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Michael Sherraden: Saving for the Future

Can something as simple as owning a savings account lead youth in developing countries toward a better education, economic opportunities, and long-term development?

Michael Sherraden thinks this might be so, and he is putting it to the test. Named by TIME Magazine in 2010 as one of the World’s 100 Most Influential People, he is engaged in a landmark research experiment that is setting up savings accounts for 2,000 low-income youth in Ghana to study how and why they save and how this impacts their future.

And that’s just the beginning.

“The goal is to deliver savings services to 170,000 12- to 18-year-olds in Ghana, Kenya, Nepal, and Columbia,” he reports. “Over the next several years, we’ll study the ways kids maintain and add to their savings through earnings or family help, and how financial institutions develop savings products and services to reach them.”

Sherraden, MSW ’76, PhD ’79, is founder and director of the Center for Social Development (CSD) at Washington University in St. Louis, a leading academic center best known for its research on assetbuilding for low-income individuals and families. YouthSave, funded by the MasterCard Foundation, is one of a number of ambitious global research initiatives in which Sherraden serves as a collaborator and consultant.

Another, closer to home, is SEED (Savings for Education, Entrepreneurship, and Downpayment), funded by the Ford and Charles Stewart Mott Foundations. In SEED OK, Sherraden and his colleagues are following 1300 Oklahoma children who were given a $1,000 college savings account at birth to see how this asset affects their educational expectations. Their parents, and those in a control group who did not receive money, will be interviewed periodically about their savings beliefs and behaviors.

“We anticipate that the savings will influence parents to think more positively about college for their children,” Sherraden explains. “Maybe they will read to their children instead of turning on the television. We will be asking those questions.”

The families can add to these accounts, he noted, and the deposits will be matched by SEED based on income level.

Matched savings programs, called individual development accounts (IDAs), are helping low-income families all over the country to purchase a first home, start or expand a business, or pay for post-secondary education. Sherraden created the IDA concept, which has been tested in federal legislation and in more than 40 states.

It is a cornerstone of his vision for a new social policy—a policy that adds asset building to traditional income support.

Asset-building for All

“I think we are in period much like at the beginning of the 20th century, when social and economic life was changing rapidly and a lot of new approaches were being tested. Social work in the early 1900s, characterized by Hull House and the settlement movement, was designed for an industrializing society. We’re now in a similar period of change as we adapt to the information age.

“Social work has two equally honorable traditions,” he reflects. “One is helping people who don’t have enough or are in a state of crisis. The second is investing in people so that they can develop their capabilities and contribute to the greater society and economy.

“The ‘care and concern’ theme has been more prominent over the past century, and that is as it should be. It is an expression of our common humanity. But the second, which we can call social development, looks beyond problems and deficiencies toward increasing ‘capabilities,’ meaning that people and communities should have opportunities to reach their potential to be and do, in the words of Nobel Laureate Amartya Sen.

“I see the two social work themes as entirely complementary. I totally support the care and concern side, but I do think we need to pay attention to the development side as well. In the long run, this will have the greatest payoff.”

Development has always been his bailiwick. In 1991, Sherraden published Assets and the Poor, offering a simple but groundbreaking approach to overcoming poverty. Instead of a welfare system that barely helped poor people make ends meet, why not create a process through which they could build assets for the future? 

“Asset-based policies are well established in the U.S.,” he points out, citing examples like home mortgage deductions, IRAs, and 401(k) plans. “But these opportunities don’t benefit families at the bottom of society. IDAs and similar strategies can provide poor people with the same incentives to save for a college education, self-employment, home ownership, and other goals.”

The concept started in the U.S. but didn’t take long to gain traction worldwide. In 2006, CSD and the New America Foundation formed the Global Assets Project (GAP) to advance public policies that promote savings initiatives for poor to moderate-income persons worldwide.

In 2007, GAP hosted the “Savings, Assets & Financial Inclusion: A Global Symposium” in Singapore. Projects are underway in Singapore, Hong Kong, Kenya, Ghana, Nepal, Hungary, Slovakia—and the list keeps growing. “Assets for everyone” is gaining international momentum.

