Author Topic: Play the savings lottery  (Read 3134 times)

hybrid

  • Handlebar Stache
  • *****
  • Posts: 1688
  • Age: 57
  • Location: Richmond, Virginia
  • A hybrid of MMM and thoughtful consumer.
Play the savings lottery
« on: March 12, 2014, 08:02:39 PM »
I heard this on NPR a few days ago, the basic gyst is incentivizing people to save money by hosting a lottery that only folks who choose to save a portion of their tax refund can qualify for. Hey, whatever works...

http://www.npr.org/2014/03/10/288637271/groups-use-cash-prizes-to-encourage-saving

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28444
  • Age: -997
  • Location: Seattle, WA
Re: Play the savings lottery
« Reply #1 on: March 13, 2014, 07:16:11 AM »
I think this is the first time I've seen it done with tax refunds, but that's a fairly common thing to encourage people to save.  I could have sworn we've discussed it before, but I can't find the forum link.

https://en.wikipedia.org/wiki/Prize-Linked_Savings_Account
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

LalsConstant

  • Bristles
  • ***
  • Posts: 439
Re: Play the savings lottery
« Reply #2 on: March 13, 2014, 07:39:40 AM »
So, I’ve never heard of this concept before, but here’s how I imagine it going down in a bank somewhere…

In the offices of Fictional Evil Straw Man Bank, Inc:

“Frank, we’ve got to push profits up this quarter… is there some way we can screw people out of the interest we owe them?  I mean even with our rates at one tenth of one hundredth of one part of a fraction of a percent, we’re still paying out 5 million a year to these trashy people.”

“Hmmmm… okay Steve, let me bounce something off of you.”

“Okay Frank, shoot.”

“Look, that 5 million in interest is distributed to a million customers, that $5 they’re each getting on average is of no consequence to any of them individually, especially when they only get about forty cents of it in any given month.”

“But that’s what we want, we turn around and lend that out at six or seven percent and it’s pure profit for us!  Well that’s not true, we actually lend out nothing, the accounts are a sham to make people think we have a reserve.”

“Yes yes we both know how a fictional evil straw man bank works Steve.  But the point is, a small chance at a million dollars sounds much more lucrative than forty cents a month to the average idiot who gives us his money.  People don't do the math and figure out the expected event of this is much worse than just getting a regular account!”

“Wait… I see what you’re getting at Frank.  It’s like how we pay for 15 million in lobbying to get 150 million in tax revenues funneled to us to pay our bonuses, and no one stops us because it’s a question of less than fifty cents for every individual…”

“Exactly.  We get to divert income from the least sophisticated and poorest customers, and draw in the desperate, who will all actually be receiving far less than what their deposits are worth!  It’s exploiting the voluntary actions of ignorant and desperate people, rather than acting in a fiduciary manner toward our company stakeholders!”

“Just like the straw man evil government sponsored lottery!”

Then there’s evil cackling for hours on end.

I'm being silly, but I feel like I'm hitting pretty close to the mark for how this works out.

Ftao93

  • Stubble
  • **
  • Posts: 231
Re: Play the savings lottery
« Reply #3 on: March 13, 2014, 09:34:52 PM »
So, I’ve never heard of this concept before, but here’s how I imagine it going down in a bank somewhere…

In the offices of Fictional Evil Straw Man Bank, Inc:

“Frank, we’ve got to push profits up this quarter… is there some way we can screw people out of the interest we owe them?  I mean even with our rates at one tenth of one hundredth of one part of a fraction of a percent, we’re still paying out 5 million a year to these trashy people.”

“Hmmmm… okay Steve, let me bounce something off of you.”

“Okay Frank, shoot.”

“Look, that 5 million in interest is distributed to a million customers, that $5 they’re each getting on average is of no consequence to any of them individually, especially when they only get about forty cents of it in any given month.”

“But that’s what we want, we turn around and lend that out at six or seven percent and it’s pure profit for us!  Well that’s not true, we actually lend out nothing, the accounts are a sham to make people think we have a reserve.”

“Yes yes we both know how a fictional evil straw man bank works Steve.  But the point is, a small chance at a million dollars sounds much more lucrative than forty cents a month to the average idiot who gives us his money.  People don't do the math and figure out the expected event of this is much worse than just getting a regular account!”

“Wait… I see what you’re getting at Frank.  It’s like how we pay for 15 million in lobbying to get 150 million in tax revenues funneled to us to pay our bonuses, and no one stops us because it’s a question of less than fifty cents for every individual…”

“Exactly.  We get to divert income from the least sophisticated and poorest customers, and draw in the desperate, who will all actually be receiving far less than what their deposits are worth!  It’s exploiting the voluntary actions of ignorant and desperate people, rather than acting in a fiduciary manner toward our company stakeholders!”

“Just like the straw man evil government sponsored lottery!”

Then there’s evil cackling for hours on end.

I'm being silly, but I feel like I'm hitting pretty close to the mark for how this works out.

YES!

"those pesky customers get to keep some of their money!  that's horrible!  how can we give it to 'em with no lube?"