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.
to open your savings account.
