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A recent Harvard survey found that half of all Americans, if faced with an emergency, couldn't come up with $2,000 in 30 days. We have a famously low savings rate. Most people would rather spend than save -- and one of our favorite expenditures is playing the lottery. Last year, we spent more than $58 billion on lottery tickets, or roughly $200 per person. As entertainment goes, the lottery is pretty cheap - a dollar and a dream, and all that. But as an investment, it offers a dreadful return, which is why the lottery is sometimes called "a tax on stupid people."
This episode of Freakonomics Radio examines a little-known financial tool that might help people save more money while still giving them the thrill of the lottery. It's called a Prize-Linked Savings (PLS) account, and it pools a sliver of the interest from all depositors and pays out cash lottery prizes. It combines the thrill of the lottery with the safety of a savings account - thus, a "no-lose lottery." In places like England and South Africa, millions of people have been coaxed into saving money via a PLS plan, but state and federal officials in the U.S. aren't very interested. Why? Here's a hint: guess who runs (and profits from) the lotteries in our country? Also in this episode, we discuss financial literacy - or, really, financial illiteracy. In general, Americans aren't very good at the basics of saving, investing and retirement planning. So Freakonomics Radio wants to know: How do we improve our grade? We'll hear ideas for putting financial literacy in school curriculums, and from someone who thinks we shouldn't even try to learn it. And if we can't, can the solution be found in a Los Angeles hospital? Guests also include two members of President Obama's economic team and National Book Award-winner Sherwin Nuland.
The Maryland Republican Congressman who moved to block a bill that would decriminalize marijuana in D.C. defended his actions and criticized the move to boycott businesses in his district, which includes popular tourist destination Ocean City.