Long-Term Impacts of Individual Development Accounts on Homeownership among Baseline Renters: Follow-Up Evidence from a Randomized Experiment

Grinstein-Weiss, Michal and Sherraden, Michael and Gale, William G. and Rohe, William and Schreiner, Mark and Key, Clinton (2013): Long-Term Impacts of Individual Development Accounts on Homeownership among Baseline Renters: Follow-Up Evidence from a Randomized Experiment. Published in: American Economic Journal: Economic Policy , Vol. 5, No. 1 (February 2013): pp. 122-145.

Abstract

We examine the long-term effects of a 1998–2003 randomized experiment in Tulsa, Oklahoma with Individual Development Accounts that offered low-income households 2:1 matching funds for housing down payments. Prior work shows that, among households who rented in 1998, homeownership rates increased more through 2003 in the treatment group than for controls. We show that control group renters caught up rapidly with the treatment group after the experiment ended. As of 2009, the program had an economically small and statistically insignificant effect on homeownership rates, the number of years respondents owned homes, home equity, and foreclosure activity among baseline renters.

• Item Type: MPRA Paper
• Language: English
• Keywords: housing market, social policy, economic performance
• Subjects: R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R31 - Housing Supply and Markets

References

Administration for Children and Families, Office of Community Services. 2010. “Report to Congress: Assets for Independence Program: Status at the Conclusion of the Ninth Year.” US Department of Health and Human Services. Washington, DC, December. http://www.acf.hhs.gov/programs/ocs/afi/Final_AFI_9th_Report.pdf.

Almond, Douglas, and Janet Currie. 2011. “Human Capital Development Before Age Five.” In Handbook of Labor Economics, Vol. 4B, edited by Orley Ashenfelter and David Card, 1315–1486. Amsterdam: Elsevier.

American Community Survey. 2007. Tulsa county, Oklahoma. median Value (Dollars), universe: Owner-Occupied Housing units Table B25077. United States Census Bureau. Washington, DC, November. http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml? pid=ACS_07_1YR_B25077&prodType=table.

Ard, Owen S., and David Puckett. 2002. “Tulsa County Residential Housing Market Analysis.” Unpublished.

Ashraf, Nava, Dean Karlan, and Wesley Yin. 2006. “Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines.” Quarterly Journal of Economics 121 (2): 635–72.

Biemer, Paul P., Robert M. Groves, Lars E. Lyberg, Nancy A. Mathiowetz, and Seymour Sudman, eds. 1991. measurement Errors in Surveys. New York: Wiley.

Bostic, Raphael W., and Kwan Ok Lee. 2008. “Mortgages, Risk, and Homeownership among Low- and Moderate-Income Families.” American Economic review 98 (2): 310–14.

Chetty, Raj, John N. Friedman, Nathaniel Hilger, Emmanuel Saez, Diane Whitmore Schanzenbach, and Danny Yagan. 2011. “How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star.” Quarterly Journal of Economics 126 (2): 749–804.

Conger, Rand D., Lora Ebert Wallace, Yumei Sun, Ronald L. Simons, Vonnie C. McLoyd, and Gene H. Brody. 2002. “Economic Pressure in African American Families: A Replication and Extension of the Family Stress Model.” Developmental Psychology 38 (2): 179–93.

Deshpande, Rani, and Jamie M. Zimmerman, eds. 2010. “Youth Savings in Developing Countries: Trends in Practice, Gaps in Knowledge.” Paper presented at YouthSave Consortium. St. Louis, May 6. http://csd.wustl.edu/Publications/Documents/YouthSavingsMay2010.pdf.

Dietz, Robert D., and Donald R. Haurin. 2003. “The Social and Private Micro-Level Consequences of Homeownership.” Journal of urban Economics 54 (3): 401–50.

Duflo, Esther, William Gale, Jeffrey Liebman, Peter Orszag, and Emmanuel Saez. 2006. “Saving Incentives for Low- and Middle-Income Families: Evidence from a Field Experiment with H&R Block.” Quarterly Journal of Economics 121 (4): 1311–46.

Engelhardt, Gary V. 1996. “Tax Subsidies and Household Saving: Evidence from Canada.” Quarterly Journal of Economics 111 (4): 1237–68.

Engelhardt, Gary V. 1997. “Do Targeted Saving Incentives for Homeownership Work? The Canadian Experience.” Journal of Housing research 8 (2): 225–48.

Engelhardt, Gary V., and Anil Kumar. 2007. “Employer Matching and 401(k) Saving: Evidence from the Health and Retirement Study.” Journal of Public Economics 91 (10): 1920–43.

Engelhardt, Gary V., Alissa L. Dubnicki, Ellen L. Marks, and Bryan B. Rhodes. 2011. “Educational Saving Incentives for Low-Income Families: Experimental Evidence from the Michigan SEED Program.” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1946456.

Engelhardt, Gary V., Michael D. Eriksen, William G. Gale, and Gregory B. Mills. 2010. “What Are the Social Benefits of Homeownership? Experimental Evidence for Low-Income Households.” Journal of urban Economics 67 (3): 249–58.

