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

48 Pages Posted: 1 Jul 2014

See all articles by Gregory Mills

Gregory Mills

The Urban Institute

William G. Gale

Brookings Institution

Rhiannon Patterson

U.S. Government Accountability Office (GAO)

Gary V. Engelhardt

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

Michael P. Eriksen

Georgia State University - Institute of Public Health

Emil Apostolov

Brookings Institution

Multiple version iconThere are 2 versions of this paper

Date Written: June 2008

Abstract

We evaluate the first controlled field experiment on Individual Development Accounts (IDAs). Including their own contributions and matching funds, 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-$1,000. The IDA had almost no other discernable effect on other subsidized assets, overall wealth, or poverty rates.

Keywords: Individual Development Accounts, savings behavior, asset accumulation

JEL Classification: E21

Suggested Citation

Mills, Gregory and Gale, William G. and Patterson, Rhiannon and Engelhardt, Gary V. and Eriksen, Michael P. and Apostolov, Emil, Effects of Individual Development Accounts on Asset Purchases and Saving Behavior: Evidence from a Controlled Experiment (June 2008). Available at SSRN: https://ssrn.com/abstract=2460870 or http://dx.doi.org/10.2139/ssrn.2460870

Gregory Mills (Contact Author)

The Urban Institute ( email )

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William G. Gale

Brookings Institution ( email )

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Rhiannon Patterson

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

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Gary V. Engelhardt

Syracuse University - Center for Policy Research ( email )

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Dartmouth College - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Michael P. Eriksen

Georgia State University - Institute of Public Health ( email )

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Emil Apostolov

Brookings Institution ( email )

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Washington, DC 20036-2188
United States

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