Making Savers Winners: An Overview of Prize-Linked Savings Products
AbstractFor 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.
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Date of creation: Oct 2010
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Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
- K3 - Law and Economics - - Other Substantive Areas of Law
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- Annamaria Lusardi & Olivia S. Mitchell, 2011. "The Outlook for Financial Literacy," NBER Working Papers 17077, National Bureau of Economic Research, Inc.
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