Commonwealth and its partners designed a plan called Save to Win, which offered monthly cash prizes through the Michigan Credit Union League. The plan included a single big prize and a bevy of smaller ones—a jackpot and something more like the experience, Flacke says, of playing scratch tickets: a large number of small prizes, awarded more frequently and paid out quickly. Offering a large number of frequent payouts played to “hyperbolic discounting,” the tendency to value short-term possibilities disproportionately higher than long-term gains. A shot at $25 right now captures attention in a way that the promise of $100 earned through a few points of interest over a period of years does not. Throw in the slimmer possibility of a much bigger immediate payoff, and people really get interested.
Nonprofit Leaders in Financial Technology (nLIFT) is a group of organizations with a shared goal of increasing financial inclusion through technology-driven platforms. To learn more, visit nlift.org.
