Posted by:
Steve Dubb
5,000-person study finds IDAs raise savings rate
A new report released by the Ottawa-based evaluation firm Social Research and Demonstration Corporation presents the 18-month results of learn$ave, a project designed to demonstrate how matched saving credits can encourage low-income adults to save in order to increase their human capital by participating in education or training, or starting a small business. The learn$ave project was conceived and implemented in 2000 by the Toronto-based nonprofit group, Social and Enterprise Development Innovations.
The pilot program involved 4,827 Canadians. Program participants were encouraged to save up to $1,500 in their individual development accounts (IDAs), which would be matched at a 3:1 rate, providing up to $6,000 that could be used either for education or to start up a small business. To evaluate the effectiveness of the savings match, a “control group” of participants of similar economic background were encouraged to save, but without the incentive of the savings match. The study found that participants in the IDA group saved on average $679 more than those in the control group over an initial 18-month period.
The study recruited participants from 10 communities. These communities were: Vancouver (British Columbia), Toronto (Ontario), Halifax (Nova Scotia), Calgary (Alberta), Winnipeg (Saskatchewan), Grey–Bruce counties (Ontario), Kitchener–Waterloo (Ontario), Montreal (Quebec), Fredericton (New Brunswick), and Digby (Nova Scotia).
The study’s authors found that the learn$ave’s IDA program has had a positive effect not only on saving, but on encouraging participants to create household budgets as well. In addition, the authors have found that the matched saving credits have worked to enhance the attitudes of program group participants toward education.
Copies of the report and its executive summary can be downloaded from this web page (scroll to the bottom of the screen).