Mitigating the Combined Distributional Consequences of the Georgia Lottery for Education and the HOPE Scholarship*

Abstract

Objective. Research demonstrates that nonwhite, lower‐income households bear the Georgia Lottery's tax burden, yet receive fewer benefits. However, local disparities in grading standards may mitigate the observed income redistribution. Our objective is to determine whether certain localities obtain more HOPE scholarships than expected, mitigating the observed redistribution.Method. We use fixed‐effects regression and a sample of Georgia's counties (1996–2002).Results. Our results indicate that some localities obtain more HOPE scholarships than expected, mitigating the observed redistribution.Conclusions. We conclude the income‐redistribution research result does not reveal a complete picture because it overlooks the HOPE scholarship's extraordinary allocation mechanism.