Cramer, R. and Elliott, W. (Feb. 10, 2012). Op-Ed. To limit student debt, let’s try savings. Inside Higher Ed
Cramer, R. and Elliott, W. (Feb. 10, 2012). Op-Ed. To limit student debt, let’s try savings. Inside Higher Ed
It has been suggested that children’s savings programs will be more effective if they are combined with strategies to build children’s college-bound identities. In this study we use a multi-level treatment approach to propensity score analysis to test this proposition. Findings suggest that children who have savings and are certain they will graduate from a four-year college are more likely to attend college than their counterparts. Given this, we suggest that children’s savings policies designed to increase college attendance rates will be more effective if they include strategies for building children’s college-bound identity and college-bound identity programs will be more effective if they are linked to children’s savings programs.
Elliott, W., Chowa, G. and Loke, V. (2011). Toward a children’s savings and college-bound identity intervention for raising college attendance rates: A multilevel propensity score analysis. Sociology Mind, 1(4). 192 –205.
Wealth is increasingly included alongside income for predicting youth’s educational outcomes. However, the natural log and categorical transformations may not always be appropriate for adjusting for skewness given wealth’s unique properties. We introduce an alternative transformation—the inverse hyperbolic sine (IHS)—for simultaneously dealing with skewness and accounting for wealth’s unique properties. We also explore non-linearity and accumulation thresholds by combining IHS transformed wealth with splines. We predict youth's math achievement with two data sources: (1) U.S. households from the Panel Study of Income Dynamics and (2) Ghanaian households from the YouthSave Ghana Experiment. IHS transformed wealth relates to youth’s math achievement similarly when compared to categorical and natural log transformations. In both U.S. and Ghanaian households, we find evidence of non-linearity between wealth and youth’s math achievement. We also find evidence for wealth accumulation thresholds that relate to youth’s math achievement. In an aggregate sample of U.S. households, accumulating zero and negative net worth is significantly related to decreases in youth’s math achievement whereas accumulating moderate values of positive net worth is significantly related to increases in youth’s math achievement. Among black and low-to-moderate income U.S. households, holding net worth sufficient to remain above the poverty line for three months is significantly related to youth’s improved math achievement. In Ghanaian households, accumulating assets between the 25th and 50th percentiles is related to a significant increase in youth’s math achievement.
This paper explores predictors of young adults’ savings using propensity score analysis and logistic regression with separate, longitudinal samples of whites and blacks aged 17–23 from the Panel Study of Income Dynamics. We ask who saves among adolescents and young adults and whether the likelihood of having a savings account and the amount saved in young adulthood can be predicted by two factors: (1) having a savings account during adolescence and (2) having families who own assets. The majority of white (90%) and black (64%) young adults had savings; however, blacks saved about 3% the amount saved by whites, suggesting that young adults’ savings may be patterned after disparities in the distribution of assets and families may transfer a financial advantage to young adults. Logistic regression results find that among whites, future orientation was a significant predictor of having a savings account in young adulthood. A notable trend level finding was that white young adults were more likely to have a savings account when they had a savings account as adolescents. Among blacks, academic achievement and household size were significant predictors of having a savings account in young adulthood. If confirmed in future research, findings suggest that Children’s Development Accounts may be one way to reduce racial disparities in savings by intervening at a young age and providing universal accounts to improve savings across the life course.
Friedline, T.* and Elliott, W. (2011). Predicting savings for white and black young adults: An early look at racial disparities in savings and the potential role of children's development accounts (CDAs). Journal of Race and Social Problems, 3(2), 99-118.
This paper examines the progression of savings between adolescence and young adulthood. Using data from the Panel Study of Income Dynamics, we ask whether adolescents with a savings account and parents who have assets significantly predict having a savings account and the amount saved in young adulthood. Descriptive statistics reveal that adolescents have savings accounts more often when they are White, employed, and live in households where the head is married, has more education, and owns assets. Propensity score analyses provide evidence confirming that adolescents with savings accounts are more likely to have savings accounts as young adults. There is some evidence to suggest that adolescents whose parents have savings on their behalf and higher net worth are more likely to have more saved as young adults. Findings suggest that parents may play an important role in modeling saving habits to adolescents. Furthermore, if our findings regarding adolescents’ savings accounts are confirmed in future research, this study suggests that having a savings account in adolescence may lead to an increased likelihood of having a savings account in young adulthood.
