Saving Performance in the American Dream Demonstration: Final Report

The American Dream Demonstration (ADD) is the first systematic study of Individual Development Account (IDA) programs. IDAs are special accounts wherein savings are matched for the poor. While saving is not easy for anyone, it is more difficult for the poor because they have few resources and because they lack access to some public policy mechanisms, such as tax-benefited retirement accounts, that subsidize saving.

IDAs are designed to increase savings incentives for the poor. Savings in IDAs are matched if used for home ownership, post-secondary education, microenterprise, or other approved asset uses. Participants also receive financial education and support from IDA staff. Do IDAs work? ADD suggests that the poor can save and accumulate assets in IDAs:

• Average monthly net deposits per participant were US $19.07;
• The average participant saved about US $1 for every US $2 that could have been matched;
• The average participant made a deposit in about 6 of every 12 months;
• With an average match rate of about 2:1, participants accumulated approximately US $700 per year in IDAs.