Feeds:
Posts
Comments

Posts Tagged ‘prize-linked savings’

Richard Thaler, a behavioral economist at the Booth School of Business in Chicago, wrote an interesting op-ed in the NY Times recently.

“Governments,” he says, “typically use two tools to encourage citizens to engage in civic behavior like paying their taxes, driving safely or recycling their garbage: exhortation and fines. These efforts are often ineffective. …

“As every successful parent learns, one way to encourage good behavior, from room-cleaning to tooth-brushing, is to make it fun. Not surprisingly, the same principle applies to adults. Adults like to have fun, too.

“In this spirit, the Swedish division of Volkswagen has sponsored an initiative they call The Fun Theory. Their first project is documented in a highly popular (and fun) YouTube video. The idea was to get people to use a set of stairs rather than the escalator that ran alongside it. By transforming the stairs into a piano-style keyboard such that walking on the steps produced notes, they made using the stairs fun, and they found that stair use increased by 66 percent.

“The musical stairs idea is more amusing than practical, so The Fun Theory sponsored a contest to generate other ideas. The winning entry suggested offering both positive and negative reinforcement to encourage safe driving. Specifically, a camera would measure the speed of passing cars. Speeders would be issued fines but some of the fine revenues would be distributed via lottery to drivers who were observed obeying the speed limit.” Read more.
Similarly, Michigan lets financial institutions offer “prize-linked savings.” The “game” appeals to people in the same way a lottery does except that they put money in a savings account to become eligible to win a jackpot. They don’t lose money as they would when buying a lottery ticket.
In Michigan, the effort is already helping people save money and paying out prizes.

Read Full Post »