'Save To Win' Makes Saving As Much Fun As Gambling

One of the most common resolutions people make at the start of each year is to save more money. Researchers concluded if you want to help people save money, preaching isn't gonna cut it. You have to make saving money as fun as a visit to a casino.

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As far as New Year's resolutions go, saving more money is often a popular one. Actually being able to do that - well, we know how that story usually ends. But researchers may have come up with a winning method. NPR's social science correspondent Shankar Vedantam, we are all ears.

SHANKAR VEDANTAM, BYLINE: Carolann Broekhuizen is a retired life insurance claims examiner. She lives in Waterford, Michigan. Whenever she has a little extra money, there are some things she likes to do.

CAROLANN BROEKHUIZEN: I do buy lottery tickets. I will buy the state raffle tickets on occasion. There are several casinos locally and I will go to one of them with friends every now and again, when I have a little bit of play money.

VEDANTAM: Broekhuizen never gets in over her head. And she doesn't mind losing. In fact, she expects to lose money. The reason she gambles is because she enjoys it. Researchers have been studying people like Broekhuizen and they've come to the conclusion that if you want to help people save money, preaching isn't gonna cut it. You have to make saving money as fun as a visit to the casino.

A couple of years ago, when Broekhuizen visited her credit union, she was told about a program called Save to Win. If she stashed some money away, she would get a shot at a grand prize of $10,000. The more money she saved, the more opportunities she'd have to win.

BROEKHUIZEN: I said, you know, why not? It's saving for retirement. That can't hurt.

VEDANTAM: Broekhuizen kept putting money away but just like her visits to the casino, she didn't win the big prize.

BROEKHUIZEN: I thought it was a one-year program, to be all honest with you. And I didn't hear anything the first year, so I assumed I did not win.

VEDANTAM: Even though she was a little disappointed, Broekhuizen says she liked the fact she could win something extra while saving for retirement. Then, a few months ago, she got a phone call out of the blue.

BROEKHUIZEN: The person identified themselves as being from my credit union. My first thought was that a check had bounced and I wasn't real happy. And then she went on to explain that I had won the cash prize, and beyond that I couldn't think for a while because something like this happens to other people; it doesn't happen to me.

VEDANTAM: Broekhuizen's Community Alliance credit union is one of several credit unions in Michigan that features the Save to Win program. It is also active in a handful of other states. Economists aren't surprised the program is getting people to save. At the University of Maryland, Emel Filiz-Ozbay recently conducted a controlled scientific experiment into the benefits of prize-linked savings programs. She found people save more and are more willing to leave their savings untouched if saving comes packaged as a lottery.

EMEL FILIZ-OZBAY: We found that indeed people seem more patient or more willing to wait additional weeks to get more money when it is offered in lottery-like form.

VEDANTAM: The catch, Filiz-Ozbay says, is that banks in most states are not allowed to offer such programs because private institutions are not allowed to run lotteries. But she says policy makers ought to know these programs are different than regular lotteries.

FILIZ-OZBAY: Unlike the standard lotteries, the consumer is not losing the initial capital, initial principal. So what you invest is always there, you are not losing it. In the lottery, once you buy the ticket, if you don't win the prize, money's gone.

VEDANTAM: Back in Michigan, Carolann Broekhuizen has a theory about why she won the $10,000 prize.

BROEKHUIZEN: My mother passed away earlier in the year and I just looked up after it had a chance to sink in, I looked up and said thank you, Mom.

VEDANTAM: In homage to her mom - and the spirit of the prize - Broekhuizen didn't go on a spending spree. She took the money and stashed it away in her savings. Shankar Vedantam, NPR News.

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