Friedline, T.* Elliott, W., and Nam, I.* (2011). Predicting savings in young adulthood: The role of adolescent savings. Journal of the Society for Social Work and Research, 2(1), 1-22.
Recent findings using traditional regression methods show that children's savings designated for school are associated with higher math scores. We build on this research by using Hierarchical Linear Modeling (HLM) to confirm that children with school savings have higher math scores than those without school savings. Moreover, we suggest children's school savings may have a stronger association with children's math scores than with either household wealth or children's savings not designated for school. Further, we find evidence that children's school savings mediates the relationship between household wealth and math scores. Policy implications for children living in low-wealth households are discussed.
Elliott, W., Jung, H.,* and Friedline, T.* (2011). Raising math scores among children in low-wealth households: Potential Benefit of Children’s School Savings. Journal of Income Distribution, 20(2), 72-91.
National and international reports have established the legitimate use of child savings accounts (CSAs) as asset-building vehicles for youths. However, many U.S. programs report difficulty in recruiting parents for CSA programs and note the failure of some parents to take full advantage of the financial match available when they do participate. This article reports some of the findings from a mixed-method study that examines a group of African American parents' involvement with a U.S. child savings account program known as Saving for Education, Entrepreneurship, and Downpayment (SEED). The elements that parents perceive to be critical to a CSA program are identified and those elements are then examined as they relate to the SEED program. Analyses revealed six themes where elements that parents identified as important were also elements that were frequently demonstrated in the SEED program. However, the study uncovered serious challenges encountered by the SEED staff and lessons learned in the process. Findings present information that may help increase African American-American parent involvement in CSAs and other asset-building programs.
Johnson. T (2011). Socio-economic and institutional factors that facilitate and prevent low income African American Parents’ Involvement in a Children’s Savings Program. Journal of Ethnic and Cultural Diversity in Social Work, 20(3), 167-183.
Increasingly, college graduation is seen as a necessary step toward achieving the American Dream. However, large disparities exist in graduation rates. For many families, the current family income is not enough to finance college. Therefore, many young adults have to rely on education loans, which may be difficult to repay, leaving them strapped with debt after leaving college. This study examines the potential role of assets and savings for promoting college progress among young adults. Overall, findings suggest that policies, such as Child Development Accounts (CDAs), that help parents and youth accumulate savings--especially savings for college--may increase college attendance and graduation completion rates.
Elliott, W. and Beverly, S. (2011). Staying on course: The effects of savings and assets on the college progress of young adults. American Journal of Education, 117(3), 343-374.
This paper has two main goals. First, we provide a review of 34 studies on the relationship between assets and children's educational attainment. Second, we discuss implications for Child Development Accounts (CDAs) policies. CDAs have been proposed as a potentially novel and promising asset approach for helping to finance college. More specifically, we propose that CDAs should be designed so that, in addition to promoting savings, they include aspects that help make children's college-bound identity salient, congruent with children's group identity, and that help children develop strategies for overcoming difficulties.
Elliott, W., Destin, M, and 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(11), 2312—2328.
This study has three goals: (1) to provide an extensive review of research on the assets/expectation relationship, (2) to provide a conceptual framework for how children's savings effects children's college-bound identity (children's college expectations are a proxy for children's college-bound identity), and (3) to conduct a simultaneous test of whether owning a savings account leads to college-bound identity or college-bound identity lead to owning a savings account using path analytic technique with Structural Equation Modeling (SEM). Our review reveals asset researchers theorize about college-bound identity in two distinct but compatible ways: college-bound identity as a "linking mechanism", and college-bound identity as a mediator. However, there has been little theoretical development on the attitudinal effects of assets. In this study, we posit a conceptual framework for how children's savings affects children's college-bound identity. Findings from the simultaneous test of the assets/college-bound identity relationship suggest that savings has modest effect on college-bound identity and vice versa. A policy implication is that asset building policies that seek to build children's college-bound identity in addition to their savings may be more effective than policies that only seek to build children's savings.
