# Behavioral Finance and Incentives — Lottery to make people save

This post belongs on the marketing blog — so clever.

But psychologists have long known that people tend to overestimate
the odds of rare events. Applying that behavioral insight, finance
professor Peter Tufano of Harvard Business School has devised a clever
program called "Save to Win." Launched earlier this year for members of
eight credit unions in Michigan, it is a cross between a certificate of
deposit and a raffle ticket. Members who put $25 or more into a Save to Win one-year CD are entered into a monthly "savings raffle" for prizes up to$400, plus one annual drawing for a $100,000 jackpot. Only Michigan residents are eligible to participate. This unusual CD is federally guaranteed by the National Credit Union Administration and pays between 1% and 1.5% annual interest, a bit lower than conventional rates. In 25 weeks, the program has attracted about$3.1 million in new deposits, often from people who have never
been able to set money aside.

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