Could gambling be the secret to saving when rates are so low?

Many interest rates in the U.S. are close to zero and even negative in some parts of the world, like Japan.

Not unexpectedly, U.S. savings rates are also quite low as individuals ask themselves: “Why save a lot of money at a bank if I get no return?”

This situation has many commentators wringing their hands because low savings rates are a problem for many reasons.

Individuals who don’t save face spending their golden years of retirement in poverty, instead of plenty. In addition, people with no savings face financial problems and potential ruin when unexpected large expenses occur and cannot help out their children with large bills like college or a down payment on a first home.

In the absence of a rapid increase in interest rates, which appears unlikely, is there anything we can do to change this problem and get people to save more?

As odd as it may sound, gambling could be part of the answer. Continue reading

Why is corruption so costly?

The news is currently filled with stories of corruption.  A global group of media outlets just broke the story of secret offshore bank accounts in Panama, which suggests widespread corruption in the Russian government and elsewhere. For months, stories of the Brazilian government’s bribery scandal have filled the news. Other headline-grabbing events include Malaysia’s prime minister allegedly siphoning almost a billion dollars from a state development fund. Continue reading