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

Matthias Rodemeier, Jared Gars, Justin Holz, Egon Tripodi and Juan Miguel Villa
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Matthias Rodemeier: Bocconi University
Jared Gars: University of Florida
Justin Holz: University of Michigan
Egon Tripodi: Hertie School
Juan Miguel Villa: Inter-American Development Bank

No 582, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

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.

Keywords: retirement savings; prize-linked savings; paternalism; informality; household finance (search for similar items in EconPapers)
JEL-codes: C93 D14 D91 G52 H55 (search for similar items in EconPapers)
Date: 2026-09-09
New Economics Papers: this item is included in nep-exp, nep-mid and nep-nud
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