A Cost-Benefit Analysis of Tulsa’s IDA Program: Findings from a Long-Term Follow-Up of a Random Assignment Social Experiment

Abstract

This report 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 key follow-up data used in the evaluation was collected around 10 years after random assignment, about six 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 report 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 percent and that the probability that the loss to society exceeded $1,000 is 80 percent. 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.