Friday, 14 January 2005 - 2:00 PM

This presentation is part of: Employment and Income

Multi-level Analysis of the Institutional Factors Affecting Asset Accumulation

Purpose: Institutional factors affect savings performance of participants in the Individual Development Account (IDA) program (Sherraden, 1991). This study examined the moderating effects of the institutional factors on the saving performance using Hierarchical Linear Modeling (HLM).

Methods: This study used the data of the American Dream Demonstration (ADD), which is the first systematic study of IDA programs. IDAs are special accounts in which savings are matched for the poor (Schreiner, et. al., 2002). Sample (N=2,364) was drawn from 14 IDA programs in the United States. Based on the assumption of multi-level analysis, saving performance was hypothesized to be not independent of the institutional characteristics of programs. The HLM 5 program was used to test the effects of individual level (Income, Ethnicity, Marital status, education, intended use of matched withdrawals), program level (matching rate, education for savings, and consulting about savings), and cross-level interaction on the savings performance of the program participants (Bryk & Raudenbush, 1992).

Findings: The first analytic step was to estimate a random ANOVA model to gauge how much of the variance in the savings performance was within programs (Level 1) versus between programs (Level 2). The results of ANOVA rejected the null hypothesis that there was no variation in the average level of savings between programs (p<.001). In the multi-level analysis, the resulting model demonstrated was significant (c2=347.48, df=10, p<.001). The analysis reveals significant positive relationship between savings in IDA account and individual level predictors (income, marital status, and education), and positive relationship between savings and the level 2 predictors (matching rate and education hour). In addition, the results indicated the moderating effect of matching rate and education on the relationship between income and savings (b=.37, p<.01). In other words, the positive relationship between income and savings depended on the degree of matching rate and education.

Implications: This study supports the assets theory (Sherraden, 1991) that individual savings are associated with not only individual characteristics but also institutional characteristics. Furthermore, the results implicate that the poor can save if they have institutional supports from policy and practices.

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