Listen to the podcast/ read the article here: http://freakonomics.com/podcast/say-no-no-lose-lottery-rebroadcast/ (链接到外部网站。)链接到外部网站。
It addresses a new financial innovation called prize-linked savings account, that might help fix USA’s very low saving’s rate “problem”, by using people’s bias towards buying lotteries. You need to write a small report that introduces the issue of low US savings rate, reports US consumers’ liking to playing Lotteries, and then explains how researchers might be able to use that proclivity to address the savings rate issue. In particular, your report should have an introduction, a conclusion and have four separate paragraphs reporting the following four topics:
1) The US savings rate:
This para should include the following topics: What was USA’s savings rate in Dec 2017? You can find it here: https://fred.stlouisfed.org/series/PSAVERT (链接到外部网站。)链接到外部网站。. Do you think it was high or low compared to recent history (last 50 years)? Why might it be bad to have low savings? What does the Freakonomics article say about why people might not like saving?
2) Popularity of lotteries in USA:
This para should include the following topics: How much do North American (State and Provincial) lotteries sell? You can find it here: http://www.naspl.org/faq (链接到外部网站。)链接到外部网站。. What does Melissa find out about lottery expenditures in her paper (http://www.nber.org/papers/w9330 (链接到外部网站。)链接到外部网站。): do state lotteries primarily crowd out other forms of gambling, or do they crowd out non-gambling consumption? Also, does consumer demand for lottery games respond to expected returns, as maximizing behavior predicts, or do consumers appear to be misinformed about the risks and returns of lottery gambles?
What is Melissa’s explanation about why people buy lotteries?
3) Prize Linked Savings (PLS) Accounts as a potential solution to the savings problem:
Use the main article/ podcast to answer the following: How did premium bonds from UK work? Credit Unions from which US state used a legal loophole to create a similar system to boost savings? Why do you think premium bonds or similar PLS accounts were this popular? Why did it take so long to make such accounts legal in Texas? Why do US states protect their lotteries?
This para should include the following topics: Do you think that the current low savings rate in USA is really a problem? (You can use your own reasons, or use Tufano’s findings mentioned in the article.)
Do the consumers act as risk averse or risk loving in their PLS saving behavior? Do you think PLS accounts can work in terms of raising the savings rate back to historical values?
Enumerate and mention all the Web-links you have used in your work.