$aveNYC Evaluation: People Save, Lives Improved, More Please

What if I told you that very poor people, living in the most expensive city in America in the aftermath of a massive economic collapse, were challenged to save $500 and not touch it for a year with the promise of a 50 percent bonus if they succeeded? Do you think that some of them would be able to do it? A few?

What would you think the impact of that small amount of money would be? Equally small? Would you think that sequestering those resources would make families more likely to go into debt? More likely to skip paying their bills?

What about the long term impact of this challenge? Do you think this experience would make people more likely to save in the future? Or do you think that they would only jump at opportunities that had large rewards like a 50 percent bonus?

Well thanks to New York City and researchers at the Center for Community Capital at UNC, those questions can now be answered for you. We’ve often written about NYC’s $aveNYC (now expanded to be SaveUSA) program, a pilot designed to answer these kind of questions and to build empirical support for a broader intervention to support saving for struggling families at tax time. Our assumptions and the early research have suggested that this was an innovative and effective program, and last week CCC released a new report with major findings from the $aveNYC experience. What did they find?

• 80 percent of participants (average income: $17,000/year) saved for the full year and earned the match.
• Participants were significantly less likely than non-participants to skip paying bills or to take out loans.
• More than 30 percent of participants reported continuing to save in the years after participating in the demonstration.

These are really strong findings. The long-standing myth that struggling families can’t/won’t save? Upended again. The benefits of saving? Demonstrated. The behavior changing effects of saving? On display. On top of all of that, the CCC team concluded that this model holds significant promise for helping “even very low-income families set aside funds for emergency savings, thus providing a means for smoothing out expenditures and increasing family financial stability.”

This is further evidence, following on MDRC’s April 2013 evaluation of the larger Save USA program, that Congress should consider adopting a proposal like the Financial Security Credit, our idea that would take the $aveNYC from local demonstration project and turn it into an opportunity for every struggling family in America to get a head start on saving, building financial security and boosting their chance at the American dream.