and economic improvement. As part of this, they make the case for Individual Development Accounts (IDAs), a new policy proposal designed to help the poor save and to build assets. This book explores IDAs to determine their effectiveness.

IDAs are matched savings accounts targeted on low-income, low-wealth individuals. Savings in IDAs are used for home ownership, post-secondary education, small business development, and other purposes. Do IDAs work? If they do, for whom? And does how an IDA is designed determine savings outcomes? This volume is the first analysis of matched savings by the poor to use data from monthly bank statements. It comes at a critical time, as debate rages over the merits of individual social security accounts. IDAs also respond to policy that is becoming more asset based and less inclusive of the poor. The authors argue for the efficacy of IDAs to counter this tendency. They find that while savings outcomes vary among participants, no characteristics (such as low income or public assistance) preclude saving. They examine effects of IDA design (the match rate, savings targets, and the use of automatic transfer) on savings results and analyze factors that influence varying rates of saving and spending over time. They conclude that financial education and other support services, though costly, improve savings performance. To address the issue of cost they suggest a two-tier system of IDA design, one with broad access and simple services and the other with targeted access and intensive services.

Can the Poor Save? offers a wealth of lessons to those interested in saving and asset accumulation among the poor. It not only breaks new ground in the scientific study of savings behavior, but also offers concrete, evidence-based recommendations to improve policies designed to encourage the poor to save and how to make such policies more inclusive.

Editorial Reviews

From the Publisher
"This book provides the best single overview of the theory behind the creation of the IDA American Demonstration Project, the structure of the ADD, and findings from the project. The account is comprehensive and balanced. This is a must-read book for everyone interested in poverty in the U.S." John Caskey, Department of Economics, Swarthmore College "Michael Sherraden and his colleagues have been at the forefront of developing new ideas for asset-building policy and practice for nearly two decades. This new book by Schreiner and Sherraden again shows why. It is a remarkable demonstration of how disciplined, engaged, and creative social science research can help low-income families to transform their lives." Michael S. Barr, Assistant Professor of Law, University of Michigan Law School “The book will be an important touchstone for debates on new ways to truly expand economic opportunities for all citizens.” —Jonathan Morduch, New York University

Product Details

ISBN-13:
9780202308395
Publisher:
Transaction Publishers
Publication date:
12/01/2006
Pages:
385
Product dimensions:
6.00(w) x 9.00(h) x 0.86(d)

Related Subjects

Meet the Author

Mark Schreiner is a senior scholar in the Center for Social Development at Washington University in St. Louis and also director of Microfinance Risk Management.

Michael Sherraden is the Benjamin E. Youngdahl Professor of Social Development and director of the Center for Social Development, George Warren Brown School of Social Work at Washington University in St. Louis.

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