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Take Five: Meet Wash U's Michael Sherraden, one of Time's 100 most influential people in the world

This article first appeared in the St. Louis Beacon, April 25, 2010 - On the day that St. Louisan Michael Sherraden officially joined the ranks of Time magazine's 100 most influential people in the world, he was on the job at Washington University keeping it all in perspective.

"It is an honor to be selected," he said, quickly adding, "It feels very arbitrary. Thousands of people could be on a list like this. A lot of people have done hard work and interesting and valuable work. But I'm glad to be on the list, and I'm glad that the work will maybe get a little more recognition and maybe people can think about it a little more. It's positive, and I hope that will help move the discussion forward."

The 61-year-old professor, who founded and directs the Brown School's Center for Social Development, is widely known for his common-sense, bottom-line approach to microfinance: Help break the cycle of poverty by enabling low-income families to establish savings accounts.


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Sherraden's concept of Individual Development Accounts for the poor -- which he spelled out in his 1991 book "Assets and the Poor: A New American Welfare Policy" -- has been adopted in both federal and state legislation. The Global Assets Project, which he co-leads, has taken the concept to developing nations.

The annual Time list has its share of celebrity and high-profile names -- political leaders President Barack Obama and Sarah Palin, comedian Ben Stiller, golfer Phil Mickelson and singer Lady Gaga, to name a few. Sherraden is in a brain-heavy category labeled "thinkers" -- rubbing shoulders with the likes of Steve Jobs, CEO of Apple; Paul Volcker, former chairman of the Federal Reserve; Lisa Jackson, administrator of the EPA; and Elon Musk, rocket scientist and environmental pioneer.

In a letter to readers in the May 10 issue, Time Managing Editor Richard Stengel explains that the list is not about the influence of power but about the power of influence -- innovators whose efforts will help change the world for years to come.

The magazine applauds Sherraden's ambitious goal to help poor families accumulate sufficient funds to ride out hard times and also to build for the future: to save enough to buy a home, start a business or send their kids to college.

"He seeks a world in which success is a function of determination and merit, not privilege or political factor," the magazine states.

Sherraden said he was informed of the honor some time ago but asked to keep it quiet until the magazine hit the newsstands.

"It's a little odd," he acknowledged Thursday. "It's the kind of thing you don't expect when you get up in the morning."

Here are excerpts from the Beacon's interview with Sherraden:

Your concept for Individual Development Accounts is now recognized as a sound way to help low-income people start building financial security, but how difficult was it 20 years ago to convince the powers-that-be to give this a try?

Sherraden: I would say in a nutshell that it's a lot easier to talk about it today than it was 20 years ago. There was a little more resistance in the beginning. But most things are like that. If we haven't been thinking a certain way and someone comes along and says maybe we should think about this, I think it always takes a little bit of time for people to check it out and get some evidence to see if it really is a better idea.

There is more discussion today about people's access to financial services -- not just credit services. So, people are talking more about savings and insurance and other financial instruments that people need to have a stable life. I think all that's changed over time, not in just the U.S. but in the developing world also.

Increasingly, we do work outside the country now.

Do you ever hear from people who were helped by Individual Development Accounts?

Sherraden: Quite a number of people over the years. Sometimes, an IDA participant will be at a conference and speak. And, occasionally, someone will call me who got my name somehow and they had an Individual Development Account and they saved money and were able to buy a home and they will call up and say thank you. Those are very satisfying little moments for an academic -- we sit in a university and do research.

A major use of IDAs has been for homeownership. People will express that finally they have a place of their own, the kind of thing most Americans would say about owning a home, and the control that gives them, the stability -- that they can paint the walls whatever color they like and the sense that it's theirs. It's a very strong theme.

Talk about your new research effort -- Saving for Education, Entrepreneurship and Downpayment (SEED) -- to establish universal savings accounts for children.

Sherraden: We're running an experiment in Oklahoma, where we have randomly given 1,360 kids a college savings account at birth. And then we randomly selected 1,360 kids who don't have a college savings account. The first accounts were opened in 2008, and it's a process over time getting them opened as babies are born.

We open the account and put in $1,000 at birth, and we're matching savings for families who have lower incomes for a period of four years. The money stays in the account until the child is 18. The program is funded through a number of different foundations, but the Ford Foundation deserves the major credit for providing the major funding.

What we're trying to model there is a test of a universal child account -- that every baby gets an account when they're born. So, we're following them over time. These kids aren't very old yet. We just know how many accounts have been opened and whether parents are putting additional money into the accounts after one year. There are in-depth interviews with them so we will know quite a lot about what the families think about this.

We pick the children randomly using birth records from the health department. I'm simplifying a little bit: We're oversampling for people of color, so there are larger sub-samples for African American, Native American and Hispanics, so statistically we can tell what's going on with them.

We'll see how it goes.

What point are you are trying to prove with these children's accounts?

Sherraden: We think that there should be a system of access to financial services and accumulating savings and assets for everyone. It should be progressive so lower-income families have larger incentives.

My original proposal for IDAs was a universal account that started at birth. What happened with IDAS was they got applied to welfare reform. In the '90s there was a lot of talk about welfare reform, so it got taken up in the context of welfare and became a program targeted toward lower-income people for a short term, which is fine. We learned a lot, but it wasn't really the original idea.

We did work in the United Kingdom starting in 2000 and in 2005. In the UK now, every baby born gets an account with a 250-pound deposit and an additional 250 pounds for the poorest children. What we're trying to model in Oklahoma is a policy that looks something like that.

While it is very impressive to be included on this list of 100 influential people, whom would you most like to influence?

Sherraden: That's a good question.

If this can serve to put these ideas out where people can think about them and consider the possibilities, I think that would be the best thing. Eventually, I hope we get legislation that makes things like college savings plans and 401k plans more universal, reaching more people -- and that the subsidies for these that now go to people in the upper half of the income distribution would be more evenly distributed. That would be a great outcome.

To see Time's entire list of the most influential 100, click here.

To read the Time profile on Michael Sherraden, click here.

Mary Delach Leonard is a veteran journalist who joined the St. Louis Beacon staff in April 2008 after a 17-year career at the St. Louis Post-Dispatch, where she was a reporter and an editor in the features section. Her work has been cited for awards by the Missouri Associated Press Managing Editors, the Missouri Press Association and the Illinois Press Association. In 2010, the Bar Association of Metropolitan St. Louis honored her with a Spirit of Justice Award in recognition of her work on the housing crisis. Leonard began her newspaper career at the Belleville News-Democrat after earning a degree in mass communications from Southern Illinois University-Edwardsville, where she now serves as an adjunct faculty member. She is partial to pomeranians and Cardinals.