Income, Institutions, and Saving Performance in Individual Development Accounts

Abstract

We are grateful to the Corporation for Enterprise Development for implementing ADD and the 14 ADD program sites for allowing us to carry out the research.

Attitudes and Saving in Individual Development Accounts: Latent Class Analysis

“…These findings partially support permanent income theory where saving is a function of irregular and intermittent income (Meghir, 2001). These findings suggest that future studies should analyze the effects of different types of income on saving rather than total income (Sherraden et al, 2003).…”

“…According to the permanent income hypothesis, consumption and long-term saving depend on changes in permanent income but in the short-term, individuals are likely to save transitory income (Meghir, 2001). Recurrent or regular income is the sum of wages, government benefits, pensions, and investment income; intermittent or irregular income is the sum of self-employment, child support, gifts, and other sources (Sherraden et al, 2003). All variables discussed above were measured at the baseline.…”

“…Age is positively associated with deposit frequency (Curley, 2004), and participants with college education is associated with saving more frequently than those with a high school education (Curley, 2004;Han, 2007;Ssewamala & Sherraden, 2004). Third, several income measures, such as high income-to-poverty ratio (Curley, 2004;Ssewamala & Sherraden, 2004), regular income (Sherraden et al, 2003), and intermittent or irregular income (Sherraden et al, 2003) are positively related to AMND and saving rates. Asset ownership, in particular, home ownership and passbook ownership are likely to increase saving outcomes (Grinstein-Weiss & Wagner, 2006;Ssewamala & Sherraden, 2004).…”

Indebtedness of Financially Vulnerable Households: What Do Social Workers Do?

“…In this regard the South African Treasury is working on an extended campaign to motivate South Africans to save more (Van Rooyen, 2008b). Savings initiatives are considered an empowerment tool for the poor, but should be appropriate to the context of a specific income group (Collins, 2007) as illustrated by the Individual Development Accounts (IDA) in the United States (Sherraden & Sherraden, 2004). IDAs are special savings accounts designed to assist low-income people on their path toward asset ownership through matched savings and financial education.…”

Educational Status and Savings Performance in Individual Development Accounts

“…The institutional model of savings, on the other hand, posits that institutional factors may play an important role in promoting savings (Beverly & Sherraden, 1999;Sherraden, Schreiner, & Beverly, 2003). This theory suggests that asset accumulation is structured and often subsidized through institutional arrangements (e.g., retirement savings).…”