Making Savers Winners: An Overview of Prize-Linked Savings Products
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.
|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.|
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- 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.
- 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.
- 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.
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