Keywords
household finance, banking, savings, prize-linked savings, lottery
Abstract
This paper studies the adoption and impact of prize-linked savings (PLS) accounts, which offer lottery-like payouts to individual account holders in lieu of interest. Using microlevel data from a bank in South Africa, we show that PLS is attractive to a broad group of individuals, with financially constrained individuals and those with no other deposit accounts particularly likely to participate. Individuals who choose to use PLS increase their total savings on average by 1% of annual income. Exploiting the random assignment of prizes,we present causal evidence that PLS substitutes for lottery gambling but is a complement to standard savings.
Original Publication Citation
“Can Gambling Increase Savings? Empirical Evidence on Prize-linked Savings Accounts,” with Shawn Cole and Peter Tufano, Management Science 68, No. 5 (May 2022): 3282-3308.
BYU ScholarsArchive Citation
Cole, Shawn; Iverson, Benjamin; and Tufano, Peter, "Can Gambling Increase Savings? Empirical Evidence on Prize- Linked Savings Accounts" (2022). Faculty Publications. 8970.
https://scholarsarchive.byu.edu/facpub/8970
Document Type
Peer-Reviewed Article
Publication Date
2022
Publisher
Management Science
Language
English
College
Marriott School of Business
Department
Finance
Copyright Status
© 2021 INFORMS
Copyright Use Information
https://lib.byu.edu/about/copyright/