IDEAS home Printed from https://ideas.repec.org/p/fip/fedpwp/17-34.html
   My bibliography  Save this paper

Spatial Commitment Devices and Addictive Goods: Evidence from the Removal of Slot Machines from Bars

Author

Listed:
  • Hyungsuk Byun
  • Barry Scholnick

Abstract

Commitment device theory suggests that temptations to consume addictive goods could be reduced by the regulatory removal of geographically close environmental cues. We provide new evidence on this hypothesis using a quasi-natural experiment, in which gambling regulators removed slot machines from some, but not all, neighborhood bars. We find that the removal of slot machines reduced personal bankruptcies of close neighbors (within 100 meters) but not neighbors slightly farther away. This is consistent with the removal of neighborhood slots serving as an effective spatial commitment device, which reduced close neighbors? temptation to gamble, thus allowing them to avoid bankruptcy.

Suggested Citation

  • Hyungsuk Byun & Barry Scholnick, 2017. "Spatial Commitment Devices and Addictive Goods: Evidence from the Removal of Slot Machines from Bars," Working Papers 17-34, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:17-34
    as

    Download full text from publisher

    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/working-papers/2017/wp17-34.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Will Dobbie & Jae Song, 2015. "Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection," American Economic Review, American Economic Association, vol. 105(3), pages 1272-1311, March.
    2. B. Douglas Bernheim & Jonathan Meer & Neva K. Novarro, 2016. "Do Consumers Exploit Commitment Opportunities? Evidence from Natural Experiments Involving Liquor Consumption," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 41-69, November.
    3. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    4. Sumit Agarwal & Chunlin Liu & Nicholas S. Souleles, 2007. "The Reaction of Consumer Spending and Debt to Tax Rebates-Evidence from Consumer Credit Data," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 986-1019, December.
    5. Janet Currie & Erdal Tekin, 2015. "Is There a Link between Foreclosure and Health?," American Economic Journal: Economic Policy, American Economic Association, vol. 7(1), pages 63-94, February.
    6. Hinnosaar, Marit, 2016. "Time inconsistency and alcohol sales restrictions," European Economic Review, Elsevier, vol. 87(C), pages 108-131.
    7. Scott Fay & Erik Hurst & Michelle J. White, 2002. "The Household Bankruptcy Decision," American Economic Review, American Economic Association, vol. 92(3), pages 706-718, June.
    8. B. Douglas Bernheim & Antonio Rangel, 2004. "Addiction and Cue-Triggered Decision Processes," American Economic Review, American Economic Association, vol. 94(5), pages 1558-1590, December.
    9. Garrett, Thomas A. & Nichols, Mark W., 2008. "Do casinos export bankruptcy?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1481-1494, August.
    10. Scott Hankins & Mark Hoekstra & Paige Marta Skiba, 2011. "The Ticket to Easy Street? The Financial Consequences of Winning the Lottery," The Review of Economics and Statistics, MIT Press, vol. 93(3), pages 961-969, August.
    11. David Laibson, 2001. "A Cue-Theory of Consumption," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 81-119.
    12. Gross, Tal & Notowidigdo, Matthew J., 2011. "Health insurance and the consumer bankruptcy decision: Evidence from expansions of Medicaid," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 767-778, August.
    13. Janet Currie & Reed Walker, 2011. "Traffic Congestion and Infant Health: Evidence from E-ZPass," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 65-90, January.
    14. Itzhak Ben-David & Marieke Bos, 2021. "Impulsive Consumption and Financial Well-Being: Evidence from an Increase in the Availability of Alcohol [Identification of causal effects using instrumental variables]," The Review of Financial Studies, Society for Financial Studies, vol. 34(5), pages 2608-2647.
    15. John Y. Campbell & Stefano Giglio & Parag Pathak, 2011. "Forced Sales and House Prices," American Economic Review, American Economic Association, vol. 101(5), pages 2108-2131, August.
