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Are All Lotteries Regressive? Evidence From the Powerball

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  • Oster, Emily

Abstract

The regressivity of lotteries has become an increasingly important issue in the U.S. as the number of state–run lotteries has increased. Despite this, we still know relatively little about the nature of lottery regressivity. I use a new dataset on Powerball lotto sales to analyze how regressivity varies with jackpot size within a single lotto game. I find that this large–stakes game is significantly less regressive at higher jackpot sizes. Out–of–sample extrapolation of this result suggests the possibility of progressivity at jackpots substantially higher than those currently experienced. This may indicate that concerns about regressivity might be allayed by concentrating lotto games to produce higher average jackpots.

Suggested Citation

  • Oster, Emily, 2004. "Are All Lotteries Regressive? Evidence From the Powerball," National Tax Journal, National Tax Association;National Tax Journal, vol. 57(2), pages 179-187, June.
  • Handle: RePEc:ntj:journl:v:57:y:2004:i:2:p:179-87
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    Cited by:

    1. Jonathan Guryan & Melissa S. Kearney, 2010. "Is Lottery Gambling Addictive?," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 90-110, August.
    2. Humphreys, Brad & Perez, Levi, 2011. "Lottery Participants and Revenues: An International Survey of Economic Research on Lotteries," Working Papers 2011-17, University of Alberta, Department of Economics.
    3. Brian Knight & Nathan Schiff, 2012. "Spatial Competition and Cross-Border Shopping: Evidence from State Lotteries," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 199-229, November.
    4. George Bulman & Robert Fairlie & Sarena Goodman & Adam Isen, 2016. "Parental Resources and College Attendance: Evidence from Lottery Wins," Working Papers id:11371, eSocialSciences.
    5. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: A Survey of the Literature," Working Papers 1109, College of the Holy Cross, Department of Economics.
    6. 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.
    7. Taylor, Matthew P., 2016. "Are high-ability individuals really more tolerant of risk? A test of the relationship between risk aversion and cognitive ability," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 63(C), pages 136-147.
    8. Jonathan A. Schwabish, 2005. "Regulating Underground Industry: An Economic Analysis of Sports Betting," New York Economic Review, New York State Economics Association (NYSEA), vol. 36(1), pages 65-77.
    9. 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.
    10. 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.

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