Alicia Sasser Modestino, associate professor of public policy and urban affairs and economics, recently helped the city of Boston win a $250,000 grant from Citi for a youth credit-building project.
The city will partner with four non-profits that provide year-round employment for young adults to help them build or improve their credit records. Applicants to the program will be randomly assigned to a control group that will receive some financial education, or a full treatment group that will receive a guaranteed loan to be repaid during the year.
“Credit building programs have the potential to enhance youth outcomes along several dimensions,” Sasser Modestino said. “These include direct outcomes such as building credit, maintaining credit, and practicing safe banking that follow directly from the program’s combined loan and savings program and financial workshops/coaching.”
“In addition, indirect outcomes such as the ability to maintain employment, and hence, a steady paycheck, may also be positively impacted by an individual’s enhanced access to credit,” she added. “To our knowledge the Boston Youth Credit Building Initiative is the first to implement such a program for young adults and evaluate the outcomes in a rigorous manner.”
Sasser Modestino and a student will use $28,000 of the Citi grant to evaluate the project through the Dukakis Center for Urban and Regional Policy.
“We envision that much of the survey data collection and focus group sessions would occur during the academic months of the spring term when the program is in session,” she said. “This data would assess improvements in knowledge and skills regarding credit building and safe banking and would be coded and analyzed during the summer.”
In the fall, they will collect administrative data related to youth credit scores as well as employment and wage outcomes to capture participants’ initial experiences during the summer after participation in the program and for follow-up in subsequent years.
Sasser Modestino and her student will link the survey and administrative data to analyze differences across demographic groups such as age, gender, race, ethnicity, and socioeconomic status, and program features, including knowledge building versus financial incentives.
“The quantitative data from the survey and the administrative data will be useful in identifying the main impacts of the Boston Youth Credit Building Program,” Sasser Modestino said. “In contrast, the more qualitative data collected from the focus groups can be used to determine the plausibility of the various mechanisms behind the observed outcomes and to address the gaps in our understanding around why the program yields different impacts across demographic groups, as well as which features are most effective at reducing those differential impacts.”
Sasser Modestino has also been spending one day a week at the Federal Reserve Bank of Boston as a visiting scholar, leading an evaluation of the Boston youth summer jobs program.