In this post I want to try and persuade you that there is a form of lottery the Prize Linked Savings scheme that would be popular and fairly cheap to run for the people in Haiti. In my next post I want to explain why such a scheme would actually be useful
"PLS is a kind of savings account that pools some of the interest from all depositors and pays out a big lottery prize every month or so. It combines the thrill of the lottery with the safety of a savings account. It’s sometimes called a “no-lose lottery,” since a depositor is automatically entered into the lottery but can’t lose the original money she deposits."
Lotteries are incredibly popular in Haiti. Probably due to the crushing poverty there the hope and 'chance to dream' lotteries provide is seen as vitally important
"the lottery system in which an astonishing number of Haitians invest their income and their dreams." "At the time of the last official count, in 2005, the streets of Port-au-Prince were home to nearly 2,000 of them" (borlettes lottery shops) "– more than double the number of schools and universities in the city"."All told, Haitians spend as much as $1.5 billion per year on the borlette – a staggering amount in a country whose gross domestic product last year was $6.9 billion"
"You can bet two balls to come up at once, and if that happens you make a ‘marriage’ and win 500 times your bet. If your married numbers are consecutive, you win 1,000 times your bet. The Haitian dream is a bet of US $1,000 that reaps US $10,000 on a consecutive marriage. Many a hopeful future has been built on less." Borlette lottery in Haiti is remarkably popular which is a good indication that a lottery that also acts as a savings scheme will be popular
The overhead cost of these Haitian lotteries is relatively low as they use the numbers and thus the security mechanisms of outside lotteries. These lotteries tend to use the numbers from other countries lotteries for example the New York State Lottery or the Santo Domingo State Lottery
Another expense is the prize won in the lottery. You want your prize to be equivalent to a million euro. This is an amazing life changing amount in Ireland where the average wage is 35K. So a million is about 30 times average income. For Haiti this would be $730 *30= 21 thousand dollars. A million Haitian gourde is about 25 thousand dollars.
If we had a monthly prize of this much that would cost 12*25k=300 thousand a year in prizes. Say you double that with some smaller prizes. 600 thousand which if you were earning 3% interest means you would have to take in 10,000000 dollars. This is a lot of money but in the context of $1.5 billion spent on lotteries in Haiti it is not that much.
If you could take in ten million dollars you could run a no lose lottery in Haiti and use the interest to pay for the prizes. But why would you want to? I will explain in the next post why PLS would be useful to the people of Haiti