Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/36917 
Year of Publication: 
2010
Series/Report no.: 
IZA Discussion Papers No. 4950
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Each week, the Dutch Postcode Lottery (PCL) randomly selects a postal code, and distributes cash and a new BMW to lottery participants in that code. We study the effects of these shocks on lottery winners and their neighbors. Consistent with the life-cycle hypothesis, the effects on winners' consumption are largely confined to cars and other durables. Consistent with the theory of in-kind transfers, the vast majority of BMW winners liquidate their BMWs. We do, however, detect substantial social effects of lottery winnings: PCL nonparticipants who live next door to winners have significantly higher levels of car consumption than other nonparticipants.
Subjects: 
Social interactions
natural experiments
JEL: 
D12
C21
Document Type: 
Working Paper

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