Individual Development Account as a Tool for Housing Policy for Low Income

Michal Grinstein-Weiss
Washington University
Campus Box 1196
One Brookings Drive
St. Louis MO 63130
USA
Phone: 314-935-8668
Email: mgw1@gwbmail.wustl.edu
 
Purpose:   Homeownership is a desirable goal for most Americans and is considered an integral part of the American Dream.  While government aims at promoting homeownership and narrowing wealth and racial inequalities, many public policies have been criticized as failing to accomplish this task. Low income households do not participate in many of the current asset-based policies, and homeownership is still a key indicator of the racial inequality in the United States. The challenge policy makers face today is to promote inclusive policies. One policy to encourage savings and homeownership is Individual Development Accounts (IDA). The purpose of this study is to examine the outcomes of IDA participants who are saving for a home.

Methods:  To answer the research questions, what are the individual and institutional characteristics that associated with saving performance for IDA participants who are saving for a home, qualitative and quantitative research methods will be used. The quantitative data includes the monitoring data set (n=2,364) that came from the evaluation of the American Dream Demonstration (ADD). The qualitative data come from in-depth interviews that were conducted with 59 IDA participants and 25 controls (N=84) as part of the experimental component of ADD.

Results:  The results of the Ordinary Least Square regression indicate that two institutional characteristics (match rate and hours of financial education) and six individual characteristics (gender, marital status, race, education, car ownership and being banked) are associated with saving among IDA participants who are saving for a home.  The examples from the in-depth interviews provide some qualitative meanings to these findings.

Implications:  The results found can be used by policymakers and program administrators to shape IDA programs specifically for helping participants who saving for a house to better.  Some program and individual characteristics seem to have large effect on saving outcomes. Specific suggestions are given.