The Ideas Industry

Interested in earning 200 percent on the dollar? It's a real offer being made to the poorest Americans in selected cities. The goal: encouraging low-income earners to save money by providing them with matching funds.

And perhaps the oddest thing about the ongoing policy experiment with so-called "individual development accounts" -- IDAs -- is that initially, it can be hard to find takers.

"There are real issues of trust," said Michelle Miller-Adams, whose book "Owning Up: Poverty, Assets, and the American Dream" is being published this month by the Brookings Institution Press and who spoke at a New America Foundation seminar last week. "These people have been targeted by scam artists before, so they are skeptical."

The seminar was organized by Ray Boshara, a 10-year veteran of the IDA movement who joined New America to run a new Asset Building Program. "I've been eager to move this work into the ideas world. I have been toiling in the economic development world and on the Hill, quietly. I thought it was a great idea that needed more play."

Congress funded a five-year IDA experiment in 1998. Each dollar a participant saves is matched, provided the funds are withdrawn only to buy a home, start a business or pay for higher education

"There were two levels of disbelief we had to go through," Boshara said. "First was policymakers who just did not believe that the poor could save. . . . Then when we launched the demonstration, the poor thought, 'This is too good to be true.' But once they got over that, the program caught on, and there is more often than not waiting lines to get in."

Michael Sherraden, the Washington University professor who originated the IDA concept, has been studying the progress of a privately funded demonstration project. His results show that the average participant made a deposit in six out of every 12 months, with an average net deposit of $528.