Savings

Last April, M.I.T. held a business conference on campus titled “Africa 2.0: Achieving Growth Through Innovation.” In the keynote speech, Dr. Ngozi Okonjo-Iweala, managing director of the World Bank, announced to a packed room, “Africa is now the new frontier.”

Or, such is the distillation of the comments made yesterday at the event "Rebuilding the Road to Financial Stability" (co-sponsored by the Congressional Savings and Ownership Caucus and the Center for Financial Security at the University of Wisconsin-Madison) made by Federal Reserve Governor Sarah Bloom Raskin.

At our event today on "Rebuilding the Road to Financial Stability" (co-sponsored by the Congressional Savings and Ownership Caucus and the Center for Financial Security at the University of Wisconsin-Madison) Federal Reserve Governor Sarah Bloom Raskin delivered a speech about her vision of economic inclusion.

We'll have the video of this up before too long, but I wanted to note that Governor's speech was as explicit a defense of an active, effective regulatory body for financial products as I have heard in some time. She echoed arguments that we have made previously about the symbiotic relationship between healthy consumers and healthy markets. It is a speech worth listening to.

iMarket News concurs with my take, but Bloomberg News thinks the headline is "Income Inequality Hurting Growth."In this case I think we can all be right, here's the whole speech:

A Lesson from the Global Assets Project

A common critique about children’s savings accounts is that children have little of their own money to save. Advocates of children’s savings contend that children are agents, capable of saving and should be offered opportunities to do so; however, critics propose that children’s savings accounts as they stand may reproduce existing asset inequalities because children may benefit when their parents have access to more financial resources. Simply stated, where will children – particularly those whose parents have little financial resources – get the money to save? International children’s savings innovations are answering this question in a variety of ways, such as by advocating for the linkage between CCTs and savings accounts.

The news is out – many Americans are living on the financial edge.  Last week, Justin blogged about how Bankrate’s June Financial Security Index poll found that one in four Americans has no emergency savings.  Last month, the Today show featured new research showing that nearly half of Americans are financially fragile, meaning that they probably or certainly would not be able to cope with an emer

This paper argues that common definitions of financial capability understate the role of psychological barriers to establishing sound financial behaviors, namely savings habits. Drawing on insights from psychology and behavioral economics, we explore these missing psychological variables in the standard financial capability equation and suggest mechanisms, or nudges, to overcome those barriers to accelerate financial capability among low-income youth.

One of the most interesting aspects of working at the New America Foundation is our fellows program, which provides support and an intellectual home for transient and innovative writers, researchers, and policy types. A new crop of fellows arrives every fall and, unvaryingly, they are super-smart and working on really interesting stuff. I always look forward to learning more about what they're working on.

I’m very excited that one of our incoming fellows is Dana Goldstein. She’s a rising star journalist on the education and social policy beat who has written for the American Prospect, the Daily Beast, and more recently the Nation. Her website has become a go-to site for engaged discussion of education policy issues and how they intersect with issues of poverty, access, and accountability. Andrew Sullivan has taken to linking to Dana’s work so you may find yourself on her site through his linking machine or you can just go there yourself.

One of her latest pieces in the Nation focuses on a difficult question: “Should all Kids Go to College?”

You can read the piece here, or hear her talk about it here in podcast form.

When we've written about this topic, we often focus on the benefits of savings for education. For a number of reasons, there appear to be powerful signals sent when children have an account with their name on it. Savings appears to help children learn the basics of financial education and get them to plan for their future. But it begs the question of what they’re preparing for.

Critics of our College Savings Initiative often point out that college is not for everyone. This is true enough if we are only thinking about a four-year liberal arts education or for that matter on focused exclusively on science and engineering. But Dana asks if more can’t be done to diversify meaningful post-secondary educational experiences tailored to the real world. She reports on emerging educational programs that emphasize technical skills rather than the liberal arts. Vocational training programs may have a troubled history but clearly there are upsides for re-tooling them for the 21^st century. If we can succeed in doing this, it makes it more plausible that everyone should prepare at an early age to pursue learning well beyond the high-school years.

Every year the Asset Building Program conducts an analysis of the federal budget to provide a more complete understanding of how the federal government encourages the accumulation of assets for families up and down the economic ladder. We seek to shine a light on what policy levers are deployed, who benefits from these from these programs and policy efforts, and how recent legislation potentially alters the landscape.

In that pursuit, we present The Assets Report 2011, an assessment of federal policies and program to promote asset building opportunities. Our analysis finds:

That's the headline from Bankrate's June Financial Security Index poll. It's definitely worth reading their release in its entirety. Though I would point out a few things, first, the article oversells the rhetoric about a "double-dip recession" IMHO. Second, while the headline is attention grabbing it undersells the findings of the study.

The Asset Building Program's Saver's Bonus proposal has logged some miles over the last few weeks and is fast becoming the Waldo of policy proposals. Any why not? It's a versatile policy that's relevant to so many constituencies.