Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108633
Authors: 
Crossley, Thomas F.
Low, Hamish
Smith, Sarah
Year of Publication: 
2013
Series/Report no.: 
Koç University-TÜSİAD Economic Research Forum Working Paper Series 1314
Abstract: 
The combination of credit constraints and indivisible consumption goods may induce some risk-averse individuals to gamble to have a chance of crossing a purchasing threshold. One implication of this is that income effects for individuals who choose to gamble are likely to be larger than for the general population. Using UK data on gambling wins, other windfalls and durable goods purchases, we show that winners display higher income effects than non-winners but only amongst those likely to be credit-onstrained. This is consistent with credit-constrained, risk-averse agents gambling to convexify their budget set.
Subjects: 
Gambling
Lotteries
Consumption
Durables
JEL: 
D12
E21
D81
L83
Document Type: 
Working Paper

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