Prize-linked savings accounts

[arbitron]

I recently heard a brief reference to prize-linked savings accounts on the Freakonomics podcast (an excellent show by the way).

PLSAs (https://en.wikipedia.org/wiki/Prize-linked_savings_account) are available around the world in different forms and are basically a mixture of a savings account and a prizebond/lottery.

They seem to be particularly effective at incentivising people on lower incomes to save. Several schemes have been scuppered by legal challenges from lotteries claiming infringement on their business.

Do we need to encourage people to save more or do we need consumers to spend? Would the banks want to offer these or would the costs be too high?

 

[RedOnion]

Would the banks want to offer these or would the costs be too high?

Banks have absolutely no desire to encourage savings at the moment. They've already got too much money.

Any such prizes offered here would most likely be subject to DIRT.

 

[NoRegretsCoyote]

Prize bonds exist, and have for a very long time.

My guess is that PLSAs would need some kind of legal basis, and the state is not going to facilitate a competitor to prize bonds.