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Testing an asset-building approach for young people: Early access to savings predicts later savings

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  • Friedline, Terri
  • Elliott, William
  • Chowa, Gina A.N.

Abstract

A major hypothesis of asset-building is that early access to savings accounts leads to continued and improved educational and economic outcomes over time. This study asks whether or not young adults (ages 18–22) in 2007, particularly among lower income households, are significantly more likely to own savings accounts and to accumulate more savings when they have access to savings accounts at banking institutions as adolescents (ages 13–17) in 2002. We investigate this question using longitudinal data (low-to-moderate income sample [LMI; N=530]; low-income sample [LI; N=354]) from the Panel Study of Income Dynamics and its supplements. Results from propensity score weighting and bivariate probit estimates support this hypothesis. Asset-building policies that extend early access to savings accounts may improve savings outcomes for young people from lower income households, which hopefully affords them with the economic resources needed to lead productive and satisfying lives.

Suggested Citation

  • Friedline, Terri & Elliott, William & Chowa, Gina A.N., 2013. "Testing an asset-building approach for young people: Early access to savings predicts later savings," Economics of Education Review, Elsevier, vol. 33(C), pages 31-51.
    • Handle: RePEc:eee:ecoedu:v:33:y:2013:i:c:p:31-51
    DOI: 10.1016/j.econedurev.2012.10.004
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    Cited by:

    1. Nohora Forero-Ramírez & Floor E. W. Knoote & Sofía Ortega-Tíneo, 2015. "Children and the Financial Regulatory Landscape in Latin America," Borradores de Economia 905, Banco de la Republica de Colombia.
    2. Rodríguez, Catherine & Saavedra, Juan E., 2019. "The persistent effects of youth savings reminders: Experimental evidence from text-message campaigns in Colombia," Journal of Development Economics, Elsevier, vol. 139(C), pages 135-156.
    3. Terri Friedline, 2015. "A Developmental Perspective on Children's Economic Agency," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(1), pages 39-68, March.
    4. Michal Grinstein-Weiss & Shenyang Guo & Vanessa Reinertson & Blair Russell, 2015. "Financial Education and Savings Outcomes for Low-Income IDA Participants: Does Age Make a Difference?," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(1), pages 156-185, March.
    5. Bucciol, Alessandro & Veronesi, Marcella, 2014. "Teaching children to save: What is the best strategy for lifetime savings?," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 1-17.
    6. Terri Friedline & Ilsung Nam & Vernon Loke, 2014. "Households’ Net Worth Accumulation Patterns and Young Adults’ Financial Health: Ripple Effects of the Great Recession?," Journal of Family and Economic Issues, Springer, vol. 35(3), pages 390-410, September.
    7. Friedline, Terri & Elliott, William, 2013. "Connections with banking institutions and diverse asset portfolios in young adulthood: Children as potential future investors," Children and Youth Services Review, Elsevier, vol. 35(6), pages 994-1006.
    8. Ning Tang, 2017. "Like Father Like Son: How Does Parents' Financial Behavior Affect Their Children's Financial Behavior?," Journal of Consumer Affairs, Wiley Blackwell, vol. 51(2), pages 284-311, July.
    9. Elliott, William & Sherraden, Michael, 2013. "Assets and educational achievement: Theory and evidence," Economics of Education Review, Elsevier, vol. 33(C), pages 1-7.
    10. Ian Dunham & Alec Foster, 2023. "FRINGE FINANCIAL ECOLOGIES AND PLACE‐BASED EXCLUSION: A Tale of Two Cities," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 47(6), pages 881-898, November.
    11. Terri Friedline & Mary Rauktis, 2014. "Young People Are the Front Lines of Financial Inclusion: A Review of 45 Years of Research," Journal of Consumer Affairs, Wiley Blackwell, vol. 48(3), pages 535-602, October.

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    More about this item

    Keywords

    Economic development; Educational economics; Educational finance; Human capital;
    All these keywords.

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development

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