SEED for Oklahoma kids

Abstract

Some 20 years ago, Michael Sherraden observed that the poor could not equitably benefit from tax breaks, such as employer-sponsored retirement plans and deductions for interest on mortgage payments, which were available to people with means. He proposed the idea of assets for the poor—namely, those who are poor should have the same opportunity as those with more wealth to accumulate assets with public support.

Instead of focusing welfare policy on income and consumption, as we have done in the past, we should focus more on savings, investment, and asset accumulation. This idea … suggests that poor people, if they are to overcome their poverty—not only economically, but also socially and psychologically— must accumulate a stake in the system …. I refer to this new thinking as asset-based welfare policy. Instead of merely providing subsistence, asset based welfare policy would seek to integrate social policy with economic development.

Michael Sherraden conceived of Individual Development Accounts (IDAs), which would provide to the poor the same opportunities for publicly supported asset accumulation that are available to households that are not poor. A subsequent strand of assets for the poor emerged as Child Development Accounts, which are savings accounts that begin as early as birth and allow parents and children to accumulate savings for postsecondary education, homeownership, or business initiatives.