The Economics of Lotteries: A Survey of the Literature

Kent Grote () and Victor Matheson
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Kent Grote: Department of Economics and Business, Lake Forest College

No 1109, Working Papers from College of the Holy Cross, Department of Economics

Abstract: Lotteries represent an important source of government revenues in many states and countries, so they are of interest to public finance economists. In addition, lotteries provide researchers interested in microeconomic theory and consumer behavior with a type of experimental lab that allows economists to explore these topics. This paper surveys the existing literature on lotteries organized around these two central themes. The first section examines the microeconomic aspects of lotteries including consumer decision-making under uncertainty, price and income elasticities of demand for lottery tickets, cross-price elasticities of lottery ticket to each other and to other gambling products, consumer rationality and gambling, and the efficiency of lottery markets. The second section covers topics related to public finance and public choice including the revenue potential of lotteries, the tax efficiency and dead-weight loss of lottery games, the horizontal and vertical equity of lotteries, earmarking and the fungibility of lottery revenues, and individual state decisions to participate in participate in public lotteries.

Keywords: lotto; lottery; public finance; gambling (search for similar items in EconPapers)
JEL-codes: D81 H71 L83 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2011-08
New Economics Papers: this item is included in nep-hpe and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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