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The Impact Of Casino Gambling On Personal Bankruptcy Filing Rates

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

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. 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.
  3. William R. Eadington, 1999. "The Economics of Casino Gambling," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 173-192, Summer.
  4. David B. Gross & Nicholas S. Souleles, 2001. "An Empirical Analysis of Personal Bankruptcy and Delinquency," NBER Working Papers 8409, National Bureau of Economic Research, Inc.
  5. Reint Gropp & John Karl Scholz & Michelle White, 1996. "Personal Bankruptcy and Credit Supply and Demand," NBER Working Papers 5653, National Bureau of Economic Research, Inc.
  6. 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.
  7. 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.
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