    16. Sumit Agarwal & Wenlan Qian, 2014. "Consumption and Debt Response to Unanticipated Income Shocks: Evidence from a Natural Experiment in Singapore," American Economic Review, American Economic Association, vol. 104(12), pages 4205-4230, December.
    17. Martin Young & Francis Markham & Bruce Doran, 2012. "Too close to home? The relationships between residential distance to venue and gambling outcomes," International Gambling Studies, Taylor & Francis Journals, vol. 12(2), pages 257-273, February.
    18. John Storer & Max Abbott & Judith Stubbs, 2009. "Access or adaptation? A meta-analysis of surveys of problem gambling prevalence in Australia and New Zealand with respect to concentration of electronic gaming machines," International Gambling Studies, Taylor & Francis Journals, vol. 9(3), pages 225-244, December.
    19. Wenli Li & Michelle J. White & Ning Zhu, 2011. "Did Bankruptcy Reform Cause Mortgage Defaults to Rise?," American Economic Journal: Economic Policy, American Economic Association, vol. 3(4), pages 123-147, November.
    20. Richard Thalheimer & Mukhtar M. Ali, 2004. "The Relationship of Pari‐mutuel Wagering and Casino Gaming to Personal Bankruptcy," Contemporary Economic Policy, Western Economic Association International, vol. 22(3), pages 420-432, July.
    21. David B. Gross, 2002. "An Empirical Analysis of Personal Bankruptcy and Delinquency," The Review of Financial Studies, Society for Financial Studies, vol. 15(1), pages 319-347, March.
    22. Kent R. Grote & Victor A. Matheson, 2014. "The Impact of State Lotteries and Casinos on State Bankruptcy Filings," Growth and Change, Wiley Blackwell, vol. 45(1), pages 121-135, March.
    23. Tal Gross & Matthew J. Notowidigdo & Jialan Wang, 2014. "Liquidity Constraints and Consumer Bankruptcy: Evidence from Tax Rebates," The Review of Economics and Statistics, MIT Press, vol. 96(3), pages 431-443, July.
    24. Janet Currie & Stefano DellaVigna & Enrico Moretti & Vikram Pathania, 2010. "The Effect of Fast Food Restaurants on Obesity and Weight Gain," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 32-63, August.
    25. Michelle J. White, 2007. "Bankruptcy Reform and Credit Cards," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 175-200, Fall.
    26. Pope, Devin G. & Pope, Jaren C., 2015. "When Walmart comes to town: Always low housing prices? Always?," Journal of Urban Economics, Elsevier, vol. 87(C), pages 1-13.
    27. Charles Livingstone & Richard Woolley, 2007. "Risky Business: A Few Provocations on the Regulation of Electronic Gaming Machines," International Gambling Studies, Taylor & Francis Journals, vol. 7(3), pages 361-376, December.
    28. Michelle J. White, 2011. "Corporate and Personal Bankruptcy Law," NBER Working Papers 17237, National Bureau of Economic Research, Inc.
    29. Justin Gallagher, 2014. "Learning about an Infrequent Event: Evidence from Flood Insurance Take-Up in the United States," American Economic Journal: Applied Economics, American Economic Association, vol. 6(3), pages 206-233, July.
    30. Alex Blaszczynski, 2013. "A Critical Examination Of The Link Between Gaming Machines And Gambling-Related Harm," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 7(3), pages 55-76.
    31. Vyacheslav Mikhed & Barry Scholnick, 2016. "The Causes of Household Bankruptcy: The Interaction of Income Shocks and Balance Sheets," Working Papers 16-19, Federal Reserve Bank of Philadelphia.
    32. Leigh Linden & Jonah E. Rockoff, 2008. "Estimates of the Impact of Crime Risk on Property Values from Megan's Laws," American Economic Review, American Economic Association, vol. 98(3), pages 1103-1127, June.
    33. Michelle J. White, 2007. "Bankruptcy Reform and Credit Cards," NBER Working Papers 13265, National Bureau of Economic Research, Inc.
    34. Jan McMillen & Bruce Doran, 2006. "Problem Gambling and Gaming Machine Density: Socio-spatial Analysis of Three Victorian Localities," International Gambling Studies, Taylor & Francis Journals, vol. 6(1), pages 5-29, 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. Samia Badji & Nicole Black & David W. Johnston, 2021. "Consequences of Greater Gambling Accessibility," Papers 2021-06, Centre for Health Economics, Monash University.

