Making Savers Winners: An Overview of Prize-Linked Saving Products
Melissa S. Kearney
University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)
University of Oxford - Said Business School; National Bureau of Economic Research (NBER); University of Oxford - Said Business School
Northwestern University - Human Development and Social Policy (HDSP) Program; National Bureau of Economic Research (NBER)
University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)
November 11, 2010
Pension Research Council WP 2010-36
For over three centuries and throughout the globe, people have enthusiastically bought savings products that incorporate lottery elements. In lieu of paying traditional interest to all investors proportional to their balances, these Prize Linked Savings (PLS) accounts distribute periodic sizeable payments to some investors using a lottery-like drawing where an investor’s chances of winning are proportional to one’s account balances. This paper describes these products, provides examples of their use, argues for their potential popularity in the United States - especially to low and moderate income non-savers - and discusses the laws and regulations in the United States that largely prohibit their issuance.
Number of Pages in PDF File: 35
Keywords: lottery, prize, saving, accounts, income, products, households, gambling, investment
Date posted: November 13, 2010
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