Financial Services and Savings: Theory and Evidence From the American Dream Demonstration

The American Dream Demonstration, based on the pioneering work of Michael Sherraden and his colleagues, has changed the way we think about low- and moderateincome households’ financial decision-making. Low-income families can and do save, and their saving is shaped in part by the institutional design of programs to encourage saving. The evidence from the demonstration provides support for behavioral economic models of household decision making. At the same time, the demonstration suggests the need for a new focus on cost-effective policies that integrate savings policies for low- and moderate-income households into a universal, progressive, national savings policy.

Project: American Dream Policy Demonstration (ADD)