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The Effects of Lottery Prizes on Winners and Their Neighbors: Evidence from the Dutch Postcode Lottery

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Author Info

  • Peter Kuhn
  • Peter Kooreman
  • Adriaan Soetevent
  • Arie Kapteyn

Abstract

Each week, the Dutch Postcode Lottery (PCL) randomly selects a postal code, and distributes cash and a new BMW to lottery participants in that code. We study the effects of these shocks on lottery winners and their neighbors. Consistent with the life-cycle hypothesis, the effects on winners' consumption are largely confined to cars and other durables. Consistent with the theory of in-kind transfers, the vast majority of BMW winners liquidate their BMWs. We do, however, detect substantial social effects of lottery winnings: PCL nonparticipants who live next door to winners have significantly higher levels of car consumption than other nonparticipants. JEL: D14, D91, H23, H27

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 101 (2011)
Issue (Month): 5 (August)
Pages: 2226-47

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Handle: RePEc:aea:aecrev:v:101:y:2011:i:5:p:2226-47

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  1. Zeelenberg, M. & Pieters, R., 2004. "Consequences of regret aversion in real life: The case of the Dutch postcode lottery," Open Access publications from Tilburg University urn:nbn:nl:ui:12-126233, Tilburg University.
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  7. Peter J. Kuhn & Peter Kooreman & Adriaan R. Soetevent & Arie Kapteyn, 2008. "The Own and Social Effects of an Unexpected Income Shock: Evidence from the Dutch Postcode Lottery," NBER Working Papers 14035, National Bureau of Economic Research, Inc.
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  16. Peter Kuhn & Peter Kooreman & Adriaan R. Soetevent & Arie Kapteyn, 2008. "The Own and Social Effects of an Unexpected Income Shock," Tinbergen Institute Discussion Papers 08-048/1, Tinbergen Institute, revised 05 May 2010.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Talking the economy down
    by chris dillow in Stumbling and Mumbling on 2010-12-01 18:08:38
  2. The Effects of Lottery Prizes on Winners and their Neighbors
    by Ariel Goldring in Free Market Mojo on 2010-06-22 11:23:28
  3. The macroeconomic challenge
    by chris dillow in Stumbling and Mumbling on 2014-02-19 14:07:50
  4. Incomes & satisfaction
    by chris dillow in Stumbling and Mumbling on 2014-07-06 12:53:41
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