{"id":13762,"date":"2010-11-17T08:00:49","date_gmt":"2010-11-17T13:00:49","guid":{"rendered":"http:\/\/timesandseasons.org\/?p=13762"},"modified":"2010-11-16T21:24:36","modified_gmt":"2010-11-17T02:24:36","slug":"is-prized-linked-savings-just-another-lottery","status":"publish","type":"post","link":"https:\/\/timesandseasons.org\/index.php\/2010\/11\/is-prized-linked-savings-just-another-lottery\/","title":{"rendered":"Is ‘Prized-linked Savings’ Just Another Lottery?"},"content":{"rendered":"

What if you could play the lottery and not lose any money? — You might not win, but you were guaranteed not to lose what you put in. Would that still be against LDS Church teachings? Would you vote against it in a referendum?<\/p>\n

Believe it or not, this scenario is possible, according to Stephen Dubner, one of the authors of Freakanomics, in his appearance last night<\/a> on the NPR program Marketplace. Dubner tells about a system called “Prize-linked Savings” under which participants put money in a savings account in a bank. Their investment is protected, but earns lower than normal interest. The additional interest the account would have made is put into a “lottery” fund that is “won” by one of the participants from time to time.<\/p>\n

This idea certainly has much going for it. If nothing else, it encourages savings, perhaps even among a part of the population that otherwise isn’t very likely to save. And, to the extent that it draws money away from traditional lotteries, surely it is better, right?<\/p>\n

This system is already in place in some 20 countries and in the state of Michigan, at credit unions in the state. But in the other 49 states in the United States, it is currently illegal, often because the state is the only entity permitted to run lotteries.<\/p>\n

But despite the advantages of this idea, I have doubts about whether or not active Latter-day Saints should participate. If I recall correctly, the advice to not participate in lotteries is based not only on the fact that the odds are against you, but also on the fact that they motivate participants by offering something for nothing. Participants are encouraged to believe that they can get something for nothing.<\/p>\n

While the odds are perhaps not so bad in “Prize-linked Savings” or “No-lose Lotteries” as Dubner calls them, they are really just a savings account linked to a lottery — you pay for your lottery tickets by giving up some interest on your savings.<\/p>\n

On the other hand, as Dubner observes, this is essentially a marketing gimmick for savings accounts. And in that sense, is it really different from many other marketing gimmicks — those come-ons where if you buy widget x, you get a chance to win prize y (which is sometimes even several thousand dollars).<\/p>\n

Assuming the amounts that could be won are similar to lotteries instead of marketing gimmicks, I’d have to come down on the side of considering these accounts ill-advised, especially given the evidence that winning the lottery can be so destructive.<\/p>\n

BUT, whether a state government should permit these accounts might be a different question. In part, it comes down to when to permit immorality in the law. Ideally, it is best to do this when the result will reduce immorality — such as permitting alcohol use to avoid the violence and criminality that developed when it was prohibited in the 1920s.<\/p>\n

My guess is that permitting this could actually reduce participation in traditional lotteries and encourage participants to save. And on that basis, I think I’d support making this program available.<\/p>\n

But I do think its just another lottery.<\/p>\n

\"Enhanced<\/a>