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Income and Lottery Sales: Transfers Trump Income from Work and WealthCletus C. CoughlinFederal Reserve Bank of St. Louis - Research Division Thomas A. GarrettFederal Reserve Bank of St. Louis - Research Division May 2008 Abstract: The effect of income on lottery expenditures has generally been studied using an aggregate measure of income, usually personal income. Reasons exist for thinking that lottery expenditures do not respond equally to all sources of income. This paper examines lottery spending and income from three sources, namely income from earnings, wealth, and transfer payments. Using county-level data for five states and controlling for demographic and other characteristics, we find that each source of income has a different effect on lottery ticket expenditures. A noteworthy finding is that purchases are most strongly influenced by changes in transfer payments. Several policy implications follow from our results.
Number of Pages in PDF File: 36 Keywords: State lottery, consumption, propensity to consume, income JEL Classification: H71, H31 working papers seriesDate posted: May 13, 2008Suggested CitationContact Information
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