Effects of Individual Development Accounts on Asset Purchases and Saving Behavior: Evidence from a Controlled Experiment

Abstract

We evaluate the first controlled field experiment on Individual Development Accounts (IDAs). Including their own contributions and matching funds, treatment group members in the Tulsa, Oklahoma program could accumulate $6,750 for home purchase or $4,500 for other qualified uses. Almost all treatment group members opened accounts, but many withdrew all funds for unqualified purposes. Among renters at the beginning of the experiment, the IDA increased homeownership rates after 4 years by 7-11 percentage points and reduced non-retirement financial assets by $700-$1,000. The IDA had almost no other discernable effect on other subsidized assets, overall wealth, or poverty rates.