Money Management by Low-Income Households: Earning, Spending, Saving, and Accessing Financial Services

Opening and maintaining a checking or savings account at a credit union or bank are crucial steps for establishing the kinds of relationships with financial institutions that lead to qualifying for credit and developing assets. An estimated 22.2 million households or 56 million adults in the U.S. did not have a bank account in 2002. The lack of a bank account is more pervasive among low -income families than higher income families: 83% of families without bank accounts earn less than $25,000 per year. Furthermore, as many as 22$25,000 -- do not have a checking or savings account. Families in the lowest income group are even less likely to have accounts. An estimated 29.1% of families with incomes in the lowest twentieth percentile ($10,300 or less) are without accounts, which is more than three times the median of 9.1$25,000 had bank accounts in 2001, 53.4% of this income group reported having saved in the previous year. For households in the lowest income quintile ($10,300 or less), the savings rate is 30.0%. Furthermore, the reasons for saving differ among income levels, with families at lower income levels saving for more immediate expenditures such as rent and holiday gifts, compared with the longer timeframe of savings by higher income groups for future expenditures such as children's education and retirement

Saving, Microinsurance: Why You Should Do Both or Nothing. A Behavioral Experiment on the Philippines

This paper analyzes data from a novel field experiment designed to test the impact of two different insurance products and a secret saving device on solidarity in risk-sharing groups among rural villagers in the Philippines. Risk is simulated by a lottery, risk-sharing is possible in solidarity groups of three and insurance is introduced via less risky lotteries. Our main hypothesis is that formal market-based products lead to lower transfers among network members. We also test for the persistence of this crowding-out of solidarity. We find evidence for a reduction of solidarity by insurance if shocks are observable. Depending on insurance design, there is also evidence for persistence of this effect even if insurance is removed. Simulations using our regression results show that the benefits of insurance are completely offset by the reduction in transfers. However, if secret saving is possible solidarity is very low in general and there is no crowding out effect of insurance. This suggests that introducing formal insurance is not as effective as it is hoped for when the monetary situation can be closely monitored, but that it might be a very important complement when savings inhibit observing financial resources. --

Did the 2001 Tax Rebate Stimulate Spending? Evidence from Taxpayer Surveys

In 2001, many households received rebate checks as advanced payments of the benefit of the new, 10 percent federal income tax bracket. A survey conducted at the time the rebates were mailed finds that few households said that the rebate led them mostly to increase spending. A follow-up survey in 2002, as well as a similar survey conducted after the attacks of 9/11, also indicates low spending rates. This paper investigates the robustness of these survey responses and assesses whether such surveys are useful for policy evaluation. It also draws lessons from the surveys for macroeconomic analysis of the tax rebate.

The Alaska Permanent Fund Dividend: A Case Study in Implementation of a Basic Income Guarantee

Presented at 13th Basic Income Earth Network Congress University of Sao Paulo Sao Paulo, BrazilThe Alaska Permanent Fund Dividend program has attracted considerable interest because it is a unique example of a BASIC INCOME GUARANTEE. In this paper, I describe the structure of the dividend program, its economic effects, some of its unintended consequences; and I close with a number of observations about how the dividend might be structured differently. My objective is to give the reader insights into the factors to consider in implementing a BASIC INCOME GUARANTEE in other places. However, before beginning it is important to present a short description of Alaska because the structure of any BASIC INCOME program and its impacts are contingent upon the particular institutional, economic, political, and social environment in which it is located. Alaska is the largest of the 50 United States measured by land area—but among the smallest measured by population. Its 700 thousand residents comprise only about twotenths of one percent of the total U.S. population. As a state within the United States, its border is open to the rest of the nation for the free movement of goods and services, people, capital, and information. Furthermore, it is subject to the laws, regulations, and policies established by the federal government. As I will discuss below, these connections create some challenges for the dividend program because the state cannot totally control its own economic and political environment.Northrim Ban

$100 Bills on the Sidewalk: Suboptimal Investment in 401(k) Plans

It is typically difficult to determine whether households invest optimally. But sometimes, investment incentives are strong enough to create sharp normative restrictions. We identify employees at seven companies who are eligible to receive employer matching contributions in their 401(k) and can make penalty-free withdrawals for any reason. For these employees, contributing less than the match threshold is a dominated action that violates the no-arbitrage condition. Nevertheless, between 20% and 60% contribute below the threshold, losing as much as 6% of their annual pay. Providing employees with information about the free lunch they are foregoing fails to raise contribution rates.

μ\muNap: Practical Micro-Sleeps for 802.11 WLANs

In this paper, we revisit the idea of putting interfaces to sleep during 'packet overhearing' (i.e., when there are ongoing transmissions addressed to other stations) from a practical standpoint. To this aim, we perform a robust experimental characterisation of the timing and consumption behaviour of a commercial 802.11 card. We design $\mu$Nap, a local standard-compliant energy-saving mechanism that leverages micro-sleep opportunities inherent to the CSMA operation of 802.11 WLANs. This mechanism is backwards compatible and incrementally deployable, and takes into account the timing limitations of existing hardware, as well as practical CSMA-related issues (e.g., capture effect). According to the performance assessment carried out through trace-based simulation, the use of our scheme would result in a 57% reduction in the time spent in overhearing, thus leading to an energy saving of 15.8% of the activity time.Comment: 15 pages, 12 figure

Savings Mobilization, Financial Development and Liberalization: The Case of Malaysia

This paper attempts to identify the key factors behind Malaysia’s remarkable savings performance. Drawing on the life cycle theory, the saving function is estimated by incorporating other relevant structural features and institutional settings of the Malaysian economy into the specification. Particular emphasis has been placed on the roles of financial factors in mobilizing funds in the private sector. The results suggest that financial deepening and increased banking density tend to encourage private savings. Development of insurance markets and liberalization of the financial system, however, tend to exert a dampening effect on private savings.private savings; financial development; Malaysia; ARDL bounds test

Save up to 99% of your time in mapping validation

Identifying semantic correspondences between different vocabularies has been recognized as a fundamental step towards achieving interoperability. Several manual and automatic techniques have been recently proposed. Fully manual approaches are very precise, but extremely costly. Conversely, automatic approaches tend to fail when domain specific background knowledge is needed. Consequently, they typically require a manual validation step. Yet, when the number of computed correspondences is very large, the validation phase can be very expensive. In order to reduce the problems above, we propose to compute the minimal set of correspondences, that we call the minimal mapping, which are sufficient to compute all the other ones. We show that by concentrating on such correspondences we can save up to 99% of the manual checks required for validation

Consumer Response to Tax Rebates

Many households received income tax rebates in 2001 of $300 or$600. These rebates represented advance payments of the tax cut from the new 10 percent tax bracket. Based on a survey of a representative sample of households, this paper finds that only 22 percent of households receiving the rebate would spent it. Instead, they would either save it or use it to pay off debt. This very low rate of spending represents a striking break with past behavior, which would have suggested a much higher rate of spending. The low spending rate implies that the tax rebate provided a very limited stimulus to aggregate demand.