Lotteries, Liberty, and Legislatures

Abstract:     
The central purpose of this paper is to show that lottery play is not economically irrational and uninformed. The paper presents a theory of lottery tickets not as misguided inputs into wealth production as some critics believe but as valuable inputs in creating a sense of open-ended possibility, specifically the possibility of escaping one's current life by acquiring great wealth. In the course of the discussion the claim that the lottery is a regressive tax is investigated and a variety of empirical predictions are generated as to patterns of purchase both across groups and by individuals. Finally the insights gained from the earlier discussion are employed as a springboard to reground the normative use of the assumption of rational utility maximization.

Number of Pages in PDF File: 57

JEL Classification: H29

working papers series