Retirement savings lotteries intended to help the poor actually make them less financially secure.
April 25, 2026
Original Paper
Gambling for Retirement: The Economics of Savings Lotteries
SSRN · 6620841
The Takeaway
Behavioral nudges like prize-linked savings accounts are often seen as a clever way to encourage low-income people to save. Field experiments show that people strategically time their deposits to game the system, which reduces the overall effectiveness of the program. These lotteries also crowd out the purchase of necessary insurance, leaving participants more exposed to financial shocks. The wealthy often benefit more because they have the liquid cash to maximize their chances of winning. Policy makers should favor simple subsidies over complex games that distort healthy financial habits.
From the abstract
<div> Governments frequently use lottery-like incentives to encourage socially desirable behavior (“Pigouvian lotteries”). We study lotteries that encourage retirement savings in a nationwide field experiment with over 380,000 participants in Colombia's public pension system. Lotteries increase savings during the qualification period, but this effect is almost entirely offset by subsequent declines in savings, as workers strategically shift the timing of deposits. Lotteries also crowd out demand