Journal of Family and Economic Issues

, Volume 39, Issue 1, pp 145–162 | Cite as

Program Knowledge and Racial Disparities in Savings Outcomes in a Child Development Account Experiment

  • Yunju Nam
  • Elizabeth Hole
  • Michael Sherraden
  • Margaret M. Clancy
Original Paper
  • 90 Downloads

Abstract

This study investigated whether participants’ program knowledge was associated with savings outcomes in Child Development Accounts and whether differences in program knowledge explained racial and ethnic disparities in savings outcomes. We used data collected from White, Black, American Indian, and Hispanic treatment participants in the SEED for Oklahoma Kids (SEED OK) experiment (N = 1126). Analysis results indicated that knowledge of SEED OK program features was low, especially among members of minority groups. Logit and Tobit regressions showed that program knowledge was positively related to the likelihood of holding a SEED OK account and to individual savings amounts. Gaps in program knowledge were associated with racial disparities in savings outcomes. If Whites and minorities had the same levels of program knowledge, gaps in savings outcomes would have significantly narrowed. The findings call for the development of policy designs and communication tools to enhance knowledge of program features among households with Child Development Accounts, especially racial- and ethnic-minority households.

Keywords

Racial disparities Wealth College savings Asset building 

Notes

Acknowledgements

Support for SEED for Oklahoma Kids comes from the Ford Foundation and the Charles Stewart Mott Foundation. We especially value our partnership with the state of Oklahoma: Ken Miller, State Treasurer; Scott Meacham, former State Treasurer; Tim Allen, Deputy Treasurer for Communications and Program Administration; and James Wilbanks, former Director of Revenue and Fiscal Policy. We appreciate the contributions of staff at RTI International. The Oklahoma 529 College Savings Plan Program Manager, TIAA-CREF, has also been a valuable partner. At the Center for Social Development, we are grateful to Mark Schreiner and Nora Wikoff for their assistance in managing the survey data and to Vernon Loke, Lisa Reyes Mason, and Donna-Mae Knights for assistance with data management and cleaning. The authors also thank Christopher Leiker for his wonderful editing assistance and staff on the SEED OK team over several years.

Compliance with Ethical Standards

Conflict of interest

Support for SEED for Oklahoma Kids (SEED OK) comes from the Ford Foundation and the Charles Stewart Mott Foundation. The sponsors did not participate in the design or conduct of the study; in the collection, analysis, or interpretation of the data; or in the preparation, review, or approval of the manuscript. The authors declare that they have no conflict of interest.

Ethical Approval

The SEED OK experiment obtained institutional review board approval from Washington University in Saint Louis (IRB ID No. 201102246). All procedures involving human participants were performed in accordance with the ethical standards of the institutional and/or national research committee and with the 1964 Helsinki declaration and its later amendments or comparable ethical standards.

Informed Consent

Informed consent was obtained from all individual participants included in the study. No identifying information about participants is included in the article. The manuscript will not infringe upon any statutory copyright. This paper has not been published previously and is not under consideration elsewhere.

