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Title: The economics of lotteries.
Author: Farrell, Lisa.
ISNI:       0000 0001 3457 9469
Awarding Body: University of Keele
Current Institution: Keele University
Date of Award: 1997
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The aim of this thesis is to consider the impact of lotteries on government revenue and consumer expenditure patterns. The analysis of lotteries is of interest because they are becoming increasingly popular as revenue raising instruments. They also provide a unique insight into risk seeking behaviour, since the purchase of lottery tickets represents the consumption of risk. Five aspects of lotteries are considered in relation to the UK National Lottery. Firstly, chapter 3 assesses the degree of substitution between risky gambles and riskless intertemporal income substitution. The fiscal nature of lotteries is considered in chapter 4, where we assess the role of lottery revenues in the tax system and model the effect of changes in direct taxes on the revenue raising potential of the lottery. We show the lottery is a normal good, and so lottery tax receipts are sensitive to changes in direct taxes. Chapter 6 estimates the price elasticity of demand for tickets using time series data. Price variation is identified through changes in the expected value of holding a ticket, which varies with sales and the occurrence of rollovers. Pooled cross-section data is employed in Chapter 7 to estimate the price elasticity of demand. Price variation is again identified through changes in the price of a ticket arising due to the presence of rollovers. Here, however, we also control for income effects, since individuals who participate in rollover weeks may be different from those who participate in normal weeks. We also estimate the income elasticity of demand, and the welfare benefit associated with the introduction of the lottery. Previous studies have tended to concentrate on losses suffered by players, but we show that utility maximising individuals must be substituting expenditure away from goods that yield lower utility, indicating an associated welfare gam from the lottery. Finally, the topical issue of addiction is considered in chapter 8. We find evidence that the lottery is addictive, though less addictive than smoking, and that rollovers are one possible cause of this addiction
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Economics & economic theory