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The Tax Incidence of Three Texas Lottery Games: Regressivity, Race, and Education

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  • Price, Donald I.
  • Novak, E. Shawn

Abstract

Zip code aggregated data were used to measure the regressivity of three Texas lottery games using both Suits Indices of Progressivity and regression analysis. Per capita purchases of the individual games were regressed against variables measuring income, black and Hispanic populations, education levels, gender, age, and the purchases of other lottery products. The results reveal that each of the games is highly regressive and that one, the instant game, should be classified as an inferior good. Furthermore, differences among the games indicate the more regressive games are purchased more than proportionately by black and Hispanic minorities, by people with lower education levels, and by older people. Finally, the results reveal that the various lottery products are complementary goods.

Suggested Citation

  • Price, Donald I. & Novak, E. Shawn, 1999. "The Tax Incidence of Three Texas Lottery Games: Regressivity, Race, and Education," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(4), pages 741-752, December.
    • Handle: RePEc:ntj:journl:v:52:y:1999:i:4:p:741-52
    DOI: 10.1086/NTJ41789427
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    References listed on IDEAS

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    1. Slemrod,Joel, 1997. "Tax Progressivity and Income Inequality," Cambridge Books, Cambridge University Press, number 9780521587761.
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    Cited by:

    1. Kathryn L. Combs & John A. Spry, 2019. "The Effects Of Lotto Game Changes And Large Jackpots On Income Elasticities And Sales," Contemporary Economic Policy, Western Economic Association International, vol. 37(2), pages 261-273, April.
    2. Luca Gandullia & Lucia Leporatti, 2019. "Distributional effects of gambling taxes: empirical evidence from Italy," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(4), pages 565-590, December.
    3. Garrett, Thomas A. & Coughlin, Cletus C., 2009. "Inter–Temporal Differences in the Income Elasticity of Demand for Lottery Tickets," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(1), pages 77-99, March.
    4. Linda S. Ghent & Alan P. Grant, 2007. "Are Voting and Buying Behavior Consistent? Evidence from the South Carolina Education Lottery," Public Finance Review, , vol. 35(6), pages 669-688, November.
    5. Thomas S. Dee, 2004. "Lotteries, Litigation, and Education Finance," Southern Economic Journal, John Wiley & Sons, vol. 70(3), pages 584-599, January.
    6. Madhusmita Bhadra & Doyeon Kim, 2023. "Income elasticity of demand and stock market beta," International Finance, Wiley Blackwell, vol. 26(2), pages 225-240, August.
    7. Dimitri Kohler, 2016. "On the Regressivity of Gambling Taxes in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 152(III), pages 193-208, September.
    8. Maria João Kaizeler & Horácio C. Faustino, 2008. "Demand for Lottery Products: A Cross-Country Analysis," Working Papers Department of Economics 2008/33, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    9. Thomas A. Garrett & Natalia A. Kolesnikova, 2010. "Local price variation and the tax incidence of state lotteries," Working Papers 2010-035, Federal Reserve Bank of St. Louis.
    10. Luke P. Rodgers, 2020. "Don’t Tax My Dreams: The Lottery Sales Response to Gambling Tax Changes," Public Finance Review, , vol. 48(5), pages 627-649, September.
    11. Glenn P. Jenkins & Chun-Yan Kuo, 2004. "The Taxation and Regulation of Casino’s and Games of Chance in the Dominican Republic," Development Discussion Papers 2004-07, JDI Executive Programs.
    12. Thomas A. Garrett, 2011. "A closer look at the tax incidence of instant lottery games: an analysis by price point," Working Papers 2011-010, Federal Reserve Bank of St. Louis.
    13. Andrew Weinbach & Rodney Paul, 2008. "Running the Numbers on Lotteries and the Poor: An Empirical Analysis of Transfer Payment Distribution and Subsequent Lottery Sales," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 36(3), pages 333-344, September.
    14. Horácio Faustino & Maria João Kaiseler & Rafael Marques, 2009. "Why Do People Buy Lottery Products?," Working Papers Department of Economics 2009/01, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    15. Cletus C. Coughlin & Thomas A. Garrett, 2008. "Income and lottery sales: transfers trump income from work and wealth," Working Papers 2008-004, Federal Reserve Bank of St. Louis.
    16. Cletus C. Coughlin & Thomas A. Garrett, 2009. "Income and Lottery Sales," Public Finance Review, , vol. 37(4), pages 447-469, July.
    17. Soo Hong Chew & Haoming Liu & Alberto Salvo, 2021. "Adversity-hope hypothesis: Air pollution raises lottery demand in China," Journal of Risk and Uncertainty, Springer, vol. 62(3), pages 247-280, June.
    18. Celeste K. Carruthers & Kara D. Smith, 2020. "Are “Education Lotteries” Less Regressive? Evidence from Texas," Southern Economic Journal, John Wiley & Sons, vol. 86(3), pages 1019-1040, January.
    19. Jiang, Zhujun & Shao, Shuai, 2014. "Distributional effects of a carbon tax on Chinese households: A case of Shanghai," Energy Policy, Elsevier, vol. 73(C), pages 269-277.
    20. Rose Baker & David Forrest & Levi Perez, 2016. "Modelling regional lottery sales: Methodological issues and a case study from Spain," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 127-142, March.
    21. Richard A. Dunn & Michael A. Trousdale, 2015. "Estimating the Demand for Lottery Gambling," Public Finance Review, , vol. 43(6), pages 691-716, November.
    22. Dimitri Kohler, 2016. "On the Regressivity of Gambling Taxes in Switzerland," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 152(3), pages 193-208, July.

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