Another No-Lose Lottery

Last week, Michigan’s Save-to-Win program, the sort of “no-lose lottery” we discussed in a twopart podcast, announced its second winner. Charmain Hanners of Alpena Alcona Area Credit Union is this year’s lucky winner of $100,000. The “no-lose lottery,” a savings program with a lottery element, was brought to the U.S. by Harvard Business School professor Peter Tufano, who will soon become the new dean at the Saïd Business School, University of Oxford. The Save to Win program racked up $28 million of savings as of the end of 2010 (research can be found on Tufano’s non-profit’s website). And now there’s one more “no-lose lottery” in America: if you live in Alabama, the Save Now Win Later program offers up a $20,000 savings bond prize for putting money into the bank.


Great to see Huntsville AL is promoting savings as well!


We've had these in the UK since 1956. They are called premium bonds.

And it isn't true to say they are 'no lose'. Whilst the capital is not at stake in nominal terms it is in real terms because you may 'lose' interest you could have earnt elsewhere.

Ian Kemmish

What happens after the prize drawing? If you believe that bribery is the only way to make people save and the bribe later goes away, then surely you have to believe that those people will withdraw all their savings and binge on something?

Heavens, they might even decide that not winning the grand prize is the kind of loss that humans are "averse" to and refuse to participate in any future programs designed to encourage savings.

Rich pickings for the Law of Unintended Consequences....

Nick Coghlan

@Rob: anyone financially savvy enough to be worried about opportunity cost isn't going to be considering a PLS as an alternative to buying a lottery ticket.

@Ian: they wait for the next prize drawing, just like they do when they buy their next lottery ticket. A PLS pools some of the interest from all of the saving accounts involved and awards it as prizes rather than giving it to the individual accounts. The "small chance of a big win" serves as a better incentive for some people than the "near certainty of a small win" offered by a regular savings account.

There's a good explanation in the article linked from the "part" in "two-part".

Michael Radosevich

I'm old enough to remember when lotteries were illegal throughout the US. And lotteries should be made illegal again - gambling is stupid behavior, and sometimes government has to protect people against stupid behavior.

We have laws requiring safety belts and bike helmets. We have laws preventing people from selling their organs. We need to reinstate the laws that made all gambling illegal, and extend the laws' reach to Nevada.

If people want to gamble, let them gamble with these savings lotteries. These are, in fact, "no loss" lotteries, and no other sort of lottery or gambling should be legal.


2 questions? Did it bring in unbanked cash and or did net savings actually increase for the participants?


This may encourage savings, but it also encourages gullibility and stupidity. Instead of "no lose", a more honest name would be "almost certain to lose", the loss, of course, coming in the form of reduced interest. Combining a lottery with a savings account is mere financial obfuscation.

But maybe the stupidest people of all are the Harvard Business School academics who waste their time dreaming up ways to get people to do what they don't want to do. I'm guessing that they do this because they think they know what's good for others.


I say that the majority of Americans that are actually qualified for this "lottery" would not be interested in putting away $50 per entry away in a bond.
1. The return on this is fairly low.
2. Families with children making <$50,000/year collectivly seem to (don't want to be presumptuous) not be thinking of investing. While investing and saving are very valuable, very few people understand that money needs time and time and money many do not have. MORE MONEY MAKES MONEY. America seeks out instant gratification, lottery tickets from the local corner store becomes more appealing than a government lottery with very little gain short term.

Sarah Louise Smith

Update from Alabama's SaveNow WinLater Contest (from the Executive Director of Impact Alabama):

I would like to clarify one point in this post: the link to SaveNow WinLater in this post is not entirely accurate; we are giving away $20,000 cash at the end of tax season, not a $20,000 savings bond.

In January 2011, Impact Alabama, in collaboration with the Center for Ethics & Social Responsibility at The University of Alabama, introduced its newest initiative, SaveNow WinLater, offering families in Alabama a simple but compelling proposition: for every $50 they invest in a federal savings bond, they will earn a chance to win a $20,000 cash grand prize at the end of tax season as well as two smaller monthly prizes awarded in February and March. Families making less than $50,000/year with one or more children in the home or $25,000/year without children are eligible to participate.

During the first four weeks of the initiative, with very little publicity, SaveNow WinLater encouraged low-income families to invest in 600 federal savings bonds, resulting in savings of more than $30,000.

We just awarded one of two smaller prizes to Ms. Johnita Harrell, a mother of two and receptionist for Catholic Family Services. Ms. Harrell invested in four fifty-dollar bonds, saving $100 for each of her two children. She stated that she planned to continue putting money away in savings bonds to give to her grandchildren when they are ready to begin college.

Please visit for more details about SaveNow WinLater.

-Sarah Louise Smith, Executive Director, Impact Alabama



@ Sarah
Cash prize is great. However, aren't we trying to get people to save? It almost seems as though a $200,000 bond would be a good way to help start that lottery winner towards opening some sort of savings- at an interest rate of around 6% pulling in about $120 per year with a minimum of 10 years($1200) to a savings bond of $50 with a return of a whopping $3 anually...
A cash prize will give the incentive but the overall long term benefits are not too promising. The winner of the prize hopfully will perhaps put some of it towards savings, stocks or some sort of money market keeping in mind that ATER the governement takes out their cut leaving the winner bleeding through their earning on previous loans or debt.


It's nice to see that lotteries are given as incentives now, but it is totally unfair to those who don't win. I think this is a HUGE waste of money though because those who win can be less deserving than other kids. If only this could happen to everybody, we would have a lot of more people going to college, but a whole lot more debt.


is there a way for people who live in other states to take advantage of a program like the one mentioned in Michigan or now the one I see mentioned in Alabama?