Savings and Prize-Linked Savings Accounts

Kadir Atalay, Fayzan Bakhtiar, Stephen Cheung and Robert Slonim
Additional contact information
Fayzan Bakhtiar: University of Sydney

No 6927, IZA Discussion Papers from Institute of Labor Economics (IZA)

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, that combine principal-security 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 nudge individuals to increase savings.

Keywords: personal finance; experimental economics; savings; lotteries; individual decision making (search for similar items in EconPapers)
JEL-codes: C91 D12 D14 E21 L83 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2012-10
New Economics Papers: this item is included in nep-exp
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Published - revised version published in: Journal of Economic Behavior and Organization, 2014, 107 (A), 86-106

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Related works:
Journal Article: Savings and prize-linked savings accounts (2014)
Working Paper: Savings and Prize-Linked Savings Accounts (2013)
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