Ten-Year Impacts of Individual Development Accounts on Homeownership: Evidence From a Randomized Experiment

This paper presents evidence from a randomized field experiment to evaluate the long-term impact of an incentive for household saving. We examine the effect on homeownership of an Individual Development Account (IDA) program which ran from 1998 to 2003 in Tulsa, Oklahoma. The IDA program provided low-income households with financial education and matching funds for qualified savings withdrawals, including a 2:1 match for housing down payments. About 90% of treatment group members opened IDA accounts, and contributions averaged about $1,800. Homeownership rates for both treatment and control groups increased substantially throughout the experiment. Prior work shows that from 1998 to 2003, homeownership rates increased more for treatment group members than for controls. We show in this paper, however, that control group members caught up rapidly with the treatment group after the experiment ended, so that the IDA program had no significant effect on homeownership rates among the full sample in 2009 and had no effect on the duration of homeownership during the study period. The program had a positive impact on homeownership rates among those with above-sample median income ($15,840) at the time they entered the program, but not on other subgroups that we tested