Effects of Individual Development Accounts on Asset Purchases and Saving Behavior: Evidence from a Controlled Experiment

48 Pages Posted: 16 Dec 2007 Last revised: 7 Feb 2011

See all articles by Gregory Mills

Gregory Mills

The Urban Institute

William G. Gale

Brookings Institution

Gary V. Engelhardt

Syracuse University - Center for Policy Research; Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Michael D. Eriksen

University of Cincinnati - Department of Finance - Real Estate

Rhiannon Patterson

U.S. Government Accountability Office (GAO)

Emil Apostolov

Brookings Institution

Multiple version iconThere are 2 versions of this paper

Date Written: February 1, 2011

Abstract

We evaluate the first controlled field experiment on Individual Development Accounts (IDAs). Including their own contributions and matching fund, treatment group members in the Tulsa, Oklahoma program could accumulate $6,750 for home purchase or $4,500 for other qualified uses. Almost all treatment group members opened accounts, but many withdrew all funds for unqualified purposes. Among renters at the beginning of the experiment, the IDA increased homeownership rates after 4 years by 7-11 percentage points and reduced non-retirement financial assets by $700-$1000. The IDA had almost no other discernable effect on other subsidized assets, overall wealth or poverty rates.

Keywords: Saving, Matching contibutions, Low-income households, Asset building, Wealth accumulation

Suggested Citation

Mills, Gregory and Gale, William G. and Engelhardt, Gary V. and Eriksen, Michael D. and Patterson, Rhiannon and Apostolov, Emil, Effects of Individual Development Accounts on Asset Purchases and Saving Behavior: Evidence from a Controlled Experiment (February 1, 2011). Journal of Public Economics, Vol.92, No. 5-6, 2008. Available at SSRN: https://ssrn.com/abstract=1031362

Gregory Mills

The Urban Institute ( email )

2100 M Street, NW
Washington, DC 20037
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HOME PAGE: http://www.urban.org

William G. Gale (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Avenue, NW
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202-797-6148 (Phone)
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Gary V. Engelhardt

Syracuse University - Center for Policy Research ( email )

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Syracuse, NY 13244
United States
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315-443-1081 (Fax)

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Michael D. Eriksen

University of Cincinnati - Department of Finance - Real Estate ( email )

College of Business Administration
Cincinnati, OH 45221
United States

Rhiannon Patterson

U.S. Government Accountability Office (GAO) ( email )

441 G St., NW
Washington, DC 20548
United States

Emil Apostolov

Brookings Institution ( email )

1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States

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