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Is lottery gambling addictive?

Author: Jonathan Guryan; Melissa Schettini Kearney; National Bureau of Economic Research.
Publisher: Cambridge, MA : National Bureau of Economic Research, ©2009.
Series: Working paper series (National Bureau of Economic Research), working paper no. 14742.
Edition/Format:   Print book : Document   Computer File : EnglishView all editions and formats
Summary:
We present an empirical test for the addictiveness of lottery gambling. To distinguish state dependence from serial correlation, we exploit an exogenous shock to local market consumption of lottery gambling. We use the sale of a winning ticket in the zip code, the location of which is random conditional on sales, as an instrument for present consumption and test for a causal relationship between present and future  Read more...
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Details

Material Type: Document, Internet resource
Document Type: Book, Computer File, Internet Resource
All Authors / Contributors: Jonathan Guryan; Melissa Schettini Kearney; National Bureau of Economic Research.
OCLC Number: 319070480
Notes: "February 2009."
Description: 41 pages.
Series Title: Working paper series (National Bureau of Economic Research), working paper no. 14742.
Responsibility: Jonathan Guryan, Melissa Schettini Kearney.

Abstract:

We present an empirical test for the addictiveness of lottery gambling. To distinguish state dependence from serial correlation, we exploit an exogenous shock to local market consumption of lottery gambling. We use the sale of a winning ticket in the zip code, the location of which is random conditional on sales, as an instrument for present consumption and test for a causal relationship between present and future consumption. This test of addiction is based on the definition of addiction commonly used in the economics literature. It has two key advantages over previous tests for addiction. First, our test is unique in being based on an observed increase in consumption coming from a randomly assigned shock. Second, our approach estimates the time path of persistence non-parametrically. Our 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. These estimates provide an upper bound on the degree of addictiveness in lottery gambling. They also highlight the potential effectiveness of innovations and advertising campaigns designed to increase lottery gambling.

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