Prize-Linked Savings (PLS) accounts

Don’t miss this Freakonomics Radio on PLS — a pragmatic way to increase savings for retirement. This is an idea that should be implemented ASAP.

(…) This episode looks at a little-known financial initiative that might help people save money while giving them the thrill of the lottery. It’s called a Prize-Linked Savings (PLS) account, and it pools a sliver of the interest from all depositors and pays out cash lottery prizes. If you don’t win, you still have your savings – thus, a “no-lose lottery.” In places like the U.K. and South Africa, millions of people have been coaxed into saving money via a PLS plan. But state and federal officials in the U.S. aren’t very interested. Why? Here’s a hint: guess who runs (and profits from) the lotteries in our country?

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