Skip to main content


Can Gambling Increase Savings? Empirical Evidence on Prize-linked Savings Accounts
Shawn Cole, Harvard University and NBER
Benjamin Iverson, Brigham Young University
Peter Tufano, University of Oxford

This paper studies the adoption and impact of prize-linked savings (PLS) accounts, which offer random, lottery-like payouts to individual account holders in lieu of interest. Using micro-level data from a bank offering these products in South Africa, Cole, Iverson, and Tufano show that a PLS product was attractive to a broad group of individuals, across all age, race, and income levels. Financially-constrained individuals and those with no other deposit accounts were particularly likely to open a PLS account. Participants in the PLS program increased their total savings on average by 1% of annual income, a 38% increase from the mean level of savings. Deposits in PLS did not appear to cannibalize same-bank savings in standard savings products. Instead, PLS appears to serve as a substitute for lottery gambling. Exploiting the random assignment of prizes, the researchers also present evidence that prize winners increase their investment in PLS, sometimes by more than the amount of the prize won, and that large prizes generate a local "buzz" which lead to an 11.6% increase in demand for PLS at a winning branch.

The Impact of High School Financial Education: Evidence from a Large-Scale Evaulation in Brazil
Bilal Zia, The World Bank
Miriam Bruhn, The World Bank

Bruhn, de Souza Leão, Legovini, Marchetti, and Zia study the impact of a comprehensive high school financial education program spanning 6 states, 868 schools, and approximately 20,000 students in Brazil through a randomized control trial. The program increased student scores on an independently administered financial proficiency test by a quarter of a standard deviation over the control group and shifted the entire score distribution to the right. Administrative data on academic performance shows significant reduction in grade-level failing rates as well. Self-reported behaviors were measured through multiple elicitation and recall methods and show statistically significant improvements in saving up for purchases rather than buying on installments, better likelihood of financial planning, and greater participation in household financial decisions by students. "Trickle up" impacts on parents were also significant, with improvements in parent financial knowledge, savings, and spending behavior.

Positive Externalities of Social Insurance: Unemployment Insurance and Consumer Credit
Joanne Hsu, Federal Reserve Board
David A. Matsa, Northwestern University and NBER
Brian T. Melzer, Dartmouth College

This paper studies the impact of unemployment insurance (UI) on consumer credit markets. Exploiting heterogeneity in UI generosity across U.S. states and over time, Hsu, Matsa, and Melzer find that UI helps the unemployed avoid defaulting on their mortgage debt. The researchers estimate that UI expansions during the Great Recession prevented about 1.4 million foreclosures. Lenders respond to this decline in default risk by expanding credit access and reducing interest rates for low-income households at risk of being laid off. The authors' findings call attention to two benefits of unemployment insurance not previously highlighted: reducing deadweight losses from loan default and expanding access to credit.

Mortgage Rates, Household Balance Sheets, and Real Economy
Benjamin J. Keys, University of Pennsylvania and NBER
Tomasz Piskorski, Columbia University and NBER
Amit Seru, Stanford University and NBER
Vincent Yao, Georgia State University

This paper investigates the impact of lower mortgage rates on household balance sheets and other economic outcomes during the housing crisis. Keys, Piskorski, Seru, and Yao use proprietary loan-level panel data matched to consumer credit records using borrowers' Social Security numbers, which allows for accurate measurement of the effects. The researchers’ main focus is on borrowers with agency loans, which constitute the vast majority of U.S. mortgage borrowers. Relying on variation in the timing of resets of adjustable rate mortgages, they find that a sizable decline in mortgage payments ($150 per month on average) induces a significant drop in mortgage defaults, an increase in new financing of durable consumption (auto purchases) of more than 10% in relative terms, and an overall improvement in household credit standing. New financing of durable consumption by borrowers with lower housing wealth responds more to mortgage payment reduction relative to wealthier households. Credit-constrained households initially use more than 70% of the extra liquidity generated by mortgage rate reductions to repay credit card debt – a deleveraging response that can significantly restrict the ability of monetary policy to stimulate these households' consumption. These findings also qualitatively hold in a sample of less-prevalent borrowers with private non-agency loans. The authors then use regional variation in mortgage contract types to explore the impact of lower mortgage rates on broader economic outcomes. Regions more exposed to mortgage rate declines saw a relatively faster recovery in house prices, increased durable (auto) consumption, and increased employment growth, with responses concentrated in the non-tradable sector. Their findings have implications for the pass-through of monetary policy to the real economy through mortgage contracts and household balance sheets.

