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Economy & Business

Reducing poverty and increasing education save lives, money

This article first appeared in the St. Louis Beacon, Aug. 27, 2013 - More than 1,000 lucky newborns in Oklahoma are part of an experiment, coordinated by Washington University, to determine whether a college savings account at birth can change the life of a kid growing up in moderate-to-low income families.

It’s too soon to know the answer, but the program is being billed as a promising intervention in the first of several briefs being developed by a team of Washington University and Saint Louis University professors. They are releasing briefs on various topics over several months in an effort to convince area leaders that the region can save lives and money by investing more in those at the bottom of the economic ladder.

The first brief, released today, focuses on education and economic opportunities for African Americans in St. Louis and St. Louis County. The team’s work will culminate with a report and a conference next year to mark the 60th anniversary of the Supreme Court’s Brown vs. Board of Education ruling. The overall project, titled "For the Sake of All," is funded by a grant from the Missouri Foundation for Health.

One of the goals mentioned in today’s brief is to get the public to begin thinking about disease in new ways. The brief notes that society usually thinks about death in the context of an illness, such as cancer or a heart attack. The brief says a formula based on research into social factors and mortality allowed the team to determine how many deaths can be linked ultimately to poverty and low levels of education.

The brief’s author, Jason Purnell of Washington University, says this research makes it possible to estimate that “280 deaths (in 2011) were due to poverty and 237 were due to having less than a high school education.” The brief offers a description of how researchers arrived at the estimates.

The report mentions several steps that could be taken now to improve the lives of children. One is to invest in quality early childhood development, which can lead to better school outcomes. Another step, the brief says, involves helping low-to-moderate income families create economic opportunities. These include college savings accounts like the ones in Oklahoma.

“There are no pills or medical treatment for poverty and lack of education,” Purnell says. “But there are policies and programs that can improve both.”

A study of the Oklahoma program is being coordinated by Michael Sherraden, director of Washington University’s Center for Social Development, and a leader in asset building and community development research.

“Our vision is that every baby in America is born with a college savings account,” Sherraden says. The project assigned $1,000 college savings accounts to 1,300 newborns in that state. The idea is embraced by state officials and is funded by the Ford Foundation. Oklahoma was chosen in part, Sherraden says, because CSD looked for a state with a diverse population, including Latinos, Native Americans and blacks “so we’d be able to tell how this is working with populations of color.”

The results have made him hopeful after following the experiment for more than five years. “We know from this that low-income people will save more themselves when they have an account like this,” he says. In addition, he says families with college savings accounts tend to have higher expectations for their children’s education

Granted a one-time contribution of $1,000 to a college savings account won’t be enough to pay for college, but Sherraden says the research finds children with the accounts tend to be more likely to attend college.

He says ideas like the savings account are part of many issues that need to be addressed to help lift youngsters out of poverty.

“There are huge differences in equality about schooling,” he says. “I think it’s all connected to segregation in real estate. As long as we segregate people the way we do, I think it’s going to be hard to solve a lot of problems.”

He says these issues, and others involving wage inequality and discrimination in lending practices, “make it difficult for African Americans to get a start in life.”

One challenge, he and Purnell say, is to discuss all these issues in ways that resonate with people across racial and economic lines.  The savings account is listed as an example.

“When you talk about children having savings accounts for college, there’s pretty broad support for that idea. It’s an easier discussion to have in a bipartisan way.”

Sherraden says the issues go beyond the question of social justice.

“I do care about that, but I’m speaking in practical terms. If people don’t have enough money to support their households, they cannot have a stable household. If we don’t provide jobs at a wage that will help people enjoy a stable life, there are high costs for that. We have increasing wage inequality now and low economic growth. I think we should take a lesson from that.”

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