Elliott, W., Choi, E. H.*, Destin, M. and Kim, K. (2011). The age old question, which comes first? A simultaneous test of children’s savings and children’s college-bound identity. Children and Youth Services Review, 33(7), 1101-1111.
Despite the importance of higher education, Hispanic immigrant youth still have far lower college attainment rate than whites in the U.S. Existing studies show the significant role of household assets on educational attainment even after controlling for income. Thus, this study examines the role of homeownership and school savings on Hispanic immigrant youth's college attendance and graduation. Findings show that homeownership is a significant positive predictor of Hispanic immigrant youth's college attendance and graduation, but parent school savings is not a significant predictor. Policy and practice implications discussed.
Song, H. and Elliott, W. (2011). The role of assets in improving college attainment among Hispanic immigrant youth in the U.S. Children and Youth Services Review, 33(11), 2160-2167.
Elliott, W. and Beverly, S. (2011). The role of savings and wealth in reducing “wilt” between expectations and college attendance. Journal of Children and Poverty, 17(2), 165-185.
This article considers the processes through which parents' and children's wealth may influence children's academic achievements, and examines how these processes may vary across race and gender. It starts by reviewing existing research on the wealth-academic achievement relationship, and the role of college expectations in explaining this relationship. The study used 2002 data from the Panel Study of Income Dynamics (PSID), a national annual survey of US individuals and households, to examine wealth effects in relation to children’s maths and reading scores. The analysis sample included black and white children between the ages of 12 and 18 who were enrolled in a public school, giving a sample size of 1063. The data were analysed using multi-group structural equation modelling (SEM) to examine wealth effects on maths and reading scores by gender and by race. The results suggest that there are important statistical differences across race and gender. For example, children's school savings predict maths scores among white children but not black children. Net worth is a positive predictor of black males' maths scores but a negative predictor of black females'. In the case of income, the results find that it is directly related to black females' maths scores but not black males'. In general, the findings suggest that liquid forms of wealth (i.e., forms of wealth that are easily converted into cash) may be better predictors of children's academic achievement than net worth.
Elliott, W., Jung, H.*, Kim, K., and Chowa, G. (2010). A multi-group structural equation model (SEM) examining asset holding effects on educational attainment by race and gender. Journal of Children and Poverty, 16(2), 91-121.
This study extends previous analyses in several ways. First, in addition to parental wealth, the relationship between children's wealth and math and reading scores are examined. Second, we examine different mediating pathways that wealth may affect children's math and reading scores in a single path analysis model. The advantage of path analysis over traditional regression analyses, which are typically used in this area, is that researchers can get a glimpse of relationships among variables. Furthermore, mediation can be tested more easily and extensively in path analysis compared to regression. Third, we examine whether different forms of wealth (net worth, homeownership, and children's savings for school) have different effects. Forth, we examine whether wealth (parental and/or children's) effects vary across racial groups.
Elliott, W., Kim, K. H., Jung, H.*, and Zhan, M. (2010). Asset holding and educational attainment among African American youth. Children and Youth Services Review 32(11), 1497-1507.
A groundswell of interest in young people’s ability to understand and handle financial decisions has generated keen interest in financial knowledge and effectiveness of financial education. This study examines an innovative four-year school-based financial education and savings program, called “I Can Save” (ICS). Using a quasi-experimental design, the study examines quantitative and qualitative data to analyze program effects on financial knowledge. Elementary school children who participated in ICS scored significantly higher on a financial literacy test taken in fourth grade than comparison group students in the same school, regardless of parent education and income. Results suggest that young children increase financial capability when they have access to financial education and it is accompanied by participation in meaningful financial services.
Sherraden, Margaret. S., Johnson, L., Guo, B. and Elliott, W. (2010). Financial capability in children: Effects of participation in a school-based financial education and savings program. Journal of Family and Economic Issues, 32(3), 385-399.
