Mark Schreiner and Michael Sherraden
(2004) Center for Social Development, Washington University in St. Louis.
Financial Services Review,
Vol. 14, No. 1, pp. 37–54.
Individual
Development Accounts help the poor build assets by providing matches
for
savings used for home ownership, post-secondary education, and
microenterprise.
IDAs cannot help, however, if participants drop out. What factors
predict
drop-out? And what can be done to prevent it? For IDAs in the American
Dream
Demonstration, drop-out is less likely if participants already own some
assets,
be they human capital in education or experience, financial capital in
bank
accounts, social capital in marriage, or physical capital in homes or
cars. Income
and welfare receipt are not linked with drop-out. Drop-out is strongly
associated with aspects of IDA design such as match rates, time caps,
and the
use of automatic transfer. Because drop-out can be predicted, IDA
programs can keep
costs down while targeting additional assistance to the most at-risk
enrollees.