Poverty and economic behavior: gambling on social security paydays

Abstract

ABSTRACT The goal of this research is to explore whether actual lottery revenues are sensitive to economic scarcity, as measured by intra-monthly stock of financial resources. Paydays of social security benefits are employed in this study to generate the various degrees of intra-monthly scarcity in financial resources. Using two million observations on daily lottery revenues that cover more than 2,500 lottery outlets in Israel over two years (2015–2016), the empirical analysis suggests that gambling revenue spikes at social security paydays. The estimation results imply that on income support payday aggregate lottery revenues are higher by 5% after taking into account potential determinants of gambling such as day of week, holidays and outlet characteristics. However, the calculated aggregate reaction of lottery revenues on income support payday is quite small and equals 0.5% of the total monthly payments deposited into the bank accounts of income support recipients. In addition, the other social security and salary paydays induce a trivial impact, relative to total monthly payments deposited into the bank accounts of the respective recipients. The findings presented here provide a valuable contribution to gambling studies that examine the relationship between economic conditions and lottery.