Saving and Asset-Accumulation Strategies Used by Low-Income Individuals
AbstractThis paper presents quantitative and qualitative data regarding the saving and asset-accumulation strategies used by low-income participants in Individual Development Account programs (IDAs). The results of a cross-sectional survey with 298 IDA participants and case studies with 15 IDA participants—the first methods that assessed saving behavior among this population—demonstrate that low-income individuals use psychological and behavioral strategies to save, deposit, and maintain assets. The most frequently used strategies are behavioral saving strategies for increasing the efficiency of spending (e.g., shopping more carefully for food) and for reducing consumption (e.g., spending less on leisure). Qualitative results indicate that individuals also use goals and mental accounting to help them save, view their deposits as bills or pay their accounts first to help them make deposits, and create "rules-of-thumb" to maintain assets. Linear regression results suggest that the behavioral saving strategies are not predictors of savings amounts in IDAs. Additional research is needed to understand the saving process among low-income individuals.
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Bibliographic InfoPaper provided by EconWPA in its series GE, Growth, Math methods with number 0108001.
Length: 31 pages
Date of creation: 02 Sep 2001
Date of revision: 27 Dec 2001
Note: Type of Document - Acrobat 3.0; prepared on Windows 98; to print on Adobe Acrobat 3.0; pages: 31 ; figures: included in paper file
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savings; poverty; asset accumulation; Individual Development Accounts;
Find related papers by JEL classification:
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
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