‘If you understand where people fail, you can do things to prevent them’: Can prize-linked savings help people save?
- Yotta is bringing prize-linked savings to the US.
- But a model where how much you win is determined by how much you can spend will have its obstacles.
In 2018, Yahoo Finance released an article listing 35 things more likely to happen to you than winning the Powerball lottery. Being attacked by a shark and winning an Olympic Gold Metal were a couple of examples.
But despite all the information out there about how unlikely it is to win the lottery, people are still buying tickets.
According to the most recent numbers from the U.S. Census Bureau, consumers spend on average $86 a month on lottery tickets — over $1,000 a year.
Meanwhile, while overall U.S. savings rates have risen over the course of the pandemic, the savings are pretty disproportionate. High-income households have been able to cut their spending by 17% and save more that way. But low-income households that live paycheck-to-paycheck may not have that option. They’ve decreased their spending by only 4%.
But there seems to be a way to hack the thrill of buying a lottery ticket to get people to save better. It’s where behavioral economics comes in.
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