Participation, Expenditure and Regressivity in the Irish Lottery: Evidence from Irish Household Budget Survey 2004/2005

Frank Crowley, John Eakins, Declan Jordan

Abstract


This paper estimates, using the most recent Irish Household Budget Survey of 2004/2005, a double hurdle model to determine the socio-economic and socio-demographic factors affecting participation and expenditure of Irish households on the national lottery. Of particular interest is the effect of income on the decisions of how much participants spend on the lottery. The paper also determines the extent to which the tax inherent in lottery purchases is regressive in its incidence on purchasers. It is found that gender, social class, marital status, the presence of children in the home and household size significantly effect lottery participation. Lottery expenditures are affected by income, location of the household, gender, age, education, social class and whether the household has positive betting expenditures. Furthermore, there is evidence that the implicit lottery tax is regressive and that the allocation of lottery proceeds does not compensate for this regressivity.


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