Sherraden Policy Presentation

8/17/2019 Sherraden Policy Presentation

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Center for Social Development

Washington University in St. Louis

Schemes to Boost Small Savings:

Lessons and Directions

Michael Sherraden

Youngdahl rofessor of Social Development

Washington University in St. Louis! US"

World Ban#

May $%! &''(


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)ocus is on saving as a strategy

for asset accumulation


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*ncreasing +uestioning of *ncome asSole Definition of overty and Well,Being

"martya Sen -%$! %/ and others loo#ing to0ard

capa1ilities.

"ssets can 1e seen as part of this discussion: one

measure of long,term capa1ilities.

"ssets are li#ely to lead to a num1er of positive effects inaddition to deferred consumption -e.g.! sta1ility! investment

returns! longer time hori2ons! social standing/.


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34ample: 5he 6"sset 3ffect7-Bynner and a4ton! &''%/

Methods: 8ational Child Development Study! longitudinal!

9LS regressions.

)indings: -%/ olding assets at age &$ associated 0ith later

positive outcomes: 1etter la1or mar#et e4perience! marriages!

health! health 1ehaviors! political interest.

-&/ resence of the asset appears to matter more than the

value of the asset.


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34ample: *mpact of Wealth on

Child Developmental 9utcomes -Williams! &''$/

Methods: anel Study of *ncome Dynamics!

longitudinal data! 9LS regressions

;ey findings: -%/ Wealth positively associated 0ith

cognitive development! physical health! and

socio,emotional 1ehavior.

-&/ 3ffects occur even among very income,poor

families.

-$/ Wealth seems to 1e a 1etter predictor as children

gro0 older -income is a 1etter predictor 0hen younger/.


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34ample: "ssets! 34pectations! and

3ducational erformance- assets are positively associated 0ith

children>s educational attainment.

-&/ ?esults occur in part through e4pectations of the mother:assets are associated 0ith e4pectations! 0hich are in turn

associated 0ith educational attainment.

-$/ *ncome is not associated 0ith educational achievement 0hen

assets are in model.


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@oal Should Be

Inclusion in "sset Building

Bring everyone into asset 1uilding.

Ma#e policy progressive! 0ith greater su1sidies for

the poorest families.

Ma#e asset 1uilding life,long and fle4i1le.

See# adeAuate levels of asset accumulation

for social protection and economic development.


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"sset,Based olicies in the US:

Large and ?egressive

9ver $'' 1illion annually in US ta4 e4penditures

for assets -homes! investments! accounts/

9ver ' percent of this goes to households

0ith incomes over '!''' per year

"t same time! 0elfare policy provides disincentives

for the poor to accumulate assets

-Sherraden! %% o0ard! %E Seidman! &''%

Corporation for 3nterprise Development! &''F/


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9ne olicy Strategy for *nclusion:

*ndividual Development "ccounts -*D"s/-Sherraden! %GG! %%/

• Special savings accounts

• Started as early as 1irth

• Savings are matched for the poor! up to a cap

• Multiple sources of matching deposits

• With financial education

• )or homes! education! 1usiness capitali2ation


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?esearch on *D"s:"merican Dream Demonstration -"DD/

• )irst maHor demonstration of *D"s

•

)ourteen *D" programs around the country• "DD from %E through &''%! research through &''

• 9rgani2ed 1y Corporation for 3nterprise Development

• ?esearch designed 1y Center for Social Development

• )unded 1y t0elve foundations -)ord 0as the maHor

supporter! 0ith partnerships from CS Mott!

Citigroup! )annie Mae! 3M ;auffman! MetLife! )B

eron! Levi Strauss! ?oc#efeller! and other foundations/


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*ncome and Savings 9utcomes in "DD-Schreiner! Clancy = Sherraden! &''&

Schreiner = Sherraden! forthcoming &''(/

Method: "ccount monitoring research

;ey )indings:

-%/ Controlling for other factors! income is only 0ea#ly

associated 0ith savings outcomes.-&/ 5he poorest *D" participants save a much higher

proportion of their income than less,poor participants.


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*D"s and )uture 9rientation in "DD-M.S. Sherraden et al.! &''F/

Method: *n,depth intervie0s 0ith *D" participantsand controls

;ey finding: @reater future orientation:

-%/ *D" participants say they can 6see more clearly7

and 1etter 6visuali2e a future7 than 1efore *D"s.-&/ *D" program said to 6create goals and purpose.7

-$/ *D" program said to provide 60ay to reach goals.7


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*mpacts of *D"s in "DD-Mills et al.! &''F Center for Social Development!

research in progress/

Methods: 34periment! *D"s and controls randomly

assigned! three 0aves

;ey findings:

-%/ *D"s have positive impacts on home o0nership! dura1le

goods! education! self,employment! and net 0orth

-&/ ome o0nership effects are prominent! and stronger for "frican,"mericans than for 0hites.


