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The (Aggregate) Demand For State-Lottery Tickets: What Have We Really Learned?

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  • Thomas A. Garrett

Abstract

type="main" xml:id="coep12155-abs-0001"> Lottery-demand models using aggregate data are often used to make inferences regarding individual behavior, the most important being the distributional burden of lottery-ticket expenditures. It is shown here that estimates for the income elasticity and the cross-price elasticity will only be representative of individual behavior under extremely restrictive assumptions. In fact, estimation of aggregate-demand models presupposes that the income elasticity is equal to one. Cross-sectional analyses using microlevel data face similar restrictions on consumer behavior. Remedies are discussed, but more conclusive evidence on the distributional burden of lotteries will remain elusive until better individual-level data become available. (JEL D11, H71, H22)

Suggested Citation

  • Thomas A. Garrett, 2016. "The (Aggregate) Demand For State-Lottery Tickets: What Have We Really Learned?," Contemporary Economic Policy, Western Economic Association International, vol. 34(3), pages 475-482, July.
    • Handle: RePEc:bla:coecpo:v:34:y:2016:i:3:p:475-482
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    File URL: http://hdl.handle.net/10.1111/coep.2016.34.issue-3
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    Citations

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    Cited by:

    1. Kathryn L. Combs & John A. Spry, 2019. "The Effects Of Lotto Game Changes And Large Jackpots On Income Elasticities And Sales," Contemporary Economic Policy, Western Economic Association International, vol. 37(2), pages 261-273, April.
    2. Forrest, David & Kainulainen, Tuomo & Saastamoinen, Jani & Suhonen, Niko, 2022. "Income elasticity of demand for horse wagering — Large-scale evidence from online betting accounts," Economics Letters, Elsevier, vol. 213(C).
    3. Levi Pérez & à lvaro Muñiz, 2021. "The income elasticity of lottery revisited: a worldwide perspective," Economics and Business Letters, Oviedo University Press, vol. 10(4), pages 403-407.
    4. Will E. Cummings & Douglas M. Walker & Chad D. Cotti, 2017. "The Effect Of Casino Proximity On Lottery Sales: Evidence From Maryland," Contemporary Economic Policy, Western Economic Association International, vol. 35(4), pages 684-699, October.
    5. Celeste K. Carruthers & Kara D. Smith, 2020. "Are “Education Lotteries” Less Regressive? Evidence from Texas," Southern Economic Journal, John Wiley & Sons, vol. 86(3), pages 1019-1040, January.
    6. Luke P. Rodgers, 2020. "Don’t Tax My Dreams: The Lottery Sales Response to Gambling Tax Changes," Public Finance Review, , vol. 48(5), pages 627-649, September.

    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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