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With the Mega Millions frenzy reaching breaking point, it bears repeating the real money-maker is your investment account.Or if Freakonomics had its way, a controversial financial product called Prize-Linked Savings accounts.
Freakonomics describes how they work:
“In a nutshell, PLS is a kind of savings account that pools some of the interest from all depositors and pays out a big lottery prize every month or so. It combines the thrill of the lottery with the safety of a savings account. It’s sometimes called a “no-lose lottery,” since a depositor is automatically entered into the lottery but can’t lose the original money she deposits.”
Considering most Americans haven’t socked away $2,000 for when disaster strikes, such a financial product is badly needed. Trouble is, the states won’t go for it.
They know Americans suck at saving and are great at blowing cash on the lotto. Freakonomics points out we spent $58 billion on tickets last year (about $200 per person), and that the states withhold about 40 per cent of the prize pool for overhead.