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*nfluence of *D" ?esearch in US

*ncreases in 0elfare asset limits in nearly all states

during %'s

*D"s included as a state option in %( 60elfare

reform7 "ct -Boshara! &''$/

)ederal "ssets for *ndependence "ct in %G! first

pu1lic *D" demonstration -Boshara! &''$/

9ver F' US states have some type of *D" policy

-3d0ards = Mason! &''$/


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?eflections on US olicy rogress

*D"s introduced a change in thin#ing a1out poverty and

policy. Saving and asset 1uilding 1y the poor is no0 common

in US policy discussions.

But *D"s in the US are in a 6demonstration7 phase of

community,1ased proHects! 0hich is not a 6scala1le7 model.

Some proposals for inclusion of the 0hole population:

• Universal Savings "ccounts -Clinton! %/• Children>s Savings "ccounts! "S*?3 "ct -8e0 "merica

)oundation! &''F/.


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Supported Savings "1road

• 6Saving @ate0ay7 and 6Child 5rust )und7 in the

United ;ingdom -;elly and Lissauer! &''' Blair! &''%

.M. 5reasury! &''$ a4ton! &''$ ;empson et al.! &''F/

• )amily Development "ccounts in 5aipei -Cheng! &''$/

• *D"s and 6Learnave7 demonstration in Canada

-;ing0ell et al.! &''$/

• Matched saving in "ustralia -?ussell and )redline! &''F/

and Uganda -CSD>s "ssets"frica initiative/.


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34ample: Matched Savings 0ith

*IJ"*DS 9rphans in Uganda

)red Sse0amala -Sse0amala and Curley! &''/

igh ris# population! including li#ely *I infection later

"iming for US('' for secondary schooling

Savings of US&'' matched 0ith USF''

ilot successful

8o0 larger proHect 0ith US 8* funding! significance:

• 9ne of fe0 8* grants outside of US

• 9ne of first 8* grants to test economic intervention on health• Step to0ard Ss0eamala>s goal of an account for all orphans in

Uganda! and eventually all children in Uganda.


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• *ncentives

• *nformation

•

34pectations• "ccess

• )acilitation

• ?estrictions

• Security

• -Simplicity/

-Beverly and Sherraden! % Sherraden! et al.!

&''$ Sherraden and Barr! &''/

*nstitutions Matter: )actors that

"ffect Saving and "sset "ccumulation


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34amples of *nstitutional 3ffects in

*D" ?esearch-Schreiner et al.! &''& Schreiner and Sherraden! &''(

M.S. Sherraden et al.! &''F/

Match cap -e4pectation/ is associated 0ith a F' to ' cent

increase in savings for each dollar increase! a large effect.

*ncreased match rate -incentive/ a1out a lo0 level has little

effect on savings.

)inancial education -information/ up to a1out %' hours is

associated 0ith increased savings a1ove %' hours! no effect.

*D" savers are positive a1out limited uses -restrictions/.


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• Continue to clarify institutional constructs! and test in

different conte4ts: 1uild a systematic 1ody of #no0ledge that

can inform policy

• 9rgani2e effective constructs into designs of savings plans -Clancy! Cramer! and arrish! &'' ?utherford on saving

plans in @rameen **/

•

?oles for 1oth government and commercial financial sector

• 5est savings plans in developed and developing conte4ts

• "im for large,scale! inclusive policies.

5heory and olicy Directions


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?eferences

Beverly! S.@.! = Sherraden! M. -%/. *nstitutional determinants of saving:

*mplications for lo0,income households and pu1lic policy! Kournal of Socio,

economics &G! FE,FE$.

Blair! 5. -&''%/. Savings and assets for all! speech. London: %' Do0ning Street!

"pril &(.

Boshara! ?. -&''$/. )ederal policy and asset 1uilding. Social Development *ssues

&-%=&/! %$',%F%.

Bynner! K.B.! = a4ton! W. -&''%/. 5he asset effect. London: *nstitute for u1lic

olicy ?esearch.

Cheng! Li,Chen -&''$/. Developing )amily Development "ccounts in 5aipei: olicy

innovation from income to assets. Social Development *ssues &-%J&/! %'(,%%E.

Clinton! W.K. -%/. State of the Union address. Washington: US 34ecutive 9ffice of the resident.

Corporation for 3nterprise Development -&''F/. idden in plain site: " loo# at the

$$ 1illion federal asset,1uilding 1udget. Washington: Corporation for 3nterprise

Development.

Curley! K.! = Sherraden! M. -&'''/. olicy lessons from children>s allo0ances

for children>s savings accounts! Child Welfare! E-(/! ((%,(GE.


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3d0ards! ;.! = Mason! L.M. -&''$/. State policy trends for *ndividual Development

"ccounts in the United States! Social Development *ssues &-%=&/! %%G,%&.

@old1erg! ). -&''/. 5he universal piggy 1an#: Designing and implementing a system

of savings accounts for children. *n M. Sherraden! ed.! *nclusion in the "merican

dream: "ssets! poverty! and pu1lic policy. 8e0 Yor#: 94ford University ress.

.M. 5reasury -&''$/. Details of the Child 5rust )und. London: .M. 5reasury.

aveman! ?.! = Wolff! 3.M. -&''/. Who are the asset poor Levels! trends!

and composition! %G$,%G. *n M. Sherraden! ed.! *nclusion in the "merican dream:

"ssets! poverty! and pu1lic policy. 8e0 Yor#: 94ford University ress.

o0ard! C. -%E/. 5he hidden 0elfare state: 5a4 e4penditures and social policy in

the United States. rinceton: rinceton University ress.

