Journal of Financial Economics Vol. 129 No. 1 2018
When saving is gambling
Abstract
Prize-linked savings (PLS) accounts, which allocate interest using lottery payments rather than fixed interest, encourage savings by appealing to households’ gambling preferences. I introduce new data on casino cash withdrawals to measure gambling, and examine how individual gambling expenditures respond to the introduction of PLS in Nebraska using a difference-in-differences design. After PLS is introduced, individuals who live in counties that offer PLS reduce gambling by at least 3% more than unaffected individuals. The substitution effect is stronger in low-frills gambling environments, which most resemble PLS, indicating that these accounts fulfill the desire to gamble.
- DOI
- 10.1016/j.jfineco.2018.04.001
- Volume
- 129
- Issue
- 1
- Pages
- 24-45
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib