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A cost-benefit analysis of Tulsa’s IDA program

Published online by Cambridge University Press:  19 January 2015

David H. Greenberg
David H. Greenberg*
Affiliation:
University of Maryland - Baltimore County – Economics1000 Hilltop Circle, Baltimore, MD 21250, USA; and 5531 High Tor Hill, Columbia, MD 21045, USA
*
David H. Greenberg, University of Maryland – Baltimore County – Economics 1000 Hilltop Circle, Baltimore, MD 21250, USA; and 5531 High Tor Hill, Columbia, MD 21045, USA, Tel.: +410-884-9620, e-mail: [email protected]
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Abstract

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This article presents findings from a cost-benefit analysis of the Tulsa Individual Development Account (IDA) program, a demonstration program that was initiated in the late 1990s and is being evaluated through random assignment. The program put particular emphasis on using savings subsidies to help participants accumulate housing assets. The key follow-up data used in the evaluation was collected around 10 years after random assignment, about 6 years after the program ended. The results imply that, during this 10-year observation period, program participants gained from the program and that the program resulted in net costs to the government and private donors, and that society as a whole was probably worse off as a consequence of the program. The article examines in some detail whether these findings are robust to a number of different considerations, including the assumptions upon which the results depend, uncertainly reflected by the standard errors of the impact estimates used to derive the benefits and costs, and omitted benefits and costs, and concludes that they are essentially robust. For example, a Monte Carlo analysis suggests that the probability that the societal net benefits of the Tulsa program were negative during the observation period is over 90% and that the probability that the loss to society exceeded $1000 is 80%. Further analysis considered benefits and costs that might occur beyond the observation period. Based on this analysis, it appeared plausible, although far from certain, that the societal net benefits of the Tulsa program could eventually become positive. This would occur if the program’s apparent positive net impact on educational attainment generates substantial positive effects on the earnings of program participants after the observation period ended. However, there was no evidence that the educational impacts had yet begun to produce positive effects on earnings by the end of the observation period.

Keywords

benefit-cost analysisIndividual Development Account (IDA)longterm follow-upMonte Carlo analysisrandom assignment field experiment
Type
Article
Information
Journal of Benefit-Cost Analysis , Volume 4 , Issue 3 , 01 December 2013 , pp. 263 - 300
Copyright
Copyright © Society for Benefit-Cost Analysis 2013

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