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Freakonomics Radio: Lottery Loopholes and Deadly Doctors

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Saturday, April 07, 2012

Americans have a famously low savings rate: a Harvard survey found that half of us, if faced with an emergency, couldn’t come up with $2,000 in 30 days. Most people would rather spend than save — and one of our favorite expenditures is playing the lottery. Last year, we spent more than $58 billion on lottery tickets, or roughly $200 per person. As entertainment goes, the lottery is pretty cheap – a dollar and a dream, and all that. But as an investment, it offers a dreadful return, which is why the lottery is sometimes called “a tax on stupid people.”

This episode looks at a little-known financial initiative that might help people save money while giving them the thrill of the lottery. It’s called a Prize-Linked Savings (PLS) account, and it pools a sliver of the interest from all depositors and pays out cash lottery prizes. If you don’t win, you still have your savings – thus, a “no-lose lottery.” In places like the U.K. and South Africa, millions of people have been coaxed into saving money via a PLS plan. But state and federal officials in the U.S. aren’t very interested. Why? Here’s a hint: guess who runs (and profits from) the lotteries in our country?

Also in this episode, we take a broader look at financial literacy – or, really, financial illiteracy. In general, Americans aren’t very good at the basics of saving, investing and retirement planning. So we want to know: How do we improve our grade?  We’ll hear from one scholar who wants to put financial literacy in the schools and another who thinks that’d be a waste of time. Guests also include two members of President Obama’s economic team and National Book Award-winner Sherwin Nuland.

And if education isn’t the route to financial literacy, maybe we can learn something from how one Los Angeles hospital solved the problem of its doctors failing to wash their hands.

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Comments [1]

Suzanne from Red Hook, Brooklyn

Uhm ... what about a game? We've got a great game culture here in the USA. I'm sure some bright mind could come up with a virtual version of "The Game Of Life" (by Milton Bradley??) ... add in that lottery incentive to play (1 ticket for playing, N tickets for winning? Z tickets for keeping to steady state for Y amount of time? Where is Zynga when you need them?), and boingo, you too could have a winner.

Give those docs a prize for least bacteria in a week! You'd need a lot of agar. Better still ... tell the patients to ask their docs "did you wash your hands?"

I wash my hands the minute I get to work, and the minute I get home. In 2 years, I've had two mild colds, despite horrendous stress. I have stayed home the first day of those two mild colds, to keep the sneeze phase to myself. This from someone who has had viral meningitis 3 times (been hospitalized for it 2x). Handwashing is MUCH CHEAPER than disease.

Also, Semmelweis had a horrendous time getting people to follow his prescripts. Read the old novel THE CRY AND THE COVENANT.

Apr. 08 2012 05:04 PM

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