5 Neat, Odd Innovations That Might Fix the Economy, the Housing Market, the Environment, and Your Household Finances

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Plenty of old ideas clearly haven’t been working. So why not consider some new ones, even if they seem a bit impractical and “out there”?

Here are five suggestions I’ve come across aimed at solving various problems confronting us all:

Enter people into a lottery when they deposit money into savings accounts.
Who gets excited by the idea of opening a savings account with a non-existent rate of return? But what if putting money into such an account gave you a chance to win a cash jackpot? The National Bureau of Economic Research is, in fact, researching this possibility, with the hopes of figuring out new ways to encourage people to save more—poor people especially, who often see the lottery as their most likely means of becoming wealthy. Here’s how the system might work, as described by SmartMoney:

What if a normal savings account, with a low interest rate, gave account holders a regular chance to win a specific (and ideally large) amount of money? The depositors’ chances of winning would be a function of how much money they put into the account — essentially making each deposit like buying a lottery ticket, except that the principal would remain theirs.

Sounds like a lot more fun than earning 0.2%.

Pay homeowners to not default on their underwater homes.
A startup called Loan Value is trying to convince mortgage lenders that the way to keep potential strategic defaulters from walking away from their homes is to give them monetary incentive to continue paying their mortgages. The SF Chronicle explains:

Loan Value doesn’t actually pay cash to homeowners. Instead, on behalf of their mortgage servicer or investor, it dangles a carrot for the future: If they continue making timely payments, a slice of their lost equity will be restored to them once the mortgage is paid off through a refinance or sale. That would have to be years down the road when the home has regained value.

Is this a good deal for the homeowner? Maybe, maybe not. But the risks to homeowners are minimal: Loan Value collects its fees from the original mortgage lender, not the homeowner. Then again, depending on how much value your home has lost, how much interest you’re paying on your mortgage, and how much (or little) you stand to get back in equity through this new arrangement, the best purely financial decision may still be to walk away.

Give away $1,000 for each jobless worker hired.
Frustrated that companies just aren’t hiring workers fast enough in the uncertain post-recession era, a Pennsylvania philanthropist named Gene Epstein decided to do something about it. Per the AP, he set aside $250K, and every time a business hires an unemployed person and keeps him on the payroll for six months, Epstein is donating $1,000 to charity in the name of the business.

“It’s an encouragement to businesses to not wait,” said Epstein, who thinks the incentive may be just enough to get small businesses over the hump to make a hire in tough economic times. “This becomes like an incredible stimulus program.”

OK, for obvious reasons, this isn’t exactly a business plan that’d work everywhere. Also, doing the math, this effort would give a little incentive to get employment for 250 Americans, a small number in the grand scheme of things. But it sure is nice to see somebody who is doing something more than simply talking about fixing the unemployment problem. Perhaps Epstein’s noble cause inspires others to do something similar?

To save the environment, don’t tell people they’re saving the environment.
The NY Times reports that some communities in Kansas successfully decreased energy use without ever discussing things like global warming and climate change. The locals regard climate change with significant skepticism, actually. But there’s one concept people that bought into whole hog, and that motivated them to decrease energy use by adopting wind power, weatherizing homes, and other initiatives:

Elliot Lahn, a community development planner for Merriam, a city that reduced its energy use by 5 percent, said that when public meetings were held on the six-town competition to save energy, some residents offered their view that global warming was a hoax.

But they were very eager to hear about saving money, Mr. Lahn said. “That’s what really motivated them.”

Often, one form of green (dollars) is more important to people than the other one, especially in a tough economy.

When in doubt, use guilt and the power of social norms.
While saving money through environmentally-friendly practices is nice, the movement really hits its stride when the peer-pressure, “everyone else is doing it” factor kicks in, reports the WSJ. When people hear that their neighbors are using less water, forgoing plastic bags when shopping, and using fans instead of air-conditioners, they’re far more likely to follow suit—basically because they don’t want to be the lone oddballs catching disappointed looks from those around them. A psychologist quoted in the story says:

“We can move people to environmentally friendly behavior by simply telling them what those around them are doing.”