Panel: Building Assets in Economically Vulnerable and Underprivileged Populations: Barriers and Opportunities
(Poverty and Income Policy)

Friday, November 9, 2018: 8:30 AM-10:00 AM
8228 - Lobby Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Panel Chairs:  Olga Kondratjeva, Washington University in St. Louis
Discussants:  Stephen Grant, Prudential Workplace Solutions Group

Can Precommitment Increase Savings Deposits? Evidence from a Tax Time Field Experiment
Stephen Roll, Michal Grinstein-Weiss, Cynthia Cryder and Emily A. Gallagher, Washington University in St. Louis

Transforming Spending into Saving: The Impact of Rewards Cards on Saving Outcomes of Participants in Children’s Savings Account Programs (CSAs)
William Elliott1, Nicholas Sorensen2, Megan O'Brien1,2, Elizabeth Burland1 and Briana Starks1, (1)University of Michigan, (2)Center on Assets, Education, and Inclusion

Delinquent Debt Decisions and Their Consequences Over Time
Breno Braga, Signe-Mary McKernan and Hannah Hassani, Urban Institute

Assets play a crucial role in securing financial and psychological household well-being (Sheraden, 1991). Household ownership of liquid assets can provide a cushion against financial shocks like the job loss or medical emergencies (McKernan, Ratcliffe, and Vinopal, 2009), address current consumption shortages, facilitate long-term investments in education and homeownership, and reduce psychological distress. In the long-run, asset accumulation has potential to advance economic mobility and break the cycle of intergenerational poverty, particularly among economically vulnerable households (Zhan, 2006).

Despite the numerous benefits of building and holding assets, a high proportion of Americans lack even the most basic level of assets to withstand a modest emergency, to say nothing of the ability to save for goals like higher education or homeownership. Asset poverty and wealth inequality are multi-faceted problems driven by a complex array of factors, and adequately addressing these issues requires an understanding of both the inter- and intra-generational causes of wealth disparities and a willingness to draw solutions from innovations in the public, private, and nonprofit sectors.

To that end, this panel presents a diverse set of papers with one focus: To understand some of the causes of and solutions to savings issues, with a particular emphasis on low-income or economically underprivileged populations.

The first paper examines whether behavioral interventions delivered to low- and moderate-income (LMI) households during tax filing encourage savings of the tax refund. In a randomized controlled trial (RCT), LMI tax filers were randomly assigned to receive one of five behavioral nudges during the tax filing process. The findings show that compared to the control group, the most successful treatment group deposited their tax refund into the savings vehicle at a rate 57% higher than the control group.

The second paper evaluates an innovative policy to incentivize and facilitate savings rates for low-income families in a Children’s Savings Account (CSA) program. The policy provides a rebate to participating low-income families for purchases at certain businesses. This rebate is then deposited into their CSA. Using an RCT, the paper examines whether this innovation improves CSA savings rates and amounts.

The third paper explores wealth trajectories and family financial transfers in college-educated white and black households. Controlling for education levels and demographic characteristics, the paper identifies racial disparities in the levels of accumulated wealth and intergenerational financial transfers between college-educated households. The findings also suggest that college-educated black households tend to support their parents at higher rates.

The fourth paper examines delinquent decisions and consequences. Americans struggling financially often must forgo some financial obligations to make ends meet. Their credit health is at risk when they don’t pay their loans. The findings show which bills financially distressed people stop paying first and the long-term consequences of these decisions.

This panel illustrates the challenges faced by economically vulnerable and underprivileged households in building financial assets, but also presents several potential ways of addressing this core policy issue. The papers have important implications for researchers and policymakers who work towards ensuring long-term economic stability across the most vulnerable populations.

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