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Gambling, Saving, and Lumpy Liquidity Needs
- American Economic Journal: Applied Economics (Forthcoming)
I present evidence that unmet liquidity needs for indivisible, “lumpy”, expenditures
increase demand for betting as a second-best method of liquidity generation in
the presence of financial constraints. With a sample of 1,708 sports bettors in Kampala,
Uganda, I show that participants’ targeted payouts are linked to anticipated expenditures
while winnings disproportionately increase lumpy expenditures. I show that a
randomized savings treatment decreases demand for betting. And I use two lab-in-thefield
experiments to show that unmet liquidity needs and saving ability are important
mechanisms. These results cannot be explained by betting as a purely normal good.
Forthcoming Article Downloads