Adversity-Hope Hypothesis: Air Pollution Raises Lottery Demand in China

61 Pages Posted: 19 Mar 2021

See all articles by Soo Hong Chew

Soo Hong Chew

Southwestern University of Finance and Economics (SWUFE) - China Center for Behavior Economics and Finance; National University of Singapore (NUS) - Department of Economics

Haoming Liu

National University of Singapore (NUS) - Department of Economics

Alberto Salvo

National University of Singapore (NUS) - Department of Economics

Date Written: February 8, 2021

Abstract

The empirical literature points to a stylized phenomenon of increased demand for hope following adversity. Clotfelter and Cook (1989) suggest that hope is a key sentiment underpinning recreational gambling. Chew and Ho (1994) offer the view of hope being experienced in lottery products when people enjoy delaying the resolution of uncertainty. Taking air quality as an indicator of subjective well-being, we hypothesize a positive causal relationship between air pollution and lottery sales. We test this hypothesis using data from China and find that air pollution measured by particle concentration increases demand for a popular lottery for which province-level daily sales records exist. The relationship can readily be seen on combining high-frequency, spatially resolved lottery sales and particle pollution data. Our findings support the adversity-hope hypothesis in the context of air quality and lottery sales and point to further tests using other measures of adversity and proxies of demand for hope.

Keywords: Adversity, hope, attitudes toward risk and hope, environmental degradation, air pollution, lottery demand, particulate matter, haze, smog, instrumental variables

JEL Classification: D83, D91, and Q53

Suggested Citation

Chew, Soo Hong and Liu, Haoming and Salvo, Alberto, Adversity-Hope Hypothesis: Air Pollution Raises Lottery Demand in China (February 8, 2021). Available at SSRN: https://ssrn.com/abstract=3780634 or http://dx.doi.org/10.2139/ssrn.3780634

Soo Hong Chew

Southwestern University of Finance and Economics (SWUFE) - China Center for Behavior Economics and Finance ( email )

Liutai Road 555
Wenjiang
China

National University of Singapore (NUS) - Department of Economics ( email )

21 Lower Kent Ridge Rd
Singapore, 119077
Malaysia

Haoming Liu (Contact Author)

National University of Singapore (NUS) - Department of Economics ( email )

10 Kent Ridge Crest
Singapore 119260
Singapore

Alberto Salvo

National University of Singapore (NUS) - Department of Economics ( email )

1 Arts Link, AS2 #06-02
Singapore 117570, Singapore 119077
Singapore

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