TY  - JOUR
AU  - Guryan,Jonathan
AU  - Kearney,Melissa Schettini
TI  - Is Lottery Gambling Addictive?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14742
PY  - 2009
Y2  - February 2009
UR  - http://www.nber.org/papers/w14742
L1  - http://www.nber.org/papers/w14742.pdf
N1  - Author contact info:
Jonathan Guryan
Northwestern University
Institute for Policy Research
2040 Sheridan Road
Evanston, IL 60208
Tel: 847/467-7144
E-Mail: j-guryan@northwestern.edu

Melissa Schettini Kearney
Department of Economics
University of Maryland
3105  Tydings Hall
College Park, MD 20742
Tel: 301/405-6202
E-Mail: kearney@econ.umd.edu
AB  - We present an empirical test for the addictiveness of lottery gambling. To distinguish state dependence from serial correlation, we exploit an exogenous shock to local market consumption of lottery gambling. We use the sale of a winning ticket in the zip code, the location of which is random conditional on sales, as an instrument for present consumption and test for a causal relationship between present and future consumption. This test of addiction is based on the definition of addiction commonly used in the economics literature. It has two key advantages over previous tests for addiction. First, our test is unique in being based on an observed increase in consumption coming from a randomly assigned shock. Second, our approach estimates the time path of persistence non-parametrically. Our data from the Texas State Lottery suggests that after 6 months, roughly half of the initial increase in lottery consumption is maintained. After 18 months, roughly 40 percent of the initial shock persists, though estimates become less precise. These estimates provide an upper bound on the degree of addictiveness in lottery gambling. They also highlight the potential effectiveness of innovations and advertising campaigns designed to increase lottery gambling.
ER  -