- Working Paper
Using Lotteries to Encourage Saving: Experimental Evidence from Kenya. Working Paper, 2016.
Justin Abraham, Merve Akbas, Dan Ariely & Chaning Jang
- August 2, 2016
- 5:43 am
SECTOR
PROJECT TYPE
DOI
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BEHAVIORAL THEME
OVERVIEW
In this study, we evaluate the provision of lottery-linked deposit accounts (LLDA) – a savings scheme incorporating lottery-like payoffs to traditional savings accounts. We provide a mobile savings product to 311 informal residents
in Nairobi, Kenya and observe account activity over a 60-day period. We find that respondents with LLDAs made 42% more deposits on average over the project period than respondents receiving a matched incentive. This increase in account activity is due to respondents making more deposits per day in order to enter the lottery.
THEMATIC AREAS
We do not, however, observe any effects due to the lottery incentive on amount deposited over the project period. We show that when presented with potential winnings from previous days, respondents with LLDAs increased self-reported gambling activity by 15%. Our results suggest that LLDAs are a promising tool to improve savings among the poor and that product design has considerable implications on gambling behavior.