Child Development Accounts and saving for children's future: Do financial incentives matter?

This study examines savings outcomes and the role of financial incentives in a community-based, asset-building program for low- and moderate-income children. Data are from the first large-scale demonstration of Child Development Accounts (CDAs) in the United States. Two savings outcomes are studied: (1) average quarterly net savings (mean $29.58), and (2) average total accumulation (mean $1518.24, including incentives). Multivariate analysis finds that different incentives have different associations with the two savings outcomes. This study informs public policy in general and savings policy in particular, by expanding knowledge of the role of incentives in saving and building assets for children.