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Who Pays and Who Benefits? Examining the Distributional Consequences of the Georgia Lottery for Education

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  • Rubenstein, Ross
  • Scafidi, Benjamin

Abstract

This paper examines the incidence of the implicit lottery tax and the distribution of benefits from lottery-funded programs in Georgia. Georgia's lottery is unique in that revenues are earmarked for three educational programs--HOPE College Scholarships, universal pre-kindergarten, and education infrastructure. We estimate separate models of household-level lottery purchases and of household benefits from lottery-funded programs. Our estimates suggest that lower income and non–white households tend to have higher purchases of lottery products while receiving lower benefits, as compared to higher income and white households. Benefits of HOPE Scholarships, in particular, accrue disproportionately to higher income and more educated households.

Suggested Citation

  • 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.
  • Handle: RePEc:ntj:journl:v:55:y:2002:i:2:p:223-238
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    References listed on IDEAS

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    1. 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.
    2. Charles T. Clotfelter & Philip J. Cook, 1989. "Selling Hope: State Lotteries in America," NBER Books, National Bureau of Economic Research, Inc, number clot89-1, October.
    3. Stranahan, Harriet & Borg, Mary O., 1998. "Horizontal Equity Implications of the Lottery Tax," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(1), pages 71-82, March.
    4. Clotfelter, Charles T & Cook, Philip J, 1990. "On the Economics of State Lotteries," Journal of Economic Perspectives, American Economic Association, vol. 4(4), pages 105-119, Fall.
    5. Borg, Mary O. & Mason, Paul M., 1988. "The Budgetary Incidence of a Lottery to Support Education," National Tax Journal, National Tax Association, vol. 41(1), pages 75-85, March.
    6. Stranahan, Harriet & Borg, Mary O., 1998. "Horizontal Equity Implications of the Lottery Tax," National Tax Journal, National Tax Association, vol. 51(n. 1), pages 71-82, March.
    7. Charles T. Clotfelter & Philip J. Cook, 1987. "Implicit Taxation in Lottery Finance," NBER Working Papers 2246, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Susan Dynarski, 2004. "The New Merit Aid," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 63-100, National Bureau of Economic Research, Inc.
    2. Dynarski, Susan, 2002. "The Consequences of Merit Aid," Working Paper Series rwp02-051, Harvard University, John F. Kennedy School of Government.
    3. Pantuosco, Louis & Seyfried, William & Stonebraker, Robert, 2007. "The Impact of Lotteries on State Education Expenditures: Does Earmarking Matter?," The Review of Regional Studies, Southern Regional Science Association, vol. 37(2), pages 169-185.
    4. Ghent, Linda S. & Grant, Alan P., 2010. "The Demand for Lottery Products and Their Distributional Consequences," National Tax Journal, National Tax Association;National Tax Journal, vol. 63(2), pages 253-268, June.
    5. repec:ebl:ecbull:v:4:y:2007:i:42:p:1-11 is not listed on IDEAS
    6. 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.
    7. Cho-Min Lin & Kung-Cheng Lin, 2007. "The demand for lottery expenditure in Taiwan: a quantile regression approach," Economics Bulletin, AccessEcon, vol. 4(42), pages 1-11.
    8. Ross Rubenstein, 2003. "Helping Outstanding Pupils Educationally: Public Policy Issues of the Georgia HOPE Scholarship Program and the Lottery for Education," Center for Policy Research Policy Briefs 25, Center for Policy Research, Maxwell School, Syracuse University.
    9. 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.

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