Short Term and Long-Term Savings in Low Income Households: Evidence from Individual Development Accounts


  • Margaret S. Sherraden
  • Amanda Moore McBride
  • Stacie Hanson
  • Lissa Johnson


Previous research has found that individuals frame savings for short-term and long-term uses. These findings are reinforced through in-depth interviews with 59 participants and 25 controls in an experiment testing the effects of Individual Development Accounts (IDAs). All respondents are from low-income households. IDA participants appear more likely than control respondents to earmark savings for long-term purposes and asset investments. This could be interpreted as a result of the institutional saving structure provided through the IDA program. IDA participants are presented with savings goals, which they believe are made attainable through conveyed expectations, matching funds, financial information, and staff facilitation. Interviews suggest that savings may lead to psychological, behavioral, and economic effects. Future research can explore the distinct and marginal effect that each institutional dimension has on savings over the long term and the effects of savings on family well being.