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The Effects of Lottery Prizes on Winners and their Neighbors: Evidence from the Dutch Postcode Lottery

Peter Kuhn (), Peter Kooreman (), Adriaan Soetevent () and Arie Kapteyn ()
Additional contact information
Peter Kooreman: Tilburg University

No 4950, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Each week, the Dutch Postcode Lottery (PCL) randomly selects a postal code, and distributes cash and a new BMW to lottery participants in that code. We study the effects of these shocks on lottery winners and their neighbors. Consistent with the life-cycle hypothesis, the effects on winners’ consumption are largely confined to cars and other durables. Consistent with the theory of in-kind transfers, the vast majority of BMW winners liquidate their BMWs. We do, however, detect substantial social effects of lottery winnings: PCL nonparticipants who live next door to winners have significantly higher levels of car consumption than other nonparticipants.

Keywords: natural experiments; social interactions (search for similar items in EconPapers)
JEL-codes: D12 C21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-ltv
Date: 2010-05
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Published in: American Economic Review, 2011, 101 (5), 2226-2247

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Journal Article: The Effects of Lottery Prizes on Winners and Their Neighbors: Evidence from the Dutch Postcode Lottery (2011) Downloads
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