State Lotteries and Consumer Behavior / Melissa Schettini Kearney.

Format:

Book

Author/Creator:

Kearney, Melissa Schettini.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9330.

NBER working paper series no. w9330

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

Despite considerable controversy surrounding the use of state lotteries as a means of public finance, little is known about their consumer consequences. This project investigates two central questions about lotteries. First, do state lotteries primarily crowd out other forms of gambling, or do they crowd out non-gambling consumption? Second, does consumer demand for lottery games respond to expected returns, as maximizing behavior predicts, or do consumers appear to be misinformed about the risks and returns of lottery gambles? Analyses of multiple sources of micro-level gambling data demonstrate that lottery spending does not substitute for other forms of gambling. Household consumption data suggest that household lottery gambling crowds out approximately $38 per month, or two percent, of other household consumption, with larger proportional reductions among low-income households. Demand for lottery products responds positively to the expected value of the gamble, controlling for other moments of the gamble and product characteristics; this suggests that consumers of lottery products are not simply uninformed, but are perhaps making fully-informed purchases.

Notes:

Print version record

November 2002.