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Saving and Asset-Accumulation Strategies Used by Low-Income Individuals

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Author Info
Amanda Moore (Washington University in St. Louis)
Sondra Beverly (Washington University in St. Louis)
Michael Sherraden (Washington University in St. Louis)
Margaret Sherraden (University of Missouri-St. Louis)
Lissa Johnson (Washington University in St. Louis)
Mark Schreiner (Washington University in St. Louis)

Additional information is available for the following registered author(s):

Abstract

This 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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Publisher Info
Paper provided by EconWPA in its series GE, Growth, Math methods with number 0108001.

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Length: 31 pages
Date of creation: 02 Sep 2001
Date of revision: 27 Dec 2001
Handle: RePEc:wpa:wuwpge:0108001

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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Web page: http://129.3.20.41

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Related research
Keywords: 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

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Thaler, Richard H, 1990. "Saving, Fungibility, and Mental Accounts," Journal of Economic Perspectives, American Economic Association, vol. 4(1), pages 193-205, Winter. [Downloadable!] (restricted)
  2. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April. [Downloadable!] (restricted)
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  3. Shefrin, Hersh M & Thaler, Richard H, 1988. "The Behavioral Life-Cycle Hypothesis," Economic Inquiry, Oxford University Press, vol. 26(4), pages 609-43, October.
  4. Maital, Shlomo & Maital, Sharone L., 1994. "Is the future what it used to be? A behavioral theory of the decline of saving in the west," The Journal of Socio-Economics, Elsevier, vol. 23(1-2), pages 1-32. [Downloadable!] (restricted)
  5. Beverly, Sondra G. & Sherraden, Michael, 1999. "Institutional determinants of saving: implications for low-income households and public policy," The Journal of Socio-Economics, Elsevier, vol. 28(4), pages 457-473. [Downloadable!] (restricted)
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