;empson! 3.! Mc;ay! S.! = Collard! S. -&''$/. 3valuation of the C)L* and Saving@ate0ay pilot proHects. Bristol! United ;ingdom: University of Bristol.

;ing0ell! .! Do0ie! M.! oller! B.! = Kimene2! L. -&''F/. elping people help

themselves: "n early loo# at Learnave. 9tta0a! Canada: Social ?esearch and

Demonstration Corporation.

;elly! @.! = Lissauer -&'''/. 90nership for all. London: *nstitute for u1lic olicy

?esearch.

?eferences -cont./


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?eferences -cont./

Lindsey! D. -%F/. 5he 0elfare of children. 8e0 Yor#: 94ford University ress.

Mills! @.! atterson! ?.! 9rr! L.! = Demarco! D. -&''F/. 3valuation of the "merican

Dream Demonstration! final report. Cam1ridge! M": "1t "ssociates.

8e0 "merica )oundation -&''F/. "S*?3 "ct summary. Washington: 8e0 "merica

)oundation.

8issan! D.! = Le@rand! K. -&'''/. " capital idea: Start,up grants for young people! policy report no. F. London: )a1ian Society.

a4ton! W.! ed. -&''$/. 3Aual shares Building a progressive and coherent asset,1ased

0elfare policy. London: *nstitute for u1lic olicy ?esearch.

o0ers! 3.5. -%G/. Does means,testing 0elfare discourage saving 3vidence from a

change in ")CD policy in the United States! Kournal of u1lic 3conomics (G! $$,$.

?ussell! ?.! = )redline! L. -&''F/. 3valuation of the Saver lus pilot proHect."ustralia: ?M*5 University.

Schreiner! M.! Clancy! M.! and Sherraden! M. -&''&/. Saving performance in the

"merican Dream Demonstration! research report. St. Louis: Center for Social

Development! Washington University.


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?eferences -cont./

Seidman! L. -&''%/. "ssets and the ta4 code. *n 5. Shapiro = 3.8. Wolff! eds.!

"ssets for the poor: Benefits and mechanisms of spreading asset o0nership!

$&F,$(. 8e0 Yor#: ?ussell Sage )oundation.

Sen! ". -%$/. Capa1ility and 0ell,1eing. *n M. 8uss1aum = ". Sen! eds.! 5he Auality

of life! $',$. 94ford: Clarendon ress.

Sen! ". -%/. Development as freedom. 8e0 Yor#: ;nopf.

Sherraden! M.S.! McBride! ".M! anson! S.! = Kohnson! L. -&''F/. 5he meaning of

saving in lo0,income households! paper at annual meetings of 3astern 3conomics

"ssociation! Washington! )e1ruary &',&& -forthcoming in Kournal of *ncome

Distri1ution/.

Sherraden! M. -%GG/. ?ethin#ing social 0elfare: 5o0ard assets. Social olicy! %G-$/!

$E,F$.Sherraden! M. -%%/. "ssets and the poor. "rmon#! 8Y: M3 Sharpe.

Sherraden! M.! = Barr! M.S. -&''/. *nstitutions and inclusion in saving policy! in 8.

?etsinas = 3ric Bels#y! eds.! Building assets! 1uilding credit: Bridges and 1arriers

to financial services in lo0,income communities. Washington: Broo#ings *nstitution.


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Sherraden! M.! Schreiner! M.! = Beverly! S. -&''$/. *ncome! institutions! and saving

performance in *ndividual Development "ccounts! 3conomic Development

+uarterly %E-%/! ,%%&.

Sse0amala! ).S.! = Curley! K. -&''/. *mproving life chances of orphan children in

Uganda: 5esting an asset,1ased development strategy! 0or#ing paper ','%. St.

Louis! Center for Social Development.

Williams! 5. -&''$/. 5he impact of household 0ealth and poverty on child outcomes:

e4amining asset effects! doctoral dissertation! Washington University in St. Louis.

Yadama! @.! = Sherraden! M. -%(/. 3ffects of assets on attitudes and 1ehaviors:

"dvance test of a social policy proposal! Social Wor# ?esearch &'-%/! $,%%.


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CSD ?eports and Wor#ing apers

Center for Social DevelopmentCampus Bo4 %%(

Washington University

St. Louis! M9 ($%$' US"

$%F,$,EF$$

http:JJg010e1.0ustl.eduJcsdJpu1licationsJ

http://gwbweb.wustl.edu/csd/publications/http://gwbweb.wustl.edu/csd/publications/


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?ecent Boo#s

Sherraden! M.! ed. -&''/. Inclusion in the American dream:

Assets, poverty, and public policy. 8e0 Yor#: 94ford

University ress.

Schreiner! M.! = Sherraden! M. -forthcoming &''(/. Can

the poor save? Saving and asset accumulation in

Individual Development Accounts. 8e0 Yor#: "ldine de@ruyter.

Sherraden Policy Presentation

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