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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