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UNITED STATES DEPARTMENT OF LABOR

First‐year impacts on savings and economic well‐being from the Assets for Independence program randomized evaluation (Mills et al., 2019)

Review Guidelines

Causal Evidence Guidelines

Absence of conflict of interest. 

Citation

Mills, G., McKernan, S. M., Ratcliffe, C., Edelstein, S., Pergamit, M., & Braga, B. (2019). First‐year impacts on savings and economic well‐being from the Assets for Independence program randomized evaluation. Journal of Consumer Affairs, 53(3), 848-868.

Highlights

  • The study's objective was to examine the impact of the Assets for Independence (AFI) program on financial behaviors. 
  • The study used a randomized controlled trial to assign participants to the treatment or control group. The primary data sources were a baseline survey and a first-year follow-up survey. The authors used statistical models to compare the outcomes of the treatment and control group members. 
  • The study found that a significantly higher proportion of individuals in the treatment group had liquid assets than in the control group.  
  • This study receives a moderate evidence rating. This means we are somewhat confident that the estimated effects are attributable to the Assets for Independence (AFI) program, but other factors might also have contributed. 

Intervention Examined

Assets for Independence

Features of the Intervention

The Assets for Independence (AFI) program was a demonstration program authorized by the Assets for Independence Act (1998) and last funded by Congress in 2016. The grant program used a community-based approach to support low-income individuals and their families. To be eligible for the AFI program, participants needed to meet federal eligibility requirements. This included being eligible for Temporary Assistance to Needy Families or having an adjusted gross income less than or equal to 200% of the federal poverty level or the federal earned income tax credit limit and having a net worth that did not exceed $10,000 (excluding the house and one vehicle). 

The study focused on AFI programs in Albuquerque, New Mexico and Los Angeles, California. The Albuquerque program was operated by Prosperity Works and its partner Central New Mexico Community College. The Los Angeles program was operated by RISE Financial Pathways. Each site provided individual development accounts (IDA) and matched savings accounts that could be used to buy a home, a business, or for postsecondary education. Both the Albuquerque and Los Angeles sites matched savings amounts of $1,000 maximum, and participants could make partial matched withdraws of less than $1,000. Albuquerque matched savings at a rate of 4:1 and Los Angeles matched savings at a rate of 2:5:1. Program participants also received financial education, coaching, asset-specific training, and other supportive services. At the Albuquerque site, the financial education course was a one-semester community college course or an online equivalent. The Los Angeles financial education course consisted of on-site classroom sessions provided by AFI staff.  

Features of the Study

Between January 2013 and July 2014, 807 participants (299 in Albuquerque and 508 in Los Angeles) completed a baseline survey online and were randomly assigned to the treatment or the control group. The study randomly assigned 407 participants to the treatment group and 400 participants to the control group. The treatment group was eligible to receive the intervention, and the control group was unable to access the local AFI program for three years. Participants completed a follow-up survey between April 2014 and September 2015. The follow-up survey response rate was 78%. The authors used statistical models to compare the outcomes between treatment and control group members, controlling for differences in baseline characteristics between the groups.  

Findings

Knowledge and skills for money management 

  • The study found that a significantly higher proportion of treatment group participants had liquid assets (i.e., savings and checking accounts, certificates of deposit, money market accounts, stocks, bonds, retirement accounts) than control group participants (88.6% vs. 81.1%). 
  • However, the study did not find any significant differences between the groups in the dollar value of liquid assets, the use of alternative financial services credit (i.e., payday loan, auto loan, pawnshop), or the use of nonbank check cashing.  

Considerations for Interpreting the Findings

Although the study design was a randomized controlled trial, the study had high attrition. However, study authors accounted for differences between the groups before program participation. Therefore, the study receives a moderate causal evidence rating. The authors also noted that since study participants knew their random assignment group, the outcomes could be misreported, and this was a potential limitation of study findings.  

Causal Evidence Rating

The quality of causal evidence presented in this report is moderate, because it was a randomized controlled trial with high attrition, but the authors ensured that the groups being compared were similar before the intervention. This means we are somewhat confident that the estimated effects are attributable to the AFI program, but other factors might also have contributed.  

Reviewed by CLEAR

April 2024

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