Advanced Search
MyIDEAS: Login to save this paper or follow this series

It Could Be You! But What?s It Worth? The Welfare Gain From Lotto

Contents:

Author Info

  • Lisa Farrell
  • Ian Walker

Abstract

This research is concerned with the demand for lottery tickets and uses data for the UK National Lottery that records the behaviour, incomes and characteristics of almost 10,000 individuals. Some of the data relates to people surveyed during a "double rollover" - the jackpot had been enhanced by adding the jackpots from the previous two weeks which had not been won. This allows us to estimate how the demand for lottery tickets varies with the rate of return since this return is higher in rollover draws. It is noticeable that richer people appear to be more likely to play in rollover weeks and we need to control for income in order to obtain unbiased estimates of the price elasticity. We find that the demand for the UL National Lottery is quite sensitive to changes in the financial rate of return arising from rollovers: a typical rollover increases the rate of return by about 10% and generates an additional 16% in sales. The income effect is negative - a lottery ticket is an example of an "inferior" good where the rich buy less than the poor: an 10% increase in income generates a fall in demand of 1.2%. But, to offset this negative income effect we find that some characteristics associated with high income (e.g. being middle aged) are positively correlated with lottery demand. We use the estimates to compute the welfare gain from the introduction of the lottery. The idea behind this is that participation in the lottery is voluntary, so only those who feel that it is beneficial to buy tickets will buy them. The implication of this is that, although consumers are, on average, ex post financially worse off after buying lottery tickets (since they are an extremely poor investment with a return that is usually approximately -55% per week) they feel better off ex ante when they buy them because of the pleasure associated with doing so. We do not know what these pleasures are but can presume that they exist from the fact that people buy this commodity wi

(This abstract was borrowed from another version of this item.)

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by Department of Economics, Keele University in its series Keele Department of Economics Discussion Papers (1995-2001) with number 96/19.

as in new window
Length:
Date of creation: 1996
Date of revision:
Publication status: Published in Journal of Public Economics, 1999, Vol. 72, pages 99-120.
Handle: RePEc:kee:keeldp:96/19

Contact details of provider:
Postal: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom
Phone: +44 (0)1782 584581
Fax: +44 (0)1782 717577
Email:
Web page: http://www.keele.ac.uk/depts/ec/cer/
More information through EDIRC

Order Information:
Postal: Department of Economics, Keele University, Keele, Staffordshire ST5 5BG - United Kingdom
Email:
Web: http://www.keele.ac.uk/depts/ec/cer/pubs_kerps.htm

Related research

Keywords:

Other versions of this item:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: A Survey of the Literature," Working Papers 1109, College of the Holy Cross, Department of Economics.
  2. Addison, Tony & Chowdhury, Abdur R., 2003. "A Global Lottery and a Global Premium Bond," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:kee:keeldp:96/19. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martin E. Diedrich) The email address of this maintainer does not seem to be valid anymore. Please ask Martin E. Diedrich to update the entry or send us the correct address.

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.