The joy of lottery play: evidence from a field experiment
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The joy of lottery play: evidence from a field experiment Martijn J. Burger1 · Martijn Hendriks2 · Emma Pleeging2 · Jan C. van Ours3,4,5 Received: 7 March 2019 / Revised: 6 February 2020 / Accepted: 17 February 2020 © The Author(s) 2020
Abstract Buying lottery tickets is not a rational investment from a financial point of view. Yet, the majority of people participate at least once a year in a lottery. We conducted a field experiment to increase understanding of lottery participation. Using representative data for the Netherlands, we find that lottery participation increased the happiness of participants before the draw. Winning a small prize had no effect on happiness. Our results indicate that people may not only care about the outcomes of the lottery, but also enjoy the game. Accordingly, we conclude that lottery participation has a utility value in itself and part of the utility of a lottery ticket is consumed before the draw. Keywords Lottery play · Happiness · Field experiment · Procedural utility JEL Classification C93 · D12 · I31 Electronic supplementary material The online version of this article (https://doi.org/10.1007/s1068 3-020-09649-9) contains supplementary material, which is available to authorized users. * Jan C. van Ours [email protected] Martijn J. Burger [email protected] Martijn Hendriks [email protected] Emma Pleeging [email protected] 1
Erasmus Happiness Economics Research Organisation and Erasmus School of Economics, Tinbergen Institute (Amsterdam/Rotterdam), Erasmus University Rotterdam, Rotterdam, The Netherlands
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Erasmus Happiness Economics Research Organisation, Erasmus University Rotterdam, Rotterdam, The Netherlands
3
Erasmus School of Economics, Tinbergen Institute Rotterdam, Erasmus University Rotterdam, Rotterdam, The Netherlands
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Department of Economics, University of Melbourne, Parkville, Australia
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CEPR, London, UK
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M. J. Burger et al.
1 Introduction The average return on lottery tickets is typically just over 50%, which is considerably lower than the average return on other gambling games, such as horse racing, blackjack and roulette (Clotfelter and Cook 1990). Although buying lottery tickets is not a rational investment from a financial point of view, lottery play is the most popular form of gambling and the majority of the population participates at least once a year in a lottery (Kearney 2005; Garvía 2007). In 2015, the sales in the European lottery sector amounted to approximately €80 billion (The European Lotteries 2015), with European citizens spending on average €100 per person per year on lottery tickets. To increase our understanding of lottery participation, we conducted a field experiment randomly providing free lottery tickets to some participants of an existing household panel survey. In the economics literature, several explanations for widespread lottery play have been put forward. Already at the end of the 1940s, Friedman and Savage (1948) argued that lottery play offers an opportunity to win substantial a
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