Financial Education and Savings Outcomes for Low-Income IDA Participants: Does Age Make a Difference?

FINANCIAL literacy; INDIVIDUAL development accounts; SAVINGS; HOUSEHOLDS; PERSONAL finance; AMERICAN Dream; FINANCE

This study considers the impact of financial education dosage on savings outcomes of participants in Individual Development Account ( IDA) programs. It analyzes data from a sample of approximately 2,000 participants in the American Dream Policy Demonstration, disaggregates outcomes by age, and uses propensity score modeling to control for endogeneity and selection bias. We find that, relative to counterparts who did not complete educational requirements, IDA participants who completed program requirements for financial education had higher average monthly savings, saved a higher portion of their income, and deposited savings more frequently. Notably, we find that participants aged 36 or older experienced increasing returns on investment in financial education, and the best outcomes are found among those with more than 200% of the required dose of financial education. However, younger participants with more than 100% of the required dose are found to experience a diminishing return on their investment in financial education. [ABSTRACT FROM AUTHOR]

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