Program Knowledge and Racial Disparities in Savings Outcomes in a Child Development Account Experiment

Abstract

This study investigated whether participants’ program knowledge was associated with savings outcomes in Child Development Accounts and whether differences in program knowledge explained racial and ethnic disparities in savings outcomes. We used data collected from White, Black, American Indian, and Hispanic treatment participants in the SEED for Oklahoma Kids (SEED OK) experiment (N = 1126). Analysis results indicated that knowledge of SEED OK program features was low, especially among members of minority groups. Logit and Tobit regressions showed that program knowledge was positively related to the likelihood of holding a SEED OK account and to individual savings amounts. Gaps in program knowledge were associated with racial disparities in savings outcomes. If Whites and minorities had the same levels of program knowledge, gaps in savings outcomes would have significantly narrowed. The findings call for the development of policy designs and communication tools to enhance knowledge of program features among households with Child Development Accounts, especially racial- and ethnic-minority households.