IDEAS home Printed from https://ideas.repec.org/a/eee/soceco/v37y2008i6p2492-2504.html
   My bibliography  Save this article

Something for nothing: A model of gambling behavior

Author

Listed:
  • Nyman, John A.
  • Welte, John W.
  • Dowd, Bryan E.

Abstract

Gambling is an ancient economic activity, but despite its universality and importance, no single explanation for the demand for gambles has gained ascendance among economists. This paper suggests that the demand for gambles is based on the ability to obtain "something for nothing." That is, the gain from gambling is not merely additional income, but additional income for which the gambler does not need to work. Thus, to fully understand gambling behavior, it must be placed in a labor supply context. The theory is tested empirically using the Survey of Gambling in the U.S. Support for the theory is found.

Suggested Citation

  • Nyman, John A. & Welte, John W. & Dowd, Bryan E., 2008. "Something for nothing: A model of gambling behavior," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2492-2504, December.
    • Handle: RePEc:eee:soceco:v:37:y:2008:i:6:p:2492-2504
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/B6W5H-4RYNMG0-1/2/be29f1d09418020d7e4484807de95fc1
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. J. S. Flemming, 1969. "The Utility of Wealth and the Utility of Windfalls," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 36(1), pages 55-66.
    2. Dowell, Richard S & McLaren, Keith R, 1986. "An Intertemporal Analysis of the Interdependence between Risk Preference, Retirement, and Work Rate Decisions," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 667-682, June.
    3. Roger Hartley & Lisa Farrell, 2002. "Can Expected Utility Theory Explain Gambling?," American Economic Review, American Economic Association, vol. 92(3), pages 613-624, June.
    4. Raymond D. Sauer, 1998. "The Economics of Wagering Markets," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2021-2064, December.
    5. Harry Markowitz, 1952. "The Utility of Wealth," Journal of Political Economy, University of Chicago Press, vol. 60, pages 151-151.
    6. Young Chin Kim, 1973. "Choice in the Lottery-Insurance Situation Augmented-Income Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(1), pages 148-156.
    7. Kearney, Melissa Schettini, 2005. "State lotteries and consumer behavior," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2269-2299, December.
    8. Dobbs, Ian M, 1988. "Risk Aversion, Gambling and the Labour-Leisure Choice," Scottish Journal of Political Economy, Scottish Economic Society, vol. 35(2), pages 171-175, May.
    9. Benjamin Eden, 1979. "An Expected Utility Function for the Insurance Buying Gambler," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(4), pages 741-742.
    10. Nils H. Hakansson, 1970. "Friedman-Savage Utility Functions Consistent with Risk Aversion," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 472-487.
    11. Machina, Mark J, 1989. "Dynamic Consistency and Non-expected Utility Models of Choice under Uncertainty," Journal of Economic Literature, American Economic Association, vol. 27(4), pages 1622-1668, December.
    12. Chris Starmer, 2000. "Developments in Non-expected Utility Theory: The Hunt for a Descriptive Theory of Choice under Risk," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 332-382, June.
    13. de la Vina, Lynda & Bernstein, David, 2002. "The impact of gambling on personal bankruptcy rates," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 31(5), pages 503-509.
    14. Ng Yew Kwang, 1965. "Why do People Buy Lottery Tickets? Choices Involving Risk and the Indivisibility of Expenditure," Journal of Political Economy, University of Chicago Press, vol. 73, pages 530-530.
    15. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279-279.
    16. Machina, Mark J, 1987. "Choice under Uncertainty: Problems Solved and Unsolved," Journal of Economic Perspectives, American Economic Association, vol. 1(1), pages 121-154, Summer.
    17. Conlisk, John, 1993. "The Utility of Gambling," Journal of Risk and Uncertainty, Springer, vol. 6(3), pages 255-275, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Brad R. Humphreys & John A. Nyman & Jane E. Ruseski, 2016. "The Effect of Recreational Gambling on Regional Health Outcomes: Evidence from Canadian Provinces," Working Papers 16-28, Department of Economics, West Virginia University.
    2. 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.
    3. Humphreys, Brad & Nyman, John & Ruseski, Jane, 2011. "The Effect of Gambling on Health: Evidence from Canada," Working Papers 2011-18, University of Alberta, Department of Economics.
    4. Martijn J. Burger & Martijn Hendriks & Emma Pleeging & Jan C. Ours, 2020. "The joy of lottery play: evidence from a field experiment," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1235-1256, December.
