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Asset Building Financial Inclusion Working Paper

Drop-Out From Individual Development Accounts: Prediction and Prevention

By CSD • July 1, 2002September 2, 2021

Individual Development Accounts (IDAs) are a new policy instrument designed to help the poor save and accumulate assets. IDAs provide matches for savings used for home purchase, post-secondary education, or microenterprise. IDAs cannot help participants, however, if they drop out. What determines drop-out, and what can be done to help participants to stay in? Three findings emerge from an analysis of IDAs in the American Dream Demonstration. First, drop-out depends more on transaction costs and previous debt than on income. Second, program design –and match rates in particular–affect drop-out risk. Third, drop-out can be predicted with some accuracy, so IDA programs could use statistical targeting to identify candidates for special preventive attention before they drop out.

Project: American Dream Policy Demonstration (ADD)

Citation

Schreiner, M., & Sherraden, M. (2002). Drop-out from Individual Development Accounts: Prediction and prevention (CSD Working Paper No. 02-2). St. Louis, MO: Washington University, Center for Social Development.

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2002American Dream Policy Demonstration (ADD)Individual Development Account (IDA)Mark SchreinerMichael Sherraden

Center for Social Development

Washington University in St. Louis

MSC 1196-251-46

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St. Louis, MO 63130

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