NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Kam Yu

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December 2009Measuring the Output and Prices of the Lottery Sector: An Application of Implicit Expected Utility Theory
in Price Index Concepts and Measurement, W. Erwin Diewert, John S. Greenlees and Charles R. Hulten, editors
May 2008Measuring the Output and Prices of the Lottery Sector: An Application of Implicit Expected Utility Theory
w14020
Using implicit expected utility theory, a money metric of utility derived from playing a lottery game is developed. Output of the lottery sector can be defined as the difference in utility with and without the game. Using a kinked parametric functional form, outputs of the Canadian Lotto 6/49 are estimated. Results show that this direct economic approach yield an average output which is almost three times of the official GDP, which takes total factor costs as output. A by-product of the estimation is an implicit price index for lottery, which can serve as a cost-of-living index for the CPI. The estimated price elasticity of demand -0.67 closely resembles results for the U.K. and Israel in previous studies.

Contact and additional information for this authorAll papers and publicationsWorking Papers onlyWorking Papers with publication info

 
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