Save Money with the Lottery!

It’s said by some that the lottery (no, not that lottery) is a tax on people who never took statistics, as the odds of winning anything reasonably close to a jackpot are slim enough to be measured in picometers (seriously – see for yourself). People are well aware of this, yet lottery sales continue.

It’s also becoming known that America, not exactly a society of savers in the past, has rediscovered the joys of thrift in these troubling economic times, which, depending on who one asks, is either the cause of or the solution to many of our nation’s problems.

So, what happens when you combine a longstanding enthusiasm for lotteries with a newfound sense of frugality? To a loose confederation of Michigan credit unions, the answer is $3.1 million in new deposits.

The Wall Street Journal reports that eight Michigan credit unions have begun experimenting with a lottery-like incentive to encourage more of their members to save. Called “Save to Win,” the program gives its members a chance to win monthly cash prizes up to $400, as well as a shot at the yearly $100,000 jackpot. Each deposit of $25 or more gets members another chance to win, up to 10 a month. It’s really like a reverse lottery: instead of linking probability of reward to spending money, it’s linked, instead, to saving it.

One commenter on the Freakonomics blog noted the similarity of this program to the UK’s Premium Bonds, the interest on which goes into a prize fund that is distributed to random bold holders each month.