Do Lottery Payments Induce Savings Behavior: Evidence from the Lab

Emel Filiz-Ozbay, Jonathan Guryan, Kyle Hyndman, Melissa Kearney and Erkut Ozbay

No 19130, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents the results of a laboratory experiment designed to investigate whether the option of a Prize Linked Savings (PLS) product alters the likelihood that subjects choose to delay payment. By comparing PLS and standard savings products in a controlled way, we find strong evidence that a PLS payment option leads to greater rates of payment deferral than does a straightforward interest payment option of the same expected value. The appeal of the PLS option is strongest among men, self-reported lottery players, and subjects with low bank account balances. We use the results of our experiment to structurally estimate the parameters of the decision problem governing time preference, risk aversion, and probability weighting. We employ the parameter estimates in a series of policy simulations that compare the relative effectiveness of PLS products as compared to standard savings products.

JEL-codes: D03 D14 D81 G11 (search for similar items in EconPapers)
Date: 2013-06
New Economics Papers: this item is included in nep-exp and nep-upt
Note: LE PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as Journal of Public Economics Volume 126, June 2015, Pages 1–24 Cover image Do lottery payments induce savings behavior? Evidence from the lab ☆ Emel Filiz-Ozbaya, Jonathan Guryanb, c, , , Kyle Hyndmand, Melissa Kearneya, c, Erkut Y. Ozbaya

Downloads: (external link)
http://www.nber.org/papers/w19130.pdf (application/pdf)

Related works:
Journal Article: Do lottery payments induce savings behavior? Evidence from the lab (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:19130

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w19130

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().