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The Impact Of Casino Gambling On Personal Bankruptcy Filing Rates

Author Info

  • John M. Barron
  • Michael E. Staten
  • Stephanie M. Wilshusen

Abstract

Personal bankruptcies soared in the United States between 1994 and 1998. One activity that can precipitate personal financial crises and that has also experienced dramatic growth is commercial gambling, especially casino gambling. This article builds a simple model of bankruptcy choice and empirically tests the model using unique county-level data on debt, income, household age, population density, and casino gambling as well as state measures of employment and marital stability, health insurance coverage, and garnishment restrictions. The authors find that the proximity of casino gambling appears to be associated with higher bankruptcy rates, but that the local impact is far more pronounced than the influence of casino gambling on the national filing rate. To quantify the magnitude of the impact, the analysis predicts over a 5% decline in 1998 filing rates for counties surrounding a casino, and a 1% decline in the nationwide filing rate if one were to eliminate casino gambling. Consequently, although casino gambling exerts important local effects, nationwide the incidence and growth of casino gambling does not explain much of the rise in bankruptcies during the past decade. Copyright 2002 Western Economic Association International.

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Article provided by Western Economic Association International in its journal Contemporary Economic Policy.

Volume (Year): 20 (2002)
Issue (Month): 4 (October)
Pages: 440-455

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Handle: RePEc:bla:coecpo:v:20:y:2002:i:4:p:440-455
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  1. Nichols, Mark W. & Grant Stitt, B. & Giacopassi, David, 2000. "Casino gambling and bankruptcy in new United States casino jurisdictions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 29(3), pages 247-261, May.
  2. Buckley, F H & Brinig, Margaret F, 1998. "The Bankruptcy Puzzle," The Journal of Legal Studies, University of Chicago Press, vol. 27(1), pages 187-207, January.
  3. David B. Gross & Nicholas S. Souleles, 1999. "An Empirical Analysis of Personal Bankruptcy and Delinquency," Center for Financial Institutions Working Papers 98-28, Wharton School Center for Financial Institutions, University of Pennsylvania.
  4. Reint Gropp & John Karl Scholz & Michelle J. White, 1997. "Personal Bankruptcy and Credit Supply and Demand," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 217-251.
  5. Walker, Douglas M. & Jackson, John D., 1998. "New Goods and Economic Growth: Evidence from Legalized Gambling," The Review of Regional Studies, Southern Regional Science Association, vol. 28(2), pages 47-70, Fall.
  6. Jon P. Nelson, 1999. "Consumer Bankruptcy And Chapter Choice: State Panel Evidence," Contemporary Economic Policy, Western Economic Association International, vol. 17(4), pages 552-566, October.
  7. William R. Eadington, 1999. "The Economics of Casino Gambling," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 173-192, Summer.
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Cited by:

  1. Thomas A. Garrett & Mark W. Nichols, 2006. "Do Casinos Export Bankruptcy?," Working Papers 06-003, University of Nevada, Reno, Department of Economics;University of Nevada, Reno , Department of Resource Economics.
  2. Ernie Goss & Edward Morse & John Deskins, 2009. "Have Casinos Contributed to Rising Bankruptcy Rates?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 15(4), pages 456-469, November.
  3. Michelle J. White, 2008. "Bankruptcy: Past Puzzles, Recent Reforms, and the Mortgage Crisis," NBER Working Papers 14549, National Bureau of Economic Research, Inc.
  4. Garrett, Thomas A. & Wall, Howard J., 2014. "Personal-Bankruptcy Cycles," Macroeconomic Dynamics, Cambridge University Press, vol. 18(07), pages 1488-1507, October.
  5. Michelle J. White, 2007. "Bankruptcy Reform and Credit Cards," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 175-200, Fall.
  6. Humphreys, Brad & Marchand, Joseph, 2012. "New Casinos and Local Labor Markets: Evidence from Canada," Working Papers 2012-16, University of Alberta, Department of Economics, revised 01 Nov 2012.
  7. Daniel M. Hungerman, 2011. "Do Religious Proscriptions Matter? Evidence from a Theory-Based Test," NBER Working Papers 17375, National Bureau of Economic Research, Inc.
  8. Thomas A. Garrett, 2007. "The rise in personal bankruptcies: the Eighth Federal Reserve District and beyond," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 15-38.
  9. Michael E. Staten & John M. Barron & Andrew B. Chong, 2004. "The Emergence of Captive Finance Companies and Risk Segmentation of the Consumer Loan Market:Theory and Evidence," Econometric Society 2004 Far Eastern Meetings 584, Econometric Society.
  10. Boardman, Barry & Perry, John J., 2007. "Access to gambling and declaring personal bankruptcy," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(5), pages 789-801, October.
  11. Michelle J. White, 2007. "Bankruptcy Reform and Credit Cards," NBER Working Papers 13265, National Bureau of Economic Research, Inc.
  12. Cotti, Chad D. & Walker, Douglas M., 2010. "The impact of casinos on fatal alcohol-related traffic accidents in the United States," Journal of Health Economics, Elsevier, vol. 29(6), pages 788-796, December.
  13. Mewse, Avril J. & Lea, Stephen E.G. & Wrapson, Wendy, 2010. "First steps out of debt: Attitudes and social identity as predictors of contact by debtors with creditors," Journal of Economic Psychology, Elsevier, vol. 31(6), pages 1021-1034, December.
  14. Adkisson, Richard V. & Saucedo, Eduardo, 2012. "Emulation and state-by-state variations in bankruptcy rates," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(4), pages 400-407.
  15. Benjamin J. Keys, 2010. "The credit market consequences of job displacement," Finance and Economics Discussion Series 2010-24, Board of Governors of the Federal Reserve System (U.S.).
  16. repec:kap:iaecre:v:15:y:2009:i:4:p:456-469 is not listed on IDEAS

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