Michael Sherraden

Institutional determinants of saving: implications for low-income households and public policy

Abstract There is an emerging policy and academic discussion, supported by a growing body of empirical evidence, regarding the potentially positive effects of asset accumulation in low-income households. However, at least two questions precede this discussion: Can the poor save? And, if so, how can programs and policies promote saving by the poor? This paper begins to address these questions by examining the effects of institutional variables on saving behavior. We posit that four institutional variables—institutionalized saving mechanisms, targeted financial education, attractive saving incentives, and facilitation—promote saving. However, low-income households are substantially less likely to have access to these institutions, a phenomenon that may help explain their below-average saving rates. This discussion has implications, especially as policy-makers consider various proposals to increase the saving rates of low- and middle-income Americans.

Assets, Expectations, and Children’s Educational Achievement in Female‐Headed Households

This study examines the relationships of mothers assets (home ownership and savings) to, respectively, mothers expectations of childs educational achievement and childs actual educational outcomes in female‐headed households. Analysis of data from the National Survey of Families and Households (NSFH) indicates that assets of single mothers are positively associated with child’s educational achievement and that this relationship is partially mediated through expectations. Positive association of household income with child’s outcomes occurs mainly through mothers assets. The study indicates that regression models that include income but not assets are underspecified. Results support expansion of asset‐based policies for poor women with children.

Income, Institutions, and Saving Performance in Individual Development Accounts

This article examines the relationship between income and saving performance in Individual Development Accounts (IDAs). The authors first discuss theories of saving. Next, for IDA participants in the American Dream Demonstration (ADD), they look at income sources and distribution, followed by tabulations of income and IDA savings outcomes. Following this, the article discusses results from regression analyses on IDA savings outcomes. It was found that the IDA savings amount did not increase with income and that the IDA saving rate decreased with income. Although the data do not reveal exactly what caused this, the authors believe that institutional factors in IDA programs played an important role.

Stakeholding: Notes on a Theory of Welfare Based on Assets

Most antipoverty public policy assumes that household income is an adequate indicator of household welfare. The thesis of this article is that welfare results, in part, from accumulation of household assets. It is suggested that assets yield a number of welfare effects other than deferred consumption, and these welfare effects may be quite important in reducing poverty.

Ending Social Work's Grudge Match: Problems Versus Strengths

Some in social work have called for a paradigm shift away from a focus on problems to a focus on strengths, empowerment, and capacity building. This call sets up an unnatural dichotomy, asking social workers to identify with one side or another. In this article, we review social work history to argue that the best social work practice has always maintained a dual focus on both problems and capacity building. Throughout our history, those who championed a problem-oriented practice also emphasized strengths and growing client capacity, and todays strength-based, capacity-oriented practitioners typically advocate for the solving of consumers presenting problems.

Effects of child development accounts on early social-emotional development: an experimental test.

IMPORTANCE This study, based on Oklahomas statewide Child Development Accounts (CDAs) program, presents findings from the first experimental test of the hypothesis that creating lifelong savings accounts for children at birth promotes their long-term well-being. OBJECTIVE To examine the effects of CDAs, an innovative social policy to encourage lifelong saving and asset building for long-term development, on parent-reported social-emotional development in early childhood. DESIGN, SETTING, AND PARTICIPANTS A statewide randomized experiment of CDAs was conducted in 2008, drawing a probability sample of 7328 children from all infants born in two 3-month periods in Oklahoma (April 1 through June 30 and August 1 through October 31, 2007). After agreeing to participate in the experiment, caregivers of 2704 infants completed a baseline survey and were randomly assigned to treatment (n = 1358) and control groups (n = 1346). Approximately 84% of participants completed a follow-up survey in the spring of 2011. INTERVENTIONS The intervention offered CDAs, built on the existing Oklahoma 529 college-savings plan, to treatment participants. It also provided additional financial incentives and information. MAIN OUTCOMES AND MEASURES The primary outcome-child social-emotional development-is measured by scores from a 17-item version of the Ages and Stages Questionnaire: Social-Emotional. Caregivers completed it in the 3-year follow-up survey. Lower scores indicate better functioning. RESULTS The CDAs have positive effects on social-emotional development for children at approximately age 4 years. The nonweighted treatment-control difference is -1.56 (90% CI, -2.87 to -0.22; P = .06), but the weighted difference is nonsignificant. The effects appear to be greater for disadvantaged subsamples, such as low-income households (weighted mean difference, -2.21; 90% CI, -4.01 to -0.42; P = .04). CONCLUSIONS AND RELEVANCE As a complement to other early education and health interventions, CDAs may improve social-emotional development in early childhood. Their effects may be explained as a mediating process that influences parents. Child Development Accounts may influence parental attitudes, behaviors, expectations, and involvement; in turn, these may affect child development.

Integrating Saving into Microenterprise Programs for the Poor: Do Institutions Matter?

This study examines factors that affect saving performance among participants in a subsidized saving program who intend to use their savings to help capitalize a microenterprise. Using data from 14 community‐based organizations promoting self‐employment among the poor, and drawing on institutional theory, we find that individual‐level theories do not fully explain the variance in savings and that institutional influences also are predictive. Policy makers may want to consider a range of institutional characteristics when designing policies and programs aimed at promoting self‐employment among poor families.

Depression and poverty among African-American women at risk for Type 2 diabetes

Poverty is associated with negative health outcomes, including depression. Little is known about the specific elements of poverty that contribute to depression, particularly among African American women at risk for type 2 diabetes. This study examined the relationships of economic and social resources to depression among African American women at high risk for the development of type 2 diabetes (N = 181) using the Conservation of Resources theory as a conceptual framework. Women were assessed at 3 time points in conjunction with a dietary change intervention. At baseline, 40% of women reported clinically significant depression, and 43.3% were below the poverty line. Depressed women reported fewer economic assets and greater economic distress than nondepressed peers. Multivariate logistic regression analyses indicated that nonwork status, lack of home ownership, low appraisal of one’s economic situation, low self-esteem, and increased life events were significantly associated with depression at baseline. Longitudinal multivariate logistic regression models indicated that income, home ownership, future economic appraisal, life events, and self-esteem predicted depression trajectories at Time 3. These results speak to the multifaceted sources of stress in the lives of poor African American women. Interventions that address the economic and social factors associated with depression are needed.

Assets beyond Savings in Individual Development Accounts

This study examines whether participation in Individual Development Accounts (IDAs) provides low‐income participants with significant accumulation in assets beyond matched savings. Using a longitudinal experimental research design, the study tests whether the experiment affects accumulation in five types of assets: liquid assets, other financial assets, total financial assets, real assets, and total assets. Results show that the experimental and control groups do not differ to a statistically significant degree on the five measures. Because implausibly extreme values can influence statistical results, effects on asset accumulation are also estimated in models that delete the most extreme values. Results from these models suggest that IDA participants, at a marginally significant level, gain more real assets and total assets than do members of the control group at this stage of the experiment.

Institutions and Savings in Low-Income Households

This paper examines the influence of structured savings program arrangements on the saving performance of low-income households in individual development accounts (IDAs). Data are drawn from the American Dream Demonstration (1997-2004), which looked at the saving performance of low-income households in matched savings accounts across the United States. Hierarchical multivariate regression is used to identify which specific structural program arrangements are important in influencing the saving performance of low-income families. Findings suggest that overall, structured program arrangements, including financial education, peer mentoring groups and saving targets are important in influencing peoples saving performance―including low-income families.