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The Ticket to Easy Street? The Financial Consequences of Winning the LotteryScott HankinsUniversity of Kentucky Mark HoekstraUniversity of Pittsburgh - Department of Economics Paige Marta SkibaVanderbilt University - Law School March 26, 2010 Vanderbilt Law and Economics Research Paper No. 10-12 Abstract: This paper examines whether giving large cash transfers to financially distressed people causes them to avoid bankruptcy. A comparison of Florida Lottery winners who randomly received $50,000 to $150,000 to small winners indicates that such transfers only postpone bankruptcy rather than prevent it, a result inconsistent with the negative shock model of bankruptcy. Furthermore, the large winners who subsequently filed for bankruptcy had similar net assets and unsecured debt as small winners. Thus, our findings suggest that skepticism regarding the long-term impact of cash transfers may be warranted.
Number of Pages in PDF File: 28 Keywords: Lottery; Bankruptcy; Consumer Behavior JEL Classification: D14; K35; D12 Date posted: January 9, 2009 ; Last revised: June 24, 2010Suggested CitationContact Information
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