The Income Elasticity of Lottery: New Evidence from Micro Data

Abstract

The authors analyze consumer expenditure on the National Lottery in Spain, a popular game with over 100 draws per year and annual turnover of about three billion euros. Based on Tobit estimates using data from two nationally representative surveys, National Lottery players tend to be middle-aged married males with relatively low education. In contrast to previous research, the authors find a strong relationship between lottery expenditure and income, with estimated income elasticities of more than one. A parameter decomposition indicates that the effect of income on expenditure works through existing lottery players, not by attracting new players.