First-Year Impacts on Savings and Economic Well-Being from the Assets for Independence Program Randomized Evaluation

Abstract

Individual development accounts (IDAs) help low-income families save by providing a savings account and a potential match toward personal savings for specific investments, such as a first home, business capitalization, or postsecondary education and training. The Assets for Independence (AFI) program uses AFI IDAs—commonly coupled with financial education—with the goal of helping low-income households achieve greater self-sufficiency. Using a randomized controlled trial, we evaluate the impact of AFI after one year and find that the median level of liquid assets was $657 higher for the treatment group than the control group (before matching funds). We also find that the treatment (vs control) group experienced less material hardship (by 34%) and was less likely to use nonbank check-cashing services (by 39%).