Means Tested Public Assistance and the Demand for State Lottery Tickets

John Laitner ()

Review of Economic Dynamics, 1999, vol. 2, issue 1, 273-290

Abstract: Empirical evidence suggests that the poor spend a larger fraction of their income on gambling than the well-to-do. This paper shows that "means tests" for public-assistance eligibility could supply part of the explanation. Income support programs can distort private budget sets, conceivably leading to risk-taking behavior on the part of rational agents with standard, concave utility functions. Latter sections of the paper employ a calibrated life-cycle saving model to study resulting demands for actuarially fair lotteries numerically. The analysis demonstrates that allowing lotteries can simplify model-related computations a great deal. (Copyright: Elsevier)

JEL-codes: D91 E21 I38 (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (7)

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DOI: 10.1006/redy.1998.0042

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