Absence of conflict of interest.
Citation
Highlights
- The study’s objective was to examine the impact of the $aveNYC program on savings behavior.
- The authors used a nonexperimental design to compare the savings of individuals who participated in the program to those who did not based on telephone surveys and difference-in-differences analyses.
- The study found positive savings behavior was significantly associated with participation in the program. At the one-year follow-up, participants that received the offer of a savings account and 50 percent match had more savings in their account, and higher rates of having one month of savings without income than the comparison group.
- This study receives a low evidence rating. This means we are not confident that the estimated effects are attributable to the $aveNYC program; other factors are likely to have contributed.
Intervention Examined
$aveNYC Program
Features of the Intervention
The $aveNYC program was offered by the Office of Financial Empowerment in the New York City Department of Consumer Affairs to encourage low-income individuals to open a savings account when filing their taxes. The program operated at 12 of the city's Volunteer Income Tax Assistance (VITA) sites. Individuals needed to meet income requirements for program eligibility: an adjusted gross income of $25,000 or less for those without dependent children and an adjusted gross income of $50,000 or less for those with dependent children. Tax filers were offered the opportunity to open a savings account to deposit a portion of their refund and be provided with a 50 percent match if the initial deposit was left in the account for one year (with a maximum program match of $250). The assumption was that participants would save more money in their accounts if offered the matching funds.
Features of the Study
The study used a difference-in-differences (DiD) approach to estimate impacts and matching to strengthen the comparison between the treatment and comparison groups. The authors used a telephone survey to collect data from tax filers who visited the VITA sites between January and April of 2009. Tax filers who opened a savings account while at one of the 12 VITA sites that offered the $aveNYC program were part of the treatment group. The comparison group was obtained from tax filers at VITA sites that did not offer the $aveNYC program. At the start of the study, 639 individuals responded to the telephone survey (304 participants in the treatment group and 335 in the comparison group). One year later, 268 individuals responded to the telephone survey (145 in the treatment group and 123 in the comparison group). The majority of the participants were either African American or Hispanic, between the ages of 25 and 55, and had less than a college education. Over half of study participants had children in their household.
Findings
Knowledge and skills for money management
- The study found a significant relationship between participating in $aveNYC and the amount saved, with program participants saving $416 more than individuals in the comparison group.
- At the one-year follow up, 24 percent of the treatment group had no savings in their account while 44 percent of the comparison group had no savings in their account. This finding was significant.
- At the one-year follow up, 51 percent of the treatment group had one month of savings without income in their account while 29 percent of the comparison group had one-month savings without income in their account. This finding was significant.
- At the one-year follow up, 37 percent of the treatment group had two months of savings without income in their account while 28 percent of the comparison group had two months of savings without income in their account. This finding was not significant.
Considerations for Interpreting the Findings
The authors used a retrospective telephone survey, conducted 4-9 months after tax filing, to collect baseline data. This time lag and the fact that participants self-reported their savings level may affect the accuracy of the reported savings. Also, the authors conducted transformations to account for the positively skewed savings outcome data and used weights to account for differences in baseline characteristics between the treatment and comparison groups. However, the authors did not account for differences in gender as required by the topic area protocol. These preexisting differences between the groups—and not $aveNYC—could explain the observed differences in outcomes. Therefore, the study is not eligible for a moderate causal evidence rating, the highest rating available for nonexperimental designs.
Causal Evidence Rating
The quality of causal evidence presented in this report is low because the authors did not ensure that the groups being compared were similar before the intervention. This means we are not confident that the estimated effects are attributable to $aveNYC; other factors are likely to have contributed.