References

  1. Agnew, J. R., Szykman, L. R., Utkus, S. P., & Young, J. A. (2012). Trust, plan knowledge and 401(k) savings behavior. Journal of Pension Economics and Finance, 11, 1–20. doi: 10.1017/S1474747211000230.CrossRefGoogle Scholar
  2. Ball-Rokeach, S. J., Kim, Y.-C., & Matei, S. (2001). Storytelling neighborhood - Paths to belonging in diverse urban environments. Communication Research, 28(4), 392–428. doi: 10.1177/009365001028004003.CrossRefGoogle Scholar
  3. Baum, S., Ma, J., & Payea, K. (2010). Education pays 2010: The benefits of higher education for individuals and society (Trends in Higher Education Series Report). Retrieved from College Board website: https://trends.collegeboard.org/sites/default/files/education-pays-2010-full-report.pdf.
  4. Bernheim, B. D., & Garrett, D. M. (2003). The effects of financial education in the workplace: Evidence from a survey of households. Journal of Public Economics, 87, 1487–1519. doi: 10.1016/S0047-2727(01)00184-0.CrossRefGoogle Scholar
  5. Beverly, S. G., Sherraden, M., Cramer, R., Williams Shanks, T. R., Nam, Y., & Zhan, M. (2008). Determinants of asset holdings. In S.-M. McKernan & M. Sherraden (Eds.), Asset building and low-income families (pp. 89–151). Washington, DC: Urban Institute Press.Google Scholar
  6. Bonevski, B., Randell, M., Paul, C., Chapman, K., Twyman, L., Bryant, J., Brozek, I., & Hughes, C. (2014). Reaching the hard-to-reach: A systematic review of strategies for improving health and medical research with socially disadvantaged groups. BMC Medical Research Methodology, 14, 42. doi: 10.1186/1471-2288-14-42.CrossRefGoogle Scholar
  7. Bucks, B. K., Kennickell, A. B., Mach, T. L., & Moore, K. B. (2009). Changes in U.S. family finances from 2004 to 2007: Evidence from the survey of consumer finances. Federal Reserve Bulletin, 95, A1–A56.Google Scholar
  8. Bureau of Labor Statistics. (2009). Defined-contribution plans more common than defined-benefit plans (Program Perspectives on Retirement Benefits No. 3). Retrieved from http://www.bls.gov/opub/btn/archive/program-perspectives-on-retirement-benefits-pdf.pdf.
  9. Choi, J. J., Laibson, D., & Madrian, B. C. (2004). Plan design and 401(k) savings outcomes. National Tax Journal, 57, 275–298.CrossRefGoogle Scholar
  10. Choi, J. J., Laibson, D., & Madrian, B. C. (2005). Are empowerment and education enough? Underdiversification in 401(k) plans. Brookings Papers on Economic Activity, 2, 151–213. doi: 10.1353/eca.2006.0002.CrossRefGoogle Scholar
  11. Choi, J. J., Laibson, D., & Madrian, B. C. (2011). $100 bills on the sidewalk: Suboptimal investment in 401(k) plans. Review of Economics and Statistics, 93, 748–763. doi: 10.1162/REST_a_00100.CrossRefGoogle Scholar
  12. Clancy, M., & Lassar, T. (2010). College savings plan accounts at birth: Maines statewide program (CSD Policy Brief No. 10–16). Retrieved from Washington University, Center for Social Development website http://csd.wustl.edu/publications/documents/pb10-16.pdf
  13. Clark, R. L., Morrill, M. S., & Allen, S. G. (2012). Effectiveness of employer-provided financial information: Hiring to retiring. American Economic Review, 102, 314–318. doi: 10.1257/aer.102.3.314.CrossRefGoogle Scholar
  14. Clayman, M. L., Manganello, J. A., Viswanath, K., Hesse, B. W., & Arora, N. K. (2010). Providing health messages to Hispanics/Latinos: Understanding the importance of language, trust in health information sources, and media use. Journal of Health Communication, 15(Suppl. 3), 252–263. doi: 10.1080/10810730.2010.522697.CrossRefGoogle Scholar
  15. Conley, D. (2001). Capital for college: Parental assets and postsecondary schooling. Sociology of Education, 74, 59–72. doi: 10.2307/2673145.CrossRefGoogle Scholar
  16. Cramer, R., & Newville, D. (2009). Children’s Savings Accounts: The case for creating a lifelong savings platform at birth as a foundation for a “save-and-invest” economy (Asset Building Program Paper). Washington, DC: New America Foundation.Google Scholar
  17. Curtin, R. T., Presser, S., & Singer, E. (2005). Changes in telephone survey nonresponse over the past quarter century. Public Opinion Quarterly, 69, 87–98. doi: 10.1093/poq/nfi002.CrossRefGoogle Scholar
  18. Duflo, E., Gale, W., Liebman, J., Orszag, P., & Saez, E. (2006). Saving incentives for low- and middle-income families: Evidence from a field experiment with H&R Block. Quarterly Journal of Economics, 121, 1311–1346. doi: 10.1093/qje/121.4.1311.CrossRefGoogle Scholar
