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Buying a Dream: Alternative Models of Demand for Lotto
Author(s) -
Forrest David,
Simmons Robert,
Chesters Neil
Publication year - 2002
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/40.3.485
Subject(s) - ticket , economics , lottery , value (mathematics) , microeconomics , variable (mathematics) , contrast (vision) , econometrics , computer science , mathematics , statistics , mathematical analysis , computer security , artificial intelligence
Existing lotto demand models utilize effective price, computed as the face value of a ticket minus the expected value of prize money per ticket, as their primary explanatory variable. By contrast, this article proposes a key role for consumption benefit or “fun” in the demand for gambling in general and lotto demand in particular. It develops an alternative model of lotto demand that focuses on the maximum possible prize. When this is tested against the traditional model using data from the U.K. National Lottery, we find that jackpot considerations exert an influence over and above that of variations in effective price.