Lucky Stores, Gambling, and Addiction: Empirical Evidence from State Lottery Sales

64 Pages Posted: 3 Jun 2005

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: May 2005

Abstract

There is a large body of literature in both psychology and economics documenting mistaken perceptions of randomness. In this paper we demonstrate that people appear to believe that "lightning will strike twice" when it comes to lottery jackpots. First, we show that in the week following the sale of a winning ticket, retailers that sell a winning jackpot ticket experience relative increases in game-specific ticket sales of between 12 and 38 percent, with the sales response increasing in the size of the jackpot. In addition, the increase in sales experienced by the winning vendor increases with the proportion of the local population comprised of high school dropouts, elderly adults, and households receiving public assistance. We further show that this increase in retail-game sales initially reflects an increase in total sales at the retail and zip code level. Second, we show that the increase in sales is persistent at the winning retailer. However, the data no not provide clear evidence that the increase in sales at the zip code level is persistent. It thus appears that in the long run, consumers are persistent in their habit of buying lottery tickets at the "lucky" store; however, as the shock to total gambling dissipates, there is no evidence that lottery gambling itself is habit forming or addictive.

Suggested Citation

Guryan, Jonathan and Kearney, Melissa S., Lucky Stores, Gambling, and Addiction: Empirical Evidence from State Lottery Sales (May 2005). NBER Working Paper No. w11287, Available at SSRN: https://ssrn.com/abstract=716302

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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