Working Paper
Inter-temporal differences in the income elasticity of demand for lottery tickets
Abstract: We estimate annual income elasticities of demand for lottery tickets using roughly twenty years of county-level data for three states. We find that the income elasticity of demand (and thus the tax burden) for lottery tickets has changed over time. We argue that these changes are due to changes in a state's lottery game portfolio and the growth in consumer income. Trends in the income elasticity of demand for instant and online lottery games appear to be different. Our results question the long-term growth potential of lottery revenue and have policy implications for state governments and those concerned about regressivity.
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Bibliographic Information
Provider: Federal Reserve Bank of St. Louis
Part of Series: Working Papers
Publication Date: 2007
Number: 2007-042