The Poor and Lotteries
- So I read an article about how much the poor spend on lotteries, and I decided to follow the links in the article and read the studies myself.
- I was quite surprised.
Poverty Lab
- So there is this organization called Poverty Lab, which studies the different things which help the poor.
Research organization
- Some research organizations study things like the mating habits of purple beetles in the desert.
- Poverty Lab studies how to not be poor.
Lottery buying behavior of the poor
- Poverty Lab studied the Lottery Buying behavior of the Poor.
- And what effect Lotteries had on the economic growth of the poor.
I was shocked
- They found that the Poor spend 12.5% of their annual income on various forms of gambling, and lotteries are the most popular.
- Poverty Labs measured the amount Lotteries improved the lives of the poor financially.
- It was zero in most cases and negative in a significant number.
Why do humans play lotteries?
- Scientifically speaking Lotteries play to an emotional weakness in humans called SKEW.
- Skew means humans are drawn to things with assymetrical cost and reward.
- So in the case of the lottery, a one dollar lottery ticket, where the prize is one million dollars.
- Surprisingly, even though humans say they know that buying one ticket means the odds of winning are one in a milliom, humans still buy lottery tickets.
Now for more sad news.
- The poorer the population, the stronger the pull of SKEW.
- Poor people spend a greater percentage of their income on lotteries then any other income class.
- Why? hope? despertion? financial education?
Sadness, only sadness.
- I know you may be sad right now, so I have some good news.
- The Poverty Lab studied another game of chance called PRIZE LINKED SAVINGS ACCOUNTS.
- First they discovered it wasn't a game of chance at all, it was a savings account.
- These are savings accounts where every dollar you deposit buys you a lottery ticket.
- So when you deposit 10 dollars in your savings account, you get 10 tickets.
- But these tickets don't expire, they make you eligible for a weekly lottery where you can win a Prize of Money.
- And when you want all the money you spent on lottery tickets back, its waiting for you in a bank savings account.
- Amazing.
How does this work?
- What happens is the banks or credit unions where you deposit your savings, pools all the interest earned from all the Prize Linked Savings accounts and gives the interest to 5-10 people, every week.
Good news.
- When Prize Linked Savings Accounts are introduced into Poor Communities many of the Poor use these accounts instead of lotteries.
- The poor start depositing 12-15% of their income into these savings accounts.
- The more you save, the more you win.
- So the odds of winning are directly related to how much you save.
- And the odds of winning are much better for these accounts then the lottery.
More good news?
- Poverty Lab reports that once the poor start saving they don't quit.
- Poverty Lab reports that five years after opening Prize Linked Savings Accounts the poor are still depositing money in them.
- And the percentage of their yearly income they save goes up too.
Last words
- Poverty Lab interviewed these poor people and they said that for the first time in their lives they dreamed of owning their own homes and sending their children to college.
- If you read only one article today, I hope it is this one.
- We have a Prize Linked Savings Account on Hive, and it's called the No Loss Lottery.
- Send some Leo to the wallet of the @nolosslottery to open your savings account.
@shortsegments
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