Individual Development Accounts

Individual Development Accounts (IDAs)—matched savings accounts for low-income households—are a relatively new means of improving the lives of the poor. Advocates of IDAs argue that those with assets are more economically secure, have more options in life, and can pass on status and opportunities to future generations. They further argue that assets have positive social, psychological, and civic effects that are independent of the effects of income. Over the last decade, research and demonstration projects have been initiated to address these claims; some of the key findings are that IDAs do lead the poor to save or acquire assets, but do not necessarily increase their net worth (assets minus debt). While costs are declining, IDAs are expensive to administer and are often used by the poor as checking and savings accounts as well as a means to accumulate wealth, reflecting in part the dearth of savings products aimed at the poor.

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