Saving accounts for kids tied to development: study

Creating government savings accounts for children's future education when they're young may improve their development, according to a new study.

Researchers found that young Oklahomans who had $1,000 deposited for them in a special education savings account scored better on measures of social and emotional behavior by age 4, compared to those who didn't get an account.

"These findings are more pronounced among disadvantaged groups," Margaret Clancy said. "I think that's somet hing we want to underscore."

Clancy is the study's senior author and policy director at the Center for Social Development at Washington University in St. Louis.

She told Reuters Health that one of her coauthors first wrote about the possible benefits of saving accounts for kids in the 1990s.

"We wanted to test this concept in the best possible way - through an experimental design," she said.

For the new study, the researchers recruited the parents of 2,704 infants who were born in Oklahoma during 2007.

At the start of the study, 1,358 of the children were assigned to the savings group while the other 1,346 were assigned to a comparison group that didn't get savings accounts.

Those in the savings group were provided with $1,000 in state funds in an Oklahoma 529 College Saving Plan. The account's money can only be used toward the child's post-high school education.

The mothers of kids in the savings account group were also encouraged to create their own account for their children and were provided with a $100 initial deposit. Depending on a family's economic status, their additional deposits to the account were matched.

When the children in both groups were four years old, their mothers completed a questionnaire that scored the children's social and emotional behavior on a scale from zero to 170. Lower scores indicate better behavior.

Overall, the researchers found that children in the savings group scored about 29 points on the social and emotional development scale, compared to about 31 points among the kids in the comparison group.

That two-point difference in social and emotional development, the researchers write in JAMA Pediatrics, is about the effect seen from introducing the Head Start program, which is a U.S. program that prepares young children for school.

"We have to think of this effect size in the context of general child development," Jin Huang said. "We can see that $1,000 is not a lot of money and we get a similar effect size from a large child development program."

Huang is the study's lead author and a social policy researcher at the College for Public Health and Social Justice at St. Louis University.

The researchers found that the difference in social and emotional development scores was even more pronounced among children from families in typically disadvantaged groups, including those with low education, low economic status and who receive welfare.

Also, the benefits were seen regardless of whether the mothers went on to open another savings account with the $100. Only about 15 percent did by the end of 2011.

The researchers write that the differences in the children who received savings accounts are likely due to changes in the attitude of parents.

For example, the savings accounts may encourage mothers to raise the expectations that they have for their children and increase the support that they provide to them. That additional positive attention and encouragement may have some influence on the child's behavior and development, Huang's team wrote in JAMA Pediatrics.

One mother told the researchers that she's going to have to get her son through school so he can use the money and go to college.

In an editorial accompanying the new study, Fredrick Zimmerman, an economist at the University of California, Los Angeles, compared the accounts to a program in Finland that provides a box filled with basic baby supplies to new mothers.

"The arrival of a box filled with baby clothes carries a powerfully tangible sign that the baby is both real and a welcome member of society," he wrote, adding that the savings program may work in a similar way.