Student Loans, College Choice and Information on the Returns to Higher Education
Justine S. Hastings, Brown University and NBER
Christopher Neilson, Princeton University and NBER
Seth D. Zimmerman, Yale University and NBER

Hastings, Neilson, and Zimmerman present the results of a randomized intervention in which they provided college applicants in Chile with information about institution- and field of study-specific earnings and debt outcomes. The researchers assemble this information by linking administrative records of high school, college, and standardized testing records for the population of high school graduates in Chile between 2000 and 2013 to administrative tax records. The authors accompany their information intervention with surveys measuring baseline earnings and cost expectations as well as preferences over degree programs. They find that students have unbiased but highly variable beliefs about tuition costs, and upward-biased beliefs about earnings outcomes for past graduates of their first-choice degree programs. Poorer students have less accurate information on earnings and costs, and choose degrees with lower predicted returns from the options available to them. The informational intervention does not affect whether students enroll in higher education, but does cause low-SES students to enroll in degrees with modestly higher predicted returns. Consistent with the predictions of a model of choice under imperfect information, these effects are driven by less-informed students and students with less intense degree-specific preferences. Effects of the intervention are close to zero for students receiving state-backed loans, raising concerns about the efficacy information-based policies as strategies for lowering student loan default rates and encouraging sound financial education decisions.

Insolvency After the 2005 Bankruptcy Reform
Stefania Albanesi, University of Pittsburgh and NBER
Jaromir Nosal, Boston College

Using a comprehensive panel dataset on U.S. households, Albanesi and Nosal study the effects of the 2005 bankruptcy reform on bankruptcy, insolvency and foreclosure. The researchers find that the reform coincided with a 11% permanent drop in the bankruptcy rate relative to pre-reform level, and that this drop can be explained by liquidity constraints stemming from the rise in filing costs associated with the reform. The authors find that the non-filing individuals are shifting into persistent insolvency and foreclosure. They also show that insolvency is associated with worse financial outcomes than bankruptcy, as individuals in this state accumulate collections, judgements, do not have access to new lines of credit, and their credit score bottoms out.


This paper was distributed as Working Paper 24934, where an updated version may be available.


Shaista Ahmed, Consumer Financial Protection Bureau
Alexei Alexandrov, Unaffiliated for research purposes (employed by Amazon)
Keith Anderson, Federal Trade Commission
Ling Ling Ang, Edgeworth Economics
Jodie Bernstein, Kelley Drye & Warren LLP
Lionel Bernstein
Ron Borzekowski, Amazon
Elaine Buckberg, General Motors
Erin Currier, The Pew Charitable Trusts
Jane Dokko, Federal Reserve Bank of Chicago
Erik Durbin, Consumer Financial Protection Bureau
Jeanne Hogarth, Center for Financial Services Innovation
Felicia Ionescu, Federal Reserve Board
Howell Jackson, Harvard University
Clinton C. Key, The Pew Charitable Trusts
Shiva Koohi, Federal Trade Commission
Jesse Leary, Consumer Financial Protection Bureau
Jason M. Levine, Congressional Budget Office
Joanna Lievestro, The Pew Charitable Trusts
Damien Moore, Congressional Budget Office
Lori L. Parcel, Consumer Financial Protection Bureau
Travis Plunkett, The Pew Charitable Trusts
Paul Rothstein, Consumer Financial Protection Bureau
David Silberman, Consumer Financial Protection Bureau
Joanna Smith-Ramani, Doorways to Dreams (D2D) Fund
Andrew Stivers, Federal Trade Commissions
Marie Vazquez-Lopez, Department of the Treasury
Bilal Zia, The World Bank

More from NBER

In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, and the Bulletin on Health — as well as online conference reports, video lectures, and interviews.

  • Lecture
Alan J. Auerbach, the Robert D. Birch Professor of Economics and Law at the University of California, Berkeley, and...
  • Article
Long-time NBER research associates Joshua Angrist, David Card, and Guido Imbens have been awarded the 2021 Nobel Prize in Economic Sciences in recognition of...
  • Lecture
The credible estimation of causal effects is a central task of applied econometrics. Two tools for this purpose that...