Asset Building Financial Inclusion Working Paper

Heterogeneous Effects of Child Development Accounts on Savings for Children’s Education

In this study, we use data from SEED for Oklahoma Kids (N = 2,77), a statewide policy experiment testing Child Development Accounts (CDAs), to examine effects on individual savings for children’s postsecondary education. Built on the account structure of the Oklahoma 529 College Savings Plan, the experiment automatically opened state-owned 529 accounts for children in the treatment group with a $1,000 initial deposit, and encouraged their caregivers to open and save in participant-owned 529 accounts. Using quantile regressions and statistical match, the study focuses on the effects of CDAs on the shape of the savings distribution among participants who hold a participant-owned account for their children. Results suggest that the intervention has heterogeneous effects, affecting individual saving performance of about 8% of treatment participants. Treatment participants we expect would hold their own participant-owned accounts without the intervention have about $400 more in savings than their counterparts in the control group. Treatment participants who are motivated by the intervention to hold a participant-owned account have mean deposits of nearly $900. All those who are motivated by the intervention to save have mean deposits of $1,826. a high proportion of treatment group participants motivated by the CDA intervention to have participant-owned accounts have socioeconomically disadvantaged characteristics; the CDA intervention reduces inequality in savings for children’s education. While the CDA intervention affects some treatment participants’ individual savings, total assets accumulated in both state-owned and participant-owned accounts can play an important role in financing postsecondary education. When appropriately designed, CDAs can promote asset building among all children, and holding assets is a promising policy tool to improve college preparedness and help finance postsecondary education.

Subsequent publication: Huang, J., Kim, Y., Sherraden, M., & Clancy, M. (2017). Heterogeneous effects of Child Development Accounts on savings for children’s education. Journal of Policy Practice, 16(1), 59–80. doi:10.1080/15588742.2015.1132402

Project: SEED for Oklahoma Kids


Huang, J., Kim, Y., Sherraden, M., & Clancy, M. (2014). Heterogeneous effects of Child Development Accounts on savings for children’s education (CSD Working Paper No. 14-15). St. Louis, MO: Washington University, Center for Social Development.