Policies and programs designed to help low-income families save and build assets for developmental uses such as higher education, homeownership, and entrepreneurship are emerging and growing globally. This study uses participatory concept mapping techniques to explore perspectives of low-income parents in a children's college savings account program in a large US city. Participants in this study worked together to generate data on effective components of child savings account (CSA) programs. They then sorted these CSA components into conceptual groups reflecting their perspectives on which of the program elements were related to one another. Finally, participants were asked to rate the importance of each CSA component. Findings suggest that parents view CSA components that: (1) demonstrate respect for parents and (2) enhance accountability as being particularly effective and important elements of matched saving programs. While much more research is needed, particularly with lower-income families and communities, these findings are consistent with an emerging institutional theory of saving and asset accumulation. Implications for institutional theory, asset-building policies, CSA programs, and future research are discussed.
Johnson, T. , Adams, D., & Kim, J.(2010). Mapping the perspectives of low-income parents in a children’s college savings account program. Children and Youth Services Review, 32(1), 129-136.
In this study, we propose that children who have a savings account may be more likely to have higher math scores than children without a savings account. We find that children’s savings accounts are positively associated with math scores. Children with savings accounts on average score almost nine percent higher in math than children without a savings account. Further, results suggest that children’s savings accounts fully mediate the relationship between household wealth and children’s math scores. However, household wealth moderates the mediating relationship. We find math scores of low-wealth children increase by 2.13, middle-wealth children’s increase by 4.36, while high-wealth children’s increase by 6.59 points. Policy implications are discussed.
Elliott, W., Jung, H.*, and Friedline, T.* (2010). Math achievement and children’s savings: Implications for child development accounts. Journal of Family and Economic Issues, 31(2), 171-184.
This paper explores young children's perceptions and expectations about attending college, and the potential influence of a savings program on shaping children's perceptions about paying for college. As part of a four-year study of a school-based college savings program called “I Can Save”, this paper uses qualitative evidence from interviews conducted in second and fourth grades with a diverse group of 51 children. Findings suggest that most of the children in the study have a general understanding of college and have begun a process of considering higher education. Further, children in “I Can Save” are more likely than a comparison group of children to perceive that savings is a way to help pay for college.
Elliott, W., Sherraden, M., Johnson, L. and Guo, B. (2010). Young children's perceptions of college and saving: Potential role of child development accounts. Children and Youth Services Review, 32(11), 1577-1584.
For many children, especially minority and low-income children, attending college is a genuinely desired but elusive goal. Research on aspirations and expectations may provide a way to understand the gap between what children desire and what they actually expect to happen. This study examines the potential role of Children's Development Accounts (CDAs) as a way to reduce the aspirations and expectations gap among at risk children using Panel Study of Income Dynamics (PSID) data. While the vast majority of children without a CDA aspire to attend college (80%), only 39% see it as a realistic possibility in their lives. That is an aspirations/expectations gap of 41 percentage points. Moreover, children with a CDA are nearly twice as likely to expect to attend college than children without a CDA. It appears that when the financing of college is perceived as being under children's own control, college attendance may become more of a reality. Children with a CDA are not only more likely to expect to attend college, they perform better in school. Having a CDA is associated with a 4.57 point increase in math scores. Moreover, findings suggest that children's college expectations act as a partial mediator between CDAs and children's math achievement.
Elliott, W. (2009). Children’s college aspirations and expectations: The potential role of college development accounts (CDAs). Children and Youth Services Review, 31(2), 274-283.
This paper examines an innovative college savings program for public elementary school children. The project is based on the proposition that children will gain financial knowledge and be more likely to view college as an attainable goal because they are accumulating savings to help pay for higher education. As the latest in a long history of school-based savings programs, this program pioneers the idea of matched savings in which children and family savings in the students' accounts are matched one to one up to a maximum of $3000. Findings suggest that the principal, teachers, children, and their families are enthusiastic about the program. Saving patterns show that families can save, but low levels and patterns of saving suggest that structures that encourage regular saving might improve saving rates. The program successfully teaches financial education through an after-school club, but it has been more difficult to incorporate it into classroom teaching and to reach parents. Universal children's savings accounts may circumvent some of the limitations of this program, although more research is required to assess which program components would be the most effective in such a system.
Sherraden, Margaret. S., Johnson, L., Elliott, W., Porterfield, S., and Rainford, W. (2007). School-based children’s saving accounts for college: The I can save program. Children and Youth Services Review 29, 294-312.