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American Economic Journal: Economic Policy: Vol. 2 No. 3 (August 2010)

AEJ: Policy Volume. 2, Issue 3 | Previous ArticleNext Article

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Is Lottery Gambling Addictive?

Article Citation

Guryan, Jonathan, and Melissa S. Kearney. 2010. "Is Lottery Gambling Addictive?." American Economic Journal: Economic Policy, 2(3): 90-110.

DOI: 10.1257/pol.2.3.90

Abstract

We present an empirical test for the addictiveness of lottery gambling that exploits an exogenous shock to local market consumption of lottery gambling. It uses the sale of a winning jackpot ticket in a zip code as an instrument for present consumption and tests for a causal relationship between present and future consumption. This test estimates the time path of persistence nonparametrically. Data from the Texas State Lottery suggests that after 6 months, roughly half of the initial increase in lottery consumption is maintained. After 18 months, roughly 40 percent of the initial shock persists, though estimates become less precise. (JEL D12, H27, H71)

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Authors

Guryan, Jonathan (U Chicago)
Kearney, Melissa S. (U MD)

JEL Classifications

D12: Consumer Economics: Empirical Analysis
H27: Taxation, Subsidies, and Revenues: Other Sources of Revenue
H71: State and Local Taxation, Subsidies, and Revenue

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