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Gambling for Retirement: The Hidden Costs of Savings Lotteries in a Nationwide Experiment

Author

Listed:
  • Matthias Rodemeier
  • Jared Gars
  • Justin Holz
  • Egon Tripodi
  • Juan Miguel Villa

Abstract

Governments increasingly encourage socially desirable behavior with probabilistic incentives. We study such "Pigouvian lotteries'' in a retirement-savings field experiment with 387,000 workers in Colombia's public pension system. The lotteries induce sharp bunching at qualification thresholds, but workers mostly meet them by retiming rather than increasing deposits, leaving overall savings largely unaffected. Lotteries further crowd out valuable life and disability insurance and disproportionately reward wealthier savers. A welfare analysis shows that, once we account for these unintended consequences, lotteries reduce welfare. Our findings illustrate that behavioral spillovers across time and choice domains can reverse the verdict on behavioral public policies.

Suggested Citation

  • Matthias Rodemeier & Jared Gars & Justin Holz & Egon Tripodi & Juan Miguel Villa, 2026. "Gambling for Retirement: The Hidden Costs of Savings Lotteries in a Nationwide Experiment," CESifo Working Paper Series 12634, CESifo.
    • Handle: RePEc:ces:ceswps:_12634
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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • G52 - Financial Economics - - Household Finance - - - Insurance

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