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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16433.
Date of creation: Oct 2010
Date of revision:
Publication status: published as Kearney, Melissa S., Peter Tufano, Erik Hurst, and Jonathan Guryan. “Making Savings Fun: An Overview of Prize-Linked Savings,” in ed. Olivia Mitchell and Ammamaria Lusardi, Financial Literacy: Implications for Retirement Security and the Financial Marketplace, Oxford University Press, 2011.
Note: LE PE
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
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
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mauro F. Guillén & Adrian E. Tschoegl, 2001.
"Banking on Gambling: Banks and Lottery-Linked Deposit Accounts,"
Center for Financial Institutions Working Papers
00-25, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Mauro Guillén & Adrian Tschoegl, 2002. "Banking on Gambling: Banks and Lottery-Linked Deposit Accounts," Journal of Financial Services Research, Springer, vol. 21(3), pages 219-231, June.
- Cletus C. Coughlin & Thomas A. Garrett & Rubén Hernández-Murillo, 2006. "The geography, economics, and politics of lottery adoption," Review, Federal Reserve Bank of St. Louis, issue May, pages 165-180.
- Emel Filiz-Ozbay & Jonathan Guryan & Kyle Hyndman & Melissa Schettini Kearney & Erkut Y. Ozbay, 2013. "Do Lottery Payments Induce Savings Behavior: Evidence from the Lab," NBER Working Papers 19130, National Bureau of Economic Research, Inc.
- Nicholas C. Barberis, 2012. "Thirty Years of Prospect Theory in Economics: A Review and Assessment," NBER Working Papers 18621, National Bureau of Economic Research, Inc.
- Annamaria Lusardi & Olivia S. Mitchell, 2011. "The Outlook for Financial Literacy," NBER Working Papers 17077, National Bureau of Economic Research, Inc.
- Thomas Crossley & Hamish Low & Sarah Smith, 2011.
"Do consumers gamble to convexify?,"
IFS Working Papers
W11/07, Institute for Fiscal Studies.
- Thomas F. Crossley & Hamish Low & Sarah Smith, 2013. "Do Consumers Gamble to Convexify?," KoÃ§ University-TUSIAD Economic Research Forum Working Papers 1314, Koc University-TUSIAD Economic Research Forum.
- Tufano, Peter & De Neve, Jan-Emmanuel & Maynard, Nick, 2011. "U.S. consumer demand for prize-linked savings: New evidence on a new product," Economics Letters, Elsevier, vol. 111(2), pages 116-118, May.
- Nicholas C. Barberis, 2013. "Thirty Years of Prospect Theory in Economics: A Review and Assessment," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 173-96, Winter.
- Annamaria Lusardi & Daniel J. Schneider & Peter Tufano, 2011. "Financially Fragile Households: Evidence and Implications," NBER Working Papers 17072, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.