Are All Lotteries Regressive? Evidence from the Powerball

16 Pages Posted: 27 Mar 2004

See all articles by Emily F. Oster

Emily F. Oster

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

Date Written: January 5, 2004

Abstract

The regressivity of lotteries has become an increasingly important issue in the U.S. as the number of state-run lotteries has increased. Despite this, we still know relatively little about the nature of lottery regressivity. I use a new dataset on Powerball lotto sales to analyze how regressivity varies with jackpot size within a single lotto game. I find that these large-stakes games are significantly less regressive at higher jackpot sizes. An out-of-sample extrapolation of these results suggest that the lottery becomes progressive at a jackpot around $806 million. This suggests that concerns about regressivity might be allayed by concentrating lotto games to produce higher average jackpots.

Keywords: gambling, lottery, tax, regressivity

JEL Classification: D31, D81, H22, H31

Suggested Citation

Oster, Emily F., Are All Lotteries Regressive? Evidence from the Powerball (January 5, 2004). National Tax Journal, June 2004. Available at SSRN: https://ssrn.com/abstract=522742

Emily F. Oster (Contact Author)

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
353
Abstract Views
3,844
rank
83,138
PlumX Metrics