Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/47498 
Year of Publication: 
2011
Series/Report no.: 
IFS Working Papers No. 11,07
Publisher: 
Institute for Fiscal Studies (IFS), London
Abstract: 
The combination of credit constraints and indivisible consumption goods may induce some riskaverse individuals to play lotteries to have a chance of crossing a purchasing threshold. One implication of this is that income effects for individuals who choose to play lotteries are likely to be larger than for the general population. Using UK data on lottery wins, other windfalls and durable good purchases, we show that lottery players display higher income effects than non-players but only amongst those likely to be credit constrained. 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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