    5. Brochado, Ana & Santos, Maria & Oliveira, Fernando & Esperança, José, 2018. "Gambling behavior: Instant versus traditional lotteries," Journal of Business Research, Elsevier, vol. 88(C), pages 560-567.
    6. Ida, Takanori, 2010. "Anomaly, impulsivity, and addiction," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(2), pages 194-203, April.
    7. Luke Lunhua Mao & James J Zhang & Daniel P Connaughton, 2015. "Determinants of Demand for Sports Lottery: Insights from a Multilevel Model," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(8), pages 973-987, August.
    8. Brad R. Humphreys & John A. Nyman & Jane E. Ruseski, 2021. "The Effect of Recreational Gambling on Health and Well-Being," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 47(1), pages 29-75, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gong, Xiaodong & Zhu, Rong, 2019. "Cognitive abilities, non-cognitive skills, and gambling behaviors," Journal of Economic Behavior & Organization, Elsevier, vol. 165(C), pages 51-69.
    2. Coelho, Philip R. P. & McClure, James E., 1998. "Social context and the utility of wealth: Addressing the Markowitz challenge," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 305-314, November.
    3. Roger Hartley & Lisa Farrell, 2002. "Can Expected Utility Theory Explain Gambling?," American Economic Review, American Economic Association, vol. 92(3), pages 613-624, June.
    4. Raj Chetty, 2004. "Consumption Commitments, Unemployment Durations, and Local Risk Aversion," NBER Working Papers 10211, National Bureau of Economic Research, Inc.
    5. Machina, Mark J, 1982. ""Expected Utility" Analysis without the Independence Axiom," Econometrica, Econometric Society, vol. 50(2), pages 277-323, March.
    6. Vasquez, Markus, 2017. "Utility of wealth with many indivisibilities," Journal of Mathematical Economics, Elsevier, vol. 71(C), pages 20-27.
    7. Jakusch, Sven Thorsten, 2017. "On the applicability of maximum likelihood methods: From experimental to financial data," SAFE Working Paper Series 148, Leibniz Institute for Financial Research SAFE, revised 2017.
    8. Luke Lunhua Mao & James J Zhang & Daniel P Connaughton, 2015. "Determinants of Demand for Sports Lottery: Insights from a Multilevel Model," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(8), pages 973-987, August.
    9. W. Wong & R. Chan, 2008. "Prospect and Markowitz stochastic dominance," Annals of Finance, Springer, vol. 4(1), pages 105-129, January.
    10. Georgalos, Konstantinos & Paya, Ivan & Peel, David A., 2021. "On the contribution of the Markowitz model of utility to explain risky choice in experimental research," Journal of Economic Behavior & Organization, Elsevier, vol. 182(C), pages 527-543.
    11. Martijn J. Burger & Martijn Hendriks & Emma Pleeging & Jan C. Ours, 2020. "The joy of lottery play: evidence from a field experiment," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1235-1256, December.
    12. Hwang, Joon Ho & Kim, Min-Su, 2015. "Misunderstanding of the binomial distribution, market inefficiency, and learning behavior: Evidence from an exotic sports betting market," European Journal of Operational Research, Elsevier, vol. 243(1), pages 333-344.
    13. Brad R. Humphreys & John A. Nyman & Jane E. Ruseski, 2021. "The Effect of Recreational Gambling on Health and Well-Being," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 47(1), pages 29-75, January.
    14. Fels, Markus, 2021. "Why Do People Buy Insurance? A Modern Answer to an Old Question," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242418, Verein für Socialpolitik / German Economic Association.
    15. Montone, Maurizio, 2023. "Beta, value, and growth: Do dichotomous risk-preferences explain stock returns?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 39(C).
    16. Dorian Jullien, 2016. "Under Uncertainty, Over Time and Regarding Other People: Rationality in 3D," GREDEG Working Papers 2016-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    17. Brad R. Humphreys & John A. Nyman & Jane E. Ruseski, 2016. "The Effect of Recreational Gambling on Regional Health Outcomes: Evidence from Canadian Provinces," Working Papers 16-28, Department of Economics, West Virginia University.
    18. David A. Peel & Davind Law, 2009. "An Explanation of Optimal Each-Way Bets based on Non-Expected Utility Theory," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 3(2), pages 15-35, September.
    19. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.
    20. M Cain & D Law & D Peel, 2005. "Cumulative prospect theory and gambling," Working Papers 566823, Lancaster University Management School, Economics Department.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:soceco:v:37:y:2008:i:6:p:2492-2504. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620175 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.