Working Paper | HBS Working Paper Series | 2008

Consumer Demand for Prize-Linked Savings: A Preliminary Analysis

by P. Tufano, Nick Maynard and Jan-Emmanuel De Neve

Abstract

This paper reports on a small-scale survey of the potential American demand for prize-linked savings accounts, an account that awards prizes as part of the saving product's return. In October 2006, Centra Credit Union launched a prize-linked savings pilot. As part of that initiative, we conducted a mall intercept survey of over 500 people in Clarksville, Indiana, the community where the program was launched. This preliminary data suggests that low-to-moderate income Americans may have substantial demand for prize-linked savings, with a majority of survey participants expressing an interest in opening a prize-linked savings account. As predicted by theory and international experience, interest in prize-linked savings is greatest among people who do not have regular saving habits, who have little actual savings, who play lotteries extensively, and who are optimistic about their futures.

Keywords: Saving; Income; Consumer Behavior; Personal Finance; Investment Return; Banks and Banking; Clarksville;

Language: English Format: Print 30 pages Read Now

Citation:

Tufano, P., Nick Maynard, and Jan-Emmanuel De Neve. "Consumer Demand for Prize-Linked Savings: A Preliminary Analysis." Harvard Business School Working Paper, No. 08-061, February 2008.

About the Author

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Peter Tufano
Sylvan C. Coleman Professor of Financial Management, Emeritus

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