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The Impact of Education Earmarking on State-Level Lottery Sales

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Listed:
  • Stivender Carol O.

    ()

  • Gaggl Paul

    ()

  • Amato Louis H.

    () (Department of Economics, University of North Carolina at Charlotte, 9201 University City Blvd., Charlotte, NC 28223, United States of America)

  • Farrow-Chestnut Tonya E.

    () (Department of Geography, University of North Carolina at Charlotte, 9201 University City Blvd., Charlotte, NC 28223, United States of America)

Abstract

Prior research argues that lottery consumers consider how funds are to be used in making lottery purchase decisions. Possible explanations for this behavior include altruism as well as the desire of low-income families to provide educational opportunities within their community. This paper uses a panel of lottery sales for U.S. states covering the period 1980–2000 to test hypotheses regarding the impact of educational earmarking on lottery purchases. Our estimates suggest that states earmarking all or part of their revenue to education experience an increase in lottery sales between 11 % and 25 %, depending on the specification of state trends. Whether the propensity for earmarking to increase sales is viewed positively or negatively depends largely on one’s ethical and moral views of lotteries.

Suggested Citation

  • Stivender Carol O. & Gaggl Paul & Amato Louis H. & Farrow-Chestnut Tonya E., 2016. "The Impact of Education Earmarking on State-Level Lottery Sales," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1473-1500, September.
  • Handle: RePEc:bpj:bejeap:v:16:y:2016:i:3:p:1473-1500:n:3
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    References listed on IDEAS

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    1. Jeremy Jackson, 2013. "Tax earmarking, party politics and gubernatorial veto: theory and evidence from US states," Public Choice, Springer, vol. 155(1), pages 1-18, April.
    2. Borg, Mary O. & Mason, Paul M., 1988. "The Budgetary Incidence of a Lottery to Support Education," National Tax Journal, National Tax Association;National Tax Journal, vol. 41(1), pages 75-85, March.
    3. Hawley, Zackary B. & Rork, Jonathan C., 2013. "The case of state funded higher education scholarship plans and interstate brain drain," Regional Science and Urban Economics, Elsevier, vol. 43(2), pages 242-249.
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    5. Charles T. Clotfelter & Philip J. Cook, 1989. "Selling Hope: State Lotteries in America," NBER Books, National Bureau of Economic Research, Inc, number clot89-1, December.
    6. Michal Lewandowski, 2014. "Buying and selling price for risky lotteries and expected utility theory with gambling wealth," Journal of Risk and Uncertainty, Springer, vol. 48(3), pages 253-283, June.
    7. Rubenstein, Ross & Scafidi, Benjamin, 2002. "Who Pays and Who Benefits? Examining the Distributional Consequences of the Georgia Lottery for Education," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(2), pages 223-238, June.
    8. Finkelstein, Amy & McKnight, Robin, 2008. "What did Medicare do? The initial impact of Medicare on mortality and out of pocket medical spending," Journal of Public Economics, Elsevier, vol. 92(7), pages 1644-1668, July.
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    1. repec:eee:wdevel:v:105:y:2018:i:c:p:13-24 is not listed on IDEAS

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    Keywords

    lottery; earmarking; education;

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