Suchergebnisse

Lottery‐demand models using aggregate data are often used to make inferences regarding individual behavior, the most important being the distributional burden of lottery‐ticket expenditures. It is shown here that estimates for the income elasticity and the cross‐price elasticity will only be representative of individual behavior under extremely restrictive assumptions. In fact, estimation of aggregate‐demand models presupposes that the income elasticity is equal to one. Cross‐sectional analyses using microlevel data face similar restrictions on consumer behavior. Remedies are discussed, but more conclusive evidence on the distributional burden of lotteries will remain elusive until better individual‐level data become available. (JEL D11, H71, H22)

Unlike other governmental units, state lottery agencies publicly acknowledge that their primary objective is revenue maximization. This claim & the inherent monopoly power of lottery agencies provide a unique arena to test for Leviathan. With data obtained from US lottery games, I perform a Laffer curve analysis to derive the optimal lottery tax rates for different categories of games. These optimal tax rates & Monte Carlo simulations are then used to test whether the current tax structure of lottery games is indeed the revenue maximizing structure. I find strong empirical evidence for the "Leviathan Lottery.". 3 Tables, 1 Appendix, 31 References. Adapted from the source document.