Income and lottery sales

Income and lottery sales

by Cletus C. Coughlin

Part of Working paper -- 2008-004A

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"Previous studies have examined the effect of income on lottery ticket expenditures using an aggregate measure of income, usually personal income. Reasons exist, however, for believing that lottery expenditures do not respond equally to all sources of income. This paper examines the propensity to purchase lottery tickets from separate types of income, namely income from earnings, transfer payments, and wealth. Using county-level data for five states, we find evidence that lottery expenditures respond differently to changes in each income type, and that ticket purchases are most strongly influenced by changes in transfer payments. Several policy implications follow from our results"--Federal Reserve Bank of St. Louis web site.

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