Ashley Stoots

Critique of “Prize Linked Savings Accounts                                    

 

I think that the possibility of having a reward system is set before students. But I think that starting off by using the word gambling is the wrong way to go. Personally, I think that when students think of the word gambling they think more of spending money instead of saving money. I also think that poorer people tend to buy more lottery tickets because they think that if they cannot earn more money maybe they can win some. But if you think about they spend 9% of their income on lottery tickets. People could save this money instead of buying lottery tickets and that would add up over time. I agree that saving money is not a primary concern for most Americans, especially young Americans. I think that young Americans think that sense they are young they still have plenty of time to save money and go ahead and spend their money on things they want to do. I also agree that the temptation to spend money is very high. If someone finds something that they want and they have enough money with them it is very easy to go ahead and buy that item and not worry about saving any money. People do tend to work better when there are incentives involved because it gives them something to strive for or a goal to reach so to speak. I also think that banks should be allowed to have saving linked reward systems. I think that it could possibly bring more business to the banks. If there are incentives or rewards involved people might be more willing to put some of their money in savings accounts at these banks to try to strive for the incentives or rewards. And if they are private lotteries they are only taking place at certain banks that want the lottery, so banks that do not want to participate in an incentive or reward savings type system do not have to. This definitely goes along with the Keynesian model and not the Milton Friedman model. Because the Milton Friedman model was more focused on people saving most of their money and not spending very much of it and this is all about how people are spending on things they want or things they want to do instead of focusing on saving their money. It is more focused on people spending money while they have it and worrying about saving money for necessities after the fact.