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Buying a Dream: Alternative Models of Demand for Lotto

Author

Listed:
  • David Forrest

    (Centre for the Study of Gambling and Commercial Gaming, University of Salford, Salford, M5 4WT, UK.)

  • Robert Simmons

    (Centre for the Study of Gambling and Commercial Gaming, University of Salford, M5 4WT, UK.)

  • Neil Chesters

    (Dresdner Kleinwort Wasserstein, Riverbank House, 2 Swan Lane, London EC4R 3UX, UK.)

Abstract

Existing lotto demand models utilize effective price, computed as the face value of a ticket minus the expected value of prize money per ticket, as their primary explanatory variable. By contrast, this article proposes a key role for consumption benefit or "fun" in the demand for gambling in general and lotto demand in particular. It develops an alternative model of lotto demand that focuses on the maximum possible prize. When this is tested against the traditional model using data from the U.K. National Lottery, we find that jackpot considerations exert an influence over and above that of variations in effective price. Copyright 2002, Oxford University Press.

Suggested Citation

  • David Forrest & Robert Simmons & Neil Chesters, 2002. "Buying a Dream: Alternative Models of Demand for Lotto," Economic Inquiry, Western Economic Association International, vol. 40(3), pages 485-496, July.
    • Handle: RePEc:oup:ecinqu:v:40:y:2002:i:3:p:485-496
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    Citations

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    Cited by:

    1. Humphreys, Brad R. & Paul, Rodney J. & Weinbach, Andrew P., 2013. "Consumption benefits and gambling: Evidence from the NCAA basketball betting market," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 376-386.
    2. van Winden, Frans & Krawczyk, Michal & Hopfensitz, Astrid, 2011. "Investment, resolution of risk, and the role of affect," Journal of Economic Psychology, Elsevier, vol. 32(6), pages 918-939.
    3. Matheson, Victor A. & Grote, Kent R., 2004. "Lotto fever: do lottery players act rationally around large jackpots?," Economics Letters, Elsevier, vol. 83(2), pages 233-237, May.
    4. Hofer, Vera & Leitner, Johannes, 2011. "Should European gamblers play lotto in the USA?," European Journal of Operational Research, Elsevier, vol. 215(1), pages 181-187, November.
    5. Mao, Luke Lunhua & Zhang, James J. & Connaughton, Daniel P., 2015. "Sports gambling as consumption: Evidence from demand for sports lottery," Sport Management Review, Elsevier, vol. 18(3), pages 436-447.
    6. Kocher, Martin G. & Krawczyk, Michal & van Winden, Frans, 2014. "‘Let me dream on!’ Anticipatory emotions and preference for timing in lotteries," Journal of Economic Behavior & Organization, Elsevier, vol. 98(C), pages 29-40.
    7. Peel, D.A., 2010. "On lottery sales, jackpot sizes and irrationality: A cautionary note," Economics Letters, Elsevier, vol. 109(3), pages 161-163, December.
    8. Per Binde, 2005. "Gambling Across Cultures: Mapping Worldwide Occurrence and Learning from Ethnographic Comparison," International Gambling Studies, Taylor & Francis Journals, vol. 5(1), pages 1-27, June.
    9. De Paola, Maria & Scoppa, Vincenzo, 2014. "Media exposure and individual choices: Evidence from lottery players," Economic Modelling, Elsevier, vol. 38(C), pages 385-391.
    10. Chen, Zhuo, 2022. "Preference for hope: A behavioral definition," Economics Letters, Elsevier, vol. 221(C).
    11. Grove, Wayne A. & Jetter, Michael & Papps, Kerry L., 2021. "Career lotto? Labor supply in a superstar market," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 362-376.

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