Racial Differences in Performance in a Matched Savings Program

This study examines the saving performance of low income African Americans and Caucasian participants in an Individual Development Accounts (IDA) program. IDAs are matched saving for home ownership, education, and small business capitalization. Using data from the American Dream Demonstration (N = 2,364), this study compares the savings performance of Black and White participants in IDAs. The results indicate that low-income African Americans on average save successfully in IDAs, though in smaller amounts than Caucasians. Results of separate regressions for Blacks and Whites indicate that mostly individual characteristics are associated with saving performance among Caucasians. In contrast, mostly institutional characteristics are associated with saving performance among African Americans. Implications for policy and programs are suggested.

Project: American Dream Policy Demonstration (ADD)