    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. Barry Scholnick & Hyungsuk Byun, 2016. "Do Slot Machines Cause Bankruptcy? A Regulatory Natural Experiment with Exogenous Changes to Slot Locations," ERSA conference papers ersa16p607, European Regional Science Association.
    2. Vyacheslav Mikhed & Barry Scholnick, 2016. "The Causes of Household Bankruptcy: The Interaction of Income Shocks and Balance Sheets," Working Papers 16-19, Federal Reserve Bank of Philadelphia.
    3. Vyacheslav Mikhed & Barry Scholnick, 2015. "Who is screened out of social insurance programs by entry barriers? Evidence from consumer bankruptcies," Working Papers 15-40, Federal Reserve Bank of Philadelphia.
    4. Sumit Agarwal & Vyacheslav Mikhed & Barry Scholnick, 2016. "Does inequality cause financial distress? Evidence from lottery winners and neighboring bankruptcies," Working Papers 16-4, Federal Reserve Bank of Philadelphia.
    5. Vyacheslav Mikhed & Barry Scholnick, 2014. "Financial benefits, travel costs, and bankruptcy," Working Papers 14-18, Federal Reserve Bank of Philadelphia.
    6. Danisewicz, Piotr & Elard, Ilaf, 2023. "The real effects of financial technology: Marketplace lending and personal bankruptcy," Journal of Banking & Finance, Elsevier, vol. 155(C).
    7. Gan, Li & Hernandez, Manuel A. & Zhang, Shuoxun, 2021. "Insurance or deliberate use of the bankruptcy law for financial gain? Testing for heterogeneous filing behaviors in the United States," Economic Modelling, Elsevier, vol. 105(C).
    8. Jonathan Bauchet & David Evans, 2019. "Personal Bankruptcy Determinants Among U.S. Households During the Peak of the Great Recession," Journal of Family and Economic Issues, Springer, vol. 40(4), pages 577-591, December.
    9. Igor Livshits, 2015. "Recent Developments In Consumer Credit And Default Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 594-613, September.
    10. Garrett, Thomas A. & Wall, Howard J., 2014. "Personal-Bankruptcy Cycles," Macroeconomic Dynamics, Cambridge University Press, vol. 18(7), pages 1488-1507, October.
    11. Eduardo Dávila, 2020. "Using Elasticities to Derive Optimal Bankruptcy Exemptions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(2), pages 870-913.
    12. Adkisson, Richard V. & Saucedo, Eduardo, 2012. "Emulation and state-by-state variations in bankruptcy rates," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(4), pages 400-407.
    13. Brian Jonghwan Lee, 2024. "Bankruptcy Lawyers and Credit Recovery," Working Papers 24-10, Federal Reserve Bank of Philadelphia.
    14. Will Dobbie & Paul Goldsmith‐Pinkham & Neale Mahoney & Jae Song, 2020. "Bad Credit, No Problem? Credit and Labor Market Consequences of Bad Credit Reports," Journal of Finance, American Finance Association, vol. 75(5), pages 2377-2419, October.
    15. Florian Exler & Michéle Tertilt, 2020. "Consumer Debt and default: A Macro Perspective," CRC TR 224 Discussion Paper Series crctr224_2020_153v2, University of Bonn and University of Mannheim, Germany.
    16. Claus Thustrup Kreiner & Søren Leth-Petersen & Louise Charlotte Willerslev-Olsen, 2020. "Financial Trouble Across Generations: Evidence from the Universe of Personal Loans in Denmark," The Economic Journal, Royal Economic Society, vol. 130(625), pages 233-262.
    17. Charles Grant, 2021. "The Evolution of Arrears among US Households 1995–2013," JRFM, MDPI, vol. 14(2), pages 1-40, January.
    18. Michelle White & Wenli Li, 2011. "Residential Mortgage Default and Consumer Bankruptcy: Theory and Empirical Evidence," 2011 Meeting Papers 1038, Society for Economic Dynamics.
    19. Badji, Samia & Black, Nicole & Johnston, David W., 2023. "Economic, Health and Behavioural Consequences of Greater Gambling Availability," Economic Modelling, Elsevier, vol. 123(C).
    20. Makoto Nakajima, 2013. "A tale of two commitments: equilibrium default and temptation," Working Papers 14-1, Federal Reserve Bank of Philadelphia.

    More about this item

    Keywords

    spatial commitment devices; addiction; regulation;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • K35 - Law and Economics - - Other Substantive Areas of Law - - - Personal Bankruptcy Law
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

    Statistics

    Access and download statistics

    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:fip:fedpwp:17-34. 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: Beth Paul (email available below). General contact details of provider: https://edirc.repec.org/data/frbphus.html .

    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.