Saving Patterns and Probability of Success in Individual ...

Saving Patterns and Probability of … 3
1- Introduction:
The importance of regularity in saving patterns and its effect on changing savers’ behaviors in
IDA programs is a topic that has attracted much attention in recent years. 1 This issue not only
affects the design of a successful program, but also is of relevance in the analysis of program
costs. While there is some level of unanimity among IDA practitioners about the importance of
regularity in changing the behavior of low-income savers, the jury is still out on the issue of what
exactly results in this change. 2
Many recent studies focus on the demographic attributes of savers such as age, ethnicity, sex,
and marital status and their impact on savings outcomes. In a series of articles, researchers,
mostly from the Center for Social Development at the University of Washington in St. Louis,
have studied the IDA savings outcomes using data from the American Dream Demonstration
(ADD) project in Tulsa, Oklahoma. For example, Curley and Grinstein-Weiss (2003), studied the
rural-urban savings performance and concluded that Caucasians were among the least saving of
most ethnic groups in both the rural and urban areas. In analyzing the behavior of the microenterprise
IDA savers, Ssewamala and Sherraden (2004) concluded that while level of education,
income and ownership of other assets positively influenced savings in micro-enterprise IDAs,
number of children in the household had a negative impact on savings outcomes among this
group. This result was partly corroborated by Grinstein-Weiss and Ssewamala (2005). They
recognized that the cost of raising children was a factor that impacted savings outcomes in an
adverse fashion, but partly offsetting that hypothesis, their analysis also confirmed the relevance
of the institutional view of savings. Using a Hierarchical OLS regression model, they concluded
that proper institutions led to increased savings levels even among households with children.
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