  19. Duflo, E., & Saez, E. (2003). The role of information and social interactions in retirement plan decisions: Evidence from a randomized experiment. Quarterly Journal of Economics, 118, 815–842. doi: 10.1162/00335530360698432.CrossRefGoogle Scholar
  20. Elliott, W., Destin, M. III, & Friedline, T. (2011). Taking stock of ten years of research on the relationship between assets and children’s educational outcomes: Implications for theory, policy and intervention. Children and Youth Services Review, 33, 2312–2328. doi: 10.1016/j.childyouth.2011.08.001.CrossRefGoogle Scholar
  21. Engelhardt, G. V., & Kumar, A. (2007). Employer matching and 401(k) saving: Evidence from the Health and Retirement Study. Journal of Public Economics, 91, 1920–1943. doi: 10.1016/j.jpubeco.2007.02.009.CrossRefGoogle Scholar
  22. FinAid. (n.d.). Tuition inflation. Retrieved June 16, 2014, from http://www.finaid.org/savings/tuition-inflation.phtml.
  23. Government Accountability Office. (2012). Higher education: A small percentage of families save in 529 plans (Report No. GAO-13-64). Retrieved from http://www.gao.gov/products/GAO-13-64.
  24. Gray, K., Clancy, M., Sherraden, M. S., Wagner, K., & Miller-Cribbs, J. (2012). Interviews with mothers of young children in the SEED for Oklahoma Kids college savings experiment (CSD Research Report No. 12–53). Retrieved from Washington University, Center for Social Development website http://csd.wustl.edu/publications/documents/rp12-53.pdf.
  25. Greene, W. H. (2003). Econometric analysis (5th edn.). Upper Saddle River: Prentice Hall.Google Scholar
  26. Groves, R. M. (2006). Nonresponse rates and nonresponse bias in household surveys. Public Opinion Quarterly, 70, 646–675. doi: 10.1093/poq/nfl033.CrossRefGoogle Scholar
  27. Hastings, J. S., Madrian, B. C., & Skimmyhorn, W. L. (2013). Financial literacy, financial education, and economic outcomes. Annual Review of Economics, 5, 347–373. doi: 10.1146/annurev-economics-082312-125807.CrossRefGoogle Scholar
  28. Huang, J., Nam, Y., & Sherraden, M. S. (2013). Financial knowledge and child development account policy: A test of financial capability. Journal of Consumer Affairs, 47, 1–26. doi: 10.1111/joca.12000.CrossRefGoogle Scholar
  29. Huang, J., Sherraden, M., & Purnell, J. Q. (2014). Impacts of child development accounts on maternal depressive symptoms: Evidence from a randomized statewide policy experiment. Social Science & Medicine, 112, 30–38. doi: 10.1016/j.socscimed.2014.04.023.CrossRefGoogle Scholar
  30. Keeter, S., Kennedy, C., Dimock, M., Best, J., & Craighill, P. (2006). Gauging the impact of growing nonresponse on estimates from a national RDD telephone survey. Public Opinion Quarterly, 70, 759–779. doi: 10.1093/poq/nfl035.CrossRefGoogle Scholar
  31. Kim, Y., Sherraden, M., Huang, J., & Clancy, M. (2015). Child development accounts and parental educational expectations for young children: Early evidence from a statewide social experiment. Social Service Review, 89, 99–137. doi: 10.1086/680014.CrossRefGoogle Scholar
  32. Madrian, B. C. (2014). Applying insights from behavioral economics to policy design. Annual Review of Economics, 6, 663–688. doi: 10.1146/annurev-economics-080213-041033.CrossRefGoogle Scholar
  33. Madrian, B. C., & Shea, D. F. (2001). The power of suggestion: Inertia in 401(k) participation and savings behavior. Quarterly Journal of Economics, 116, 1149–1187. doi: 10.1162/003355301753265543.CrossRefGoogle Scholar
  34. Mani, A., Mullainathan, S., Shafir, E., & Zhao, J. (2013). Poverty impedes cognitive function. Science, 341, 976–980. doi: 10.1126/science.1238041.CrossRefGoogle Scholar
  35. Marks, E. L., Rhodes, B. B., Engelhardt, G. V., Scheffler, S., & Wallace, I. F. (2009). Building assets: An impact evaluation of the MI SEED children’s savings program [Report]. Retrieved from RTI International website http://www.rti.org/pubs/mi_seed_report.pdf.
  36. Marks, E. L., Rhodes, B. B., & Scheffler, S. (2008). SEED for Oklahoma Kids: Baseline analysis [Report]. Research Triangle Park, NC: RTI International.Google Scholar
  37. Mason, L. R., Nam, Y., Clancy, M., Kim, Y., & Loke, V. (2010). Child development accounts and saving for children’s future: Do financial incentives matter? Children and Youth Services Review, 32, 1570–1576. doi: 10.1016/j.childyouth.2010.04.007.CrossRefGoogle Scholar
  38. Mason, L. R., Nam, Y., & Kim, Y. (2014). Validity of infant race/ethnicity from birth certificates in the context of U.S. demographic change. Health Services Research, 49, 249–267. doi: 10.1111/1475-6773.12083.CrossRefGoogle Scholar
