Income and Lottery Sales: Transfers Trump Income from Work and Wealth

FRB of St. Louis Working Paper No. 2008-004C

41 Pages Posted: 17 Jan 2008

See all articles by Cletus C. Coughlin

Cletus C. Coughlin

Federal Reserve Bank of St. Louis - Research Division

Thomas A. Garrett

Federal Reserve Bank of St. Louis - Research Division

Multiple version iconThere are 2 versions of this paper

Date Written: August 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 consumption and income from three sources, namely income from earnings, wealth, and transfer payments. Using county-level data for seven 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.

Keywords: State lottery, consumption, propensity to consume, income

JEL Classification: H71, H31

Suggested Citation

Coughlin, Cletus C. and Garrett, Thomas A., Income and Lottery Sales: Transfers Trump Income from Work and Wealth (August 2008). FRB of St. Louis Working Paper No. 2008-004C. Available at SSRN: https://ssrn.com/abstract=1084183 or http://dx.doi.org/10.2139/ssrn.1084183

Cletus C. Coughlin (Contact Author)

Federal Reserve Bank of St. Louis - Research Division ( email )

411 Locust St
Saint Louis, MO 63011
United States

Thomas A. Garrett

Federal Reserve Bank of St. Louis - Research Division ( email )

411 Locust St
Saint Louis, MO 63011
United States

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