Is Lottery Gambling Addictive?

42 Pages Posted: 21 Feb 2009 Last revised: 3 Oct 2010

See all articles by Jonathan Guryan

Jonathan Guryan

Northwestern University - Human Development and Social Policy (HDSP) Program; National Bureau of Economic Research (NBER)

Melissa S. Kearney

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: February 2009

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.

Suggested Citation

Guryan, Jonathan and Kearney, Melissa S., Is Lottery Gambling Addictive? (February 2009). NBER Working Paper No. w14742, Available at SSRN: https://ssrn.com/abstract=1347264

Jonathan Guryan (Contact Author)

Northwestern University - Human Development and Social Policy (HDSP) Program ( email )

2046 Sheridan Road
Evanston, IL 60208
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Melissa S. Kearney

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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