Welfare recipiency and savings outcomes in individual development accounts

The authors examined how welfare recipiency is associated with savings outcomes in individual development accounts (IDAs), a structured savings program for low-income people. They investigated whether welfare recipients can save if they are provided with incentives. Data for this study are from the American Dream Demonstration (ADD), the first nationwide demonstration of IDAs. A Heckman two- step regression analysis suggests that, after controlling for a variety of program and participant characteristics, welfare recipiency, either before or at the time of enrollment in IDAs, is not correlated with program exits or savings outcomes. The findings suggest that welfare recipiency does not seem to affect savings performance in IDAs.