Saturday, November 10, 2012: 1:45 PM-3:15 PM
Preston (Sheraton Baltimore City Center Hotel)
*Names in bold indicate Presenter
Organizers: Trina Shanks, University of Michigan
Moderators: Reid Cramer, New America Foundation
Chairs: Trina Shanks, University of Michigan
The distribution of wealth is extremely unequal throughout most of the world. This reality became more visible toward the end of 2011 as the Occupy Wall Street movement voiced displeasure about the skewed benefits that favored the top 1% of income earners and demanded more attention to initiatives that might benefit the other 99%. Over the past two decades, there has been growing interest in ‘asset-building,’ which include policies and institutional arrangements that help low and moderate income households to accumulate assets and build wealth. Greater economic security is important for everyone, but the poor typically do not benefit from or even participate in the larger financial system. The idea is that by helping people to develop skills or education to earn more and financial assets for stability and to weather economic downturns, they will feel better about themselves and others will view them differently. A popular approach to building assets and reducing economic inequality has been child development accounts, also known as child savings accounts. One suggestion is that every child born be given an account, ideally with an initial deposit and progressive incentives that favor the poor. With savings that can be used for their own development, young people are thought to have better options as they approach adulthood, particularly if they come from low-income households.
This symposium offers research that discusses the effectiveness and sustainability of such a child account policy by looking at examples in three different countries. In the United States, SEED (Saving for Education, Entrepreneurship, and Downpayment) enrolled thousands of newborns from Oklahoma in a college savings plan as part of an experimental design that seeks to demonstrate child outcomes over time as well as whether an universal child account policy can reduce economic inequality. In Ghana, schools were randomly assigned to offer a savings program to thousands of youth between the ages of 12 and 18 to examine the potential outcomes of such a strategy. In the United Kingdom, the Labour government actually established the Child Trust Fund in 2004, an universal child account policy that was part of its assets-based approach to welfare and an attempt to reduce child poverty. The newly elected government, however, abolished this policy stating a need to reduce the deficit. Although the approach to child savings accounts in each of these countries is slightly different, they all provide insight into the potential benefits and difficulties of implementing the idea.