Savings and Prize-Linked Savings Accounts

Kadir Atalay, Fayzan Bakhtiar, Stephen Cheung and Robert Slonim

No 2013-12, Working Papers from University of Sydney, School of Economics

Abstract: Many households have insufficient savings to handle moderate and routine consumption shocks. Many of these financially-fragile households also have the highest lottery expenditures as a proportion of income. This combination suggests that Prize-Linked Savings (PLS) accounts, combining security of principal with lottery-type jackpots, can increase savings among these at-risk households. Results from an online experiment show that the introduction of PLS accounts increase total savings and reduce lottery expenditures significantly, especially among individuals with the lowest levels of savings and income. The results imply that PLS accounts offer a plausible market-based solution to encourage individuals to increase savings.

Keywords: Individual Decision Making; Online Experiment; Lotteries; Savings; Personal Finance (search for similar items in EconPapers)
Date: 2013-06
New Economics Papers: this item is included in nep-exp
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Related works:
Journal Article: Savings and prize-linked savings accounts (2014)
Working Paper: Savings and Prize-Linked Savings Accounts (2012)
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