  39. McPherson, C. J., Higginson, I. J., & Hearn, J. (2001). Effective methods of giving information in cancer: A systematic literature review of randomized controlled trials. Journal of Public Health Medicine, 23, 227–234. doi: 10.1093/pubmed/23.3.227.CrossRefGoogle Scholar
  40. Nam, Y., Kim, Y., Clancy, M., Zager, R., & Sherraden, M. (2013). Do child development accounts promote account holding, saving, and asset accumulation for children’s future? Evidence from a statewide randomized experiment. Journal of Policy Analysis and Management, 32, 6–33. doi: 10.1002/pam.21652.CrossRefGoogle Scholar
  41. Nam, Y., Wikoff, N., & Sherraden, M. (2016). Economic intervention and parenting: A Randomized experiment of a statewide child development account program. Research on Social Work Practice, 26, 339–349. doi: 10.1177/1049731514555511.CrossRefGoogle Scholar
  42. Nyce, S. A. (2005). The importance of financial communication for participation rates and contribution levels in 401(k) plans. Benefits Quarterly, 21, 22–39.Google Scholar
  43. Okech, D. (2011). Enrollment decisions in a child development accounts program for low-income families. Journal of Family and Economic Issues, 32, 400–410. doi: 10.1007/s10834-010-9234-z.CrossRefGoogle Scholar
  44. Oklahoma 529 College Savings Plan. (n.d.). Frequently asked questions. Retrieved October 19, 2010, from http://www.ok4saving.org/faq/.
  45. Pedersen, E. R., Neighbors, C., Tidwell, J., & Lostutter, T. W. (2011). Do undergraduate student research participants read psychological research consent forms? Examining memory effects, condition effects, and individual differences. Ethics and Behavior, 21, 332–350. doi: 10.1080/10508422.2011.585601.CrossRefGoogle Scholar
  46. Puhani, P. (2000). The Heckman correction for sample selection and its critique. Journal of Economic Surveys, 14, 53–68. doi: 10.1111/1467-6419.00104.CrossRefGoogle Scholar
  47. Schreiner, M. (2012). Meta-data for SEED for Oklahoma Kids: Two survey waves and OSCP administrative data through 2011Q4 [Report]. St. Louis, MO: Washington University, Center for Social Development.Google Scholar
  48. Schreiner, M., & Sherraden, M. (2007). Can the poor save? Saving and asset building in Individual Development Accounts. New Brunswick, NJ: Transaction.Google Scholar
  49. SEED for Oklahoma Kids. (2008a). Answers to frequently asked questions [Brochure]. Retrieved from state of Oklahoma website: https://www.ok.gov/treasurer/documents/SEEDOK-FAQ-2009.pdf.
  50. SEED for Oklahoma Kids. (2008b). Lets get started [Informational booklet]. Retrieved from state of Oklahoma website: https://www.ok.gov/treasurer/documents/SEED-Get-Started+MEF.pdf.
  51. SEED for Oklahoma Kids. (2008c). SEED for Oklahoma Kids savings match terms. Retrieved from state of Oklahoma website: https://www.ok.gov/treasurer/documents/SEED%20Savings%20Match%20Terms%202009.pdf.
  52. Shah, A. K., Mullainathan, S., & Shafir, E. (2012). Some consequences of having too little. Science, 338, 682–685. doi: 10.1126/science.1222426.CrossRefGoogle Scholar
  53. Shapiro, T. M. (2004). The hidden cost of being African-American: How wealth perpetuates inequality. New York: Oxford University Press.Google Scholar
  54. Sherraden, M. (1991). Assets and the poor: A new American welfare policy. Armonk, NY: M. E. Sharpe.Google Scholar
  55. Sherraden, M., Clancy, M., Nam, Y., Huang, J., Kim, Y., Beverly, S. G., … Purnell, J. Q. (2015). Universal accounts at birth: Building knowledge to inform policy. Journal of the Society for Social Work and Research, 6, 541–564. doi: 10.1086/684139.CrossRefGoogle Scholar
  56. Skimmyhorn, W. L. (2012). Essays in behavioral household finance (Doctoral dissertation, Harvard University). Retrieved from http://dash.harvard.edu/bitstream/handle/1/9369052/Skimmyhorn_gsas.harvard_0084L_10233.pdf?sequence=1.
  57. Stone, D. (2012). Policy paradox: The art of political decision making (3rd edn.). New York: W.W. Norton.Google Scholar
  58. Weintraub, E. R. (1993). Neoclassical economics. In D. R. Henderson (Ed.), The concise encyclopedia of economics. Retrieved from Library of Economics and Liberty website http://www.econlib.org/library/Enc1/NeoclassicalEconomics.html.
  59. Winship, C., & Mare, R. D. (1992). Models for sample selection bias. Annual Review of Sociology, 18, 327–350. doi: 10.1146/annurev.so.18.080192.001551.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.School of Social WorkUniversity at Buffalo, The State University of New YorkBuffaloUSA
  2. 2.Center for Social DevelopmentWashington University in Saint LouisSt. LouisUSA

Personalised recommendations