The Michigan Influence

Sherraden traces the roots of his outlook to his parents, who ran a small grocery store in Kansas. “Whether it was teaching English to immigrants or driving the sick to doctor appointments, they were always involved in helping others,” he remembers. “They never talked about this, they just did it, and it had a definite influence on me.”

Harvard, in the sixties, had adopted a geographical distribution policy to keep the college from being East Coast dominated. “They sent recruiters to places like my little high school in Junction City,” he smiles. “When people debate about affirmative action, I’m reminded that I am happy to be an affirmative action product myself!”

At Harvard, Sherraden became involved in the student-run Phillips Brooks House and its community activism. By the time he met Margaret Sherrard, a social work graduate student, his career path was becoming clear. Sherrard’s father was a mentor to U-M Social Work Professor John Tropman, and her uncle, David French, was one of the creators of U-M’s doctoral program in social work and social science. The natural next step was applying to Michigan.

“The schools of social work at U-M and Washington University are consistently ranked number one and two in the country. Sometimes the order is reversed. Obviously I have a high regard for both programs,” he says. “But I do believe Michigan’s vision of combining social work and social science creates the strongest doctoral program in the country.”

At U-M he focused on social policy and administration, and organizational behavior, and was especially influenced by Professors Charles Tilly, Rosemary Sarri, and Robert Vinter. He joined Washington University upon graduation, and is now the Benjamin E. Youngdahl Professor of Social Development. His wife Margaret is a professor of social work at the University of Missouri–St. Louis, and a research professor at Washington University, and a frequent collaborator on his many projects. They have two grown children.

Why did he choose academia? “I like thinking about things,” replies Sherraden. “Doing things is hard! The University is a wonderful place to sort out what works and what doesn’t.” With more than a dozen active research projects on the front burner, he can’t fathom retirement.

“I’m fortunate to be doing something I enjoy. I don’t think of it as work. I would like to see our agendas move forward. Though CSD is best known for its work on asset building, I’m also interested in issues related to civic engagement and productive aging.” In civic engagement, Sherraden’s PhD thesis was on the Civilian Conservation Corps of the 1930s, and he was at the White House for the signing of the AmeriCorps legislation in 1993.

Turning to productive aging, “Older adults should not only be passive recipients of care and support, but also—if they have the capacity and interest—be engaged in society as volunteers, caregivers, and, if they choose, paid employees. It is inevitable that the world will fashion a different idea of ‘growing old’ in the decades ahead.” In 2009 CSD hosted the first conference on productive aging in China, the world’s most rapidly aging country. 

A goal for the Decades Ahead

Even as his studies suggest new policy directions, they often reveal new problems to be solved. For example, while studying savings accounts in Uganda, Peru, and elsewhere, the research team has encountered the issue of legal identity.

“Thirty-eight percent of the kids in the world are born with no birth record,” Sherraden explains. “When you are born a U.S. citizen, you’re issued a birth certificate. It’s taken for granted. But in many less-developed countries, particularly in south Asia and sub-Saharan Africa, a large proportion of babies have no birth record. Even in industrialized countries the figure is not zero, but two percent.

“Without legal identity it is problematic, if not impossible, to get access to immunizations and other health care, education, financial services, and other rights and protections.”

In 2009, Sherraden spoke on this issue on Social Work Day at the United Nations. “It interests me, because of all the policy challenges we’re grappling with in social work. This is a problem we can do something about! Establishing a legal identity for all children would have huge positive effects on social and economic well-being, yet at the same time is starkly simple and measureable.

“Legal identity for all is an important, clear, and achievable goal for the planet. Through the rapid advancements in information technology, this goal is achievable by the middle of the 21st century,” he concluded. “And no profession is better suited or better situated than social work to take up this challenge.”

—Pat Materka, a former U-M staff member, is a freelance writer who owns and operates the Ann Arbor Bed and Breakfast.

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