How do you entice low-income families to save? One of the great innovations at Bank Rakyat Indonesia (BRI) was to give people a chance to win prizes if they held savings in the bank's SIMPEDES account. Getting lottery coupons proved far more popular than getting interest. The idea flew in the face of the traditional view that families are always risk averse. The SIMPEDES success helped show that families could be averse to the risk of big losses—but simultaneously risk-loving over small bets. BRI implemented the idea in 1984, and it's now morphed into a tenet of behavioral economics.
The Economist reports that this same insight—that lotteries appeal when the stakes are small—is now being applied to deal with bus congestion in Singapore (based on a successful program by Infosys in Bangalore).
(Hat tip to Tyler Cowan.)
Editor’s Note: I’m going to assume that you are seeing plenty of AI content (news and papers, not AI slop, though I’m sure you’re getting plenty of that too) from other sources, so I’m trying to think hard about the marginal value that the faiV can provide. As far as I’ve gotten so far: a) make sure that directly AI-related content does not take up more than 2 of the 5 items, and b) try to focus specifically on the cybersecurity issue for financial inclusion. Beyond that, I’m open to feedback on the value you get from the faiV in relation to AI to help guide us in the future. On a different note, I’ll be making a brief cameo appearance at the e-MFP Inclusive Finance Conference to moderate the opening plenary. If you haven’t registered, do so and I hope to see you there! - Tim Ogden