Engen, Eric M., William G. Gale, and John Karl Scholz. 1996. “The Illusory Effects of Saving Incentives on Saving.” Journal of Economic Perspectives 10 (4): 113–38.

Grinstein-Weiss, Michal, Jung-Sook Lee, Johanna K. P. Greeson, Chang-Keun Han, Yeong H. Yeo, and Kate Irish. 2008. “Fostering Low-Income Homeownership through Individual Development Accounts: A Longitudinal, Randomized Experiment.” Housing Policy Debate 19 (4): 711–39.

Grinstein-Weiss, Michal, Michael Sherraden, William G. Gale, William M. Rohe, Mark Schreiner, and Clinton Key. 2013. “Long-Term Impacts of Individual Development Accounts on Homeownership among Baseline Renters: Follow-Up Evidence from a Randomized Experiment: Dataset.” American Economic Journal: Economic Policy. http://dx.doi.org/10.1257/pol.5.1.122.

Grinstein-Weiss, Michal, Michael Sherraden, William G. Gale, William M. Rohe, Mark Schreiner, and Clinton Key. 2011. “Ten-Year Impacts of Individual Development Accounts on Homeownership: Evidence from a Randomized Experiment.” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1782018 (accessed November 26, 2012).

Guo, Shenyang, and Mark W. Fraser. 2010. Propensity Score Analysis: Statistical methods and Applications. Thousand Oaks: Sage.

Hall, Robert E. 1988. “Intertemporal Substitution in Consumption.” Journal of Political Economy 96 (2): 339–57.

Han, Chang-Keun, Michal Grinstein-Weiss, and Michael Sherraden. 2009. “Assets beyond Savings in Individual Development Accounts.” Social Service review 83 (2): 221–44. Herbert, Christopher E., and Eric S. Belsky. 2008. “Symposium: Homeownership Experience of LowIncome and Minority Households: A Review and Synthesis of the Literature.” cityscape: A Journal of Policy Development and research 10 (2): 5–60.

Hirano, Keisuke, and Guido W. Imbens. 2001. “Estimation of Causal Effects Using Propensity Score Weighting: An Application to Data on Right Heart Catheterization.” Health Services and Outcomes research methodology 2 (3–4): 259–78.

Hotz, V. Joseph, Guido W. Imbens, and Jacob A. Klerman. 2006. “Evaluating the Differential Effects of Alternative Welfare-to-Work Training Components: A Real Analysis of the California GAIN Program.” Journal of Labor Economics 24 (3): 521–66.

Hurst, Eric, and James P. Ziliak. 2006. “Do Welfare Asset Limits Affect Household Savings? Evidence from Welfare Reform.” Journal of Human resources 41 (1): 46–71.

Leckie, Norm, Taylor Shek-Wai Hui, Doug Tattrie, Jennifer Robson, and Jean-Pierre Voyer. 2010. Learn$ave Individual Development Accounts Project: Final report. Social Research and Demonstration Corporation. Ottawa, November. http://www.srdc.org/uploads/learnSave_final_EN.pdf.

Loke, Vernon, and Michael Sherraden. 2009. “Building Assets from Birth: A Global Comparison of Child Development Account Policies.” International Journal of Social Welfare 18 (2): 119–29.

McKernan, Signe-Mary, Caroline Ratcliffe, and Yunju Nam. 2007. The Effects of Welfare and IDA Program rules on the Asset Holdings of Low-Income Families. US Department of Health and Human Services Report Series: Poor Finances: Assets and Low-Income. St. Louis, September. http://aspe.hhs.gov/hsp/07/PoorFinances/assets/report.pdf.

McKernan, Signe-Mary, and Michael Sherraden, eds. 2008. Asset Building and Low-Income Families. Washington, DC: Urban Institute Press.

Mills, Gregory, Ken Lam, Donna DeMarco, Christopher Rodger, and Bulbul Kaul. 2008. Assets for Independence Act Evaluation Impact Study: Final report. Abt Associates. Cambridge, MA, February. http://www.acf.hhs.gov/programs/ocs/afi/AFI_Final_Impact_Report.pdf.

Mills, Gregory, William G. Gale, Rhiannon Patterson, Gary V. Engelhardt, Michael D. Eriksen, and Emil Apostolov. 2008. “Effects of Individual Development Accounts on Asset Purchases and Saving Behavior: Evidence from a Controlled Experiment.” Journal of Public Economics 92 (5–6): 1509–30.

Mills, Gregory, Rhiannon Patterson, Larry Orr, and Donna DeMarco. 2004. Evaluation of the American Dream Demonstration: Final Evaluation report. Abt Associates Inc. Cambridge, MA, August. http://csd.wustl.edu/Publications/Documents/Abt_ADD_Final_Report.pdf.

Moser, Caroline, and Anis A. Dani, eds. 2008. Assets, Livelihoods, and Social Policy, New Frontiers of Social Policy. Washington, DC: World Bank.

