In an article published in the Journal of Policy Practice, William Rohe, Clinton Key, Michal Grinstein-Weiss, Mark Schreiner and Michael Sherraden analyze data from a randomized controlled experiment involving 1,103 applicants to an Individual development accounts (IDA) program.
IDAs have been adopted in communities across the United States as a way of helping lower-income individuals accrue financial assets. These programs match the savings of program participants if they invest them in the purchase of a home, the creation or expansion of a business, or additional education.
Beyond the financial benefits of holding assets, scholars have argued that they should also result in psychological benefits such as enhanced future orientations and decreased depression. This study tests this argument. The findings show that assignment to the IDA program was not associated with either future orientation or depression 10 years later. The value of assets held at that time, however, was found to be negatively associated with depression. In addition, self-reported financial stress was found to be negatively associated with future orientation and positively associated with depression.
William M. Rohe is director of the UNC Center for Urban and Regional Studies and Cary C. Boshamer Distinguished Professor in the department of city and regional planning at UNC-Chapel Hill. Clinton Key is a researcher with the Pew Charitable Trusts. Michal Grinstein-Weiss is a professor at the Brown School at Washington University in St. Louis. 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 at Washington University in St. Louis.