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Researchers : Save, Spend, or Pay Down Debt: Financial Literacy and Decisions among Low-income Households
Complete Description:While low-income households face significant barriers to saving or otherwise investing in the future, cash payments provided by public policies and programs provide opportunities to divert income from daily expenses. Using a variety of financial sophistication measures, we identify predictors of payment uses among conditional cash transfer recipients in New York City. Our analysis indicates that scoring well on a financial literacy index, having savings goals, and avoiding alternative financial services predict the use of Family Rewards payments to improve social mobility. Measures reflecting access to or use of mainstream banking services and credit predict debt repayment. Further exploration of these relationships may inform the design of programs that deliver cash payments.
Date Published:Saturday, October 1, 2011
Author:Zakia Barnes, J. Michael Collins, Cynthia Miller, Nandita Verma, and Karen Walsh
Funding Agency: Social Security Administration, CFS - Wisc
Type: Working paper;
Source: Administrative data; Survey data;
Language: English
Audience: Researcher