National Association of Realtors. 2009. Tulsa Area Local market report, Fourth Quarter 2009. National Association of Realtors. Chicago.

Office of Management and Budget. 2011. Budget of the united States Government, Fy 2012: Analytical Perspectives. US Government Printing Office (GPO). Washington, DC, December. http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/spec.pdf.

Oliver, Melvin L., and Thomas M. Shapiro. 2006. Black Wealth/White Wealth. 2nd ed. New York: Routledge.

Orr, Larry L. 1999. Social Experiments: Evaluating Public Programs with Experimental methods. Thousand Oaks: Sage.

Oyserman, Daphna, and Mesmin Destin. 2010. “Identity-Based Motivation: Implications for Intervention.” counseling Psychologist 38 (7): 1001–43.

Poterba, James M., Steven F. Venti, and David A. Wise. 1996. “How Retirement Saving Programs Increase Saving.” Journal of Economic Perspectives 10 (4): 91–112.

Rademacher, Ida, Kasey Wiedrich, Signe-Mary McKernan, Caroline Ratcliffe, and Megan Gallagher. 2010. “Weathering the Storm: Have IDAs Helped Low-Income Homebuyers Avoid Foreclosure?” Corporation for Enterprise Development (CFED). http://www.urban.org/UploadedPDF/412064_weathering_the_storm.pdf (accessed November 26, 2012).

Rosenbaum, Paul R. 2002. “Covariance Adjustment in Randomized Experiments and Observational Studies.” Statistical Science 17 (3): 286–327.

Saez, Emmanuel. 2009. “Details Matter: The Impact of Presentation and Information on the Take-Up of Financial Incentives for Retirement Saving.” American Economic Journal: Economic Policy 1 (1): 204–28.

Scholz, John Karl, and Ananth Seshadri. 2009. “The Assets and Liabilities Held By Low-Income Households.” In Insufficient Funds: Savings, Assets, credit, and Banking among Low-Income Households, edited by Rebecca M. Blank and Michael S. Barr, 25–65. National Poverty Center Series on Poverty and Public Policy. New York: Russell Sage Foundation.

Schreiner, Mark. 2006. “Program Costs for Individual Development Accounts: Final Figures from CAPTC in Tulsa.” Savings and Development 30 (3): 247–74.

Schreiner, Mark, Margaret Clancy, and Michael Sherraden. 2002. Final report: Saving Performance in the American Dream Demonstration: A National Demonstration of Individual Development Accounts. Center for Social Development. St. Louis, October. http://csd.wustl.edu/Publications/Documents/ADDReport2002.pdf.

Schreiner, Mark, and Michael Sherraden. 2007. can the Poor Save? Saving and Asset Building in Individual Development Accounts. New Brunswick, NJ: Transaction Publishers.

Seidman, Laurence S. 2001. “Assets and the Tax Code.” In Assets for the Poor: The Benefits of Spreading Asset Ownership, edited by Thomas M. Shapiro and Edward N. Wolff, 324–56. New York: Russell Sage Foundation.

Shapiro, Thomas M. 2004. The Hidden cost of Being African American: How Wealth Perpetuates Inequality. New York: Oxford University Press.

Sherraden, Margaret S., and Amanda Moore McBride. 2010. Striving to Save: creating Policies for Financial Security of Low-Income Families. Ann Arbor: University of Michigan Press.

Sherraden, Margaret S., Amanda Moore McBride, Stacie Hanson, and Lissa Johnson. 2005. “Short Term and Long-Term Savings in Low Income Households: Evidence from Individual Development Accounts.” Journal of Income Distribution 13 (3–4): 76–97.

Sherraden, Michael. 1991. Assets and the Poor: A New American Welfare Policy. Armonk: M. E. Sharpe.

Sherraden, Michael. 2001. “Asset-Building Policy and Programs for the Poor.” In Assets for the Poor: The Benefits of Spreading Asset Ownership, edited by Thomas M. Shapiro and Edward N. Wolff, 302–33. New York: Russell Sage Foundation. Tulsa Housing Authority. 2008. “Options for Homeownership.” http://www.tulsahousing.org/HousingOptions/Homeownership/tabid/60/Default.aspx (accessed November 26, 2012).

US Department of Health and Human Services, Administration for Children and Families, Office of Community Services. 2010. report to congress: Assets for Independence Program: Status at the conclusion of the Ninth year. http://www.acf.hhs.gov/programs/ocs/afi/Final_AFI_9th_Report.pdf (accessed November 26, 2012).

Wolff, Edward N. 2001. “Recent Trends in Wealth Ownership, from 1983 to 1998.” In Assets for the Poor: The Benefits of Spreading Asset Ownership, edited by Thomas M. Shapiro and Edward N. Wolff, 34–73. New York: Russell Sage Foundation.

Woo, Lillian G., F. William Schweke, and David E. Buchholz. 2004. Hidden in Plain Sight: A Look at the $335 Billion Federal Asset-Building Budget. Corporation for Enterprise Development. Washington, DC, Spring. http://content.knowledgeplex.org/kp2/cache/kp/24095.pdf.