Does Unemployment Matter for Lottery Sales and their Persistence? A New Estimation Approach

This paper employs the panel smooth transition autoregressive model to evaluate the threshold effect of unemployment rate on lottery sales and their persistence. To perform the empirical estimation, we use the panel data of lottery sales in 42 US states during the period of January 2003–December 201...

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Bibliographic Details
Published in:Social indicators research 2017-01, Vol.130 (2), p.581-592
Main Authors: Wu, Po-Chin, Liu, Shiao-Yen, Wang, Kou-Bau
Format: Article
Language:English
Subjects:
Consortia
Consumer goods
Dependent variables
Economic conditions
Economic statistics
Estimating techniques
Human Geography
Lotteries
Markets
Merchants
Microeconomics
Panel data
Persistence
Public Health
Quality of Life Research
Recessions
Regression (Statistics)
Research Design
Sales
Social research
Social Sciences
Sociology
State budgets
Studies
Unemployment
Variables
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Summary:This paper employs the panel smooth transition autoregressive model to evaluate the threshold effect of unemployment rate on lottery sales and their persistence. To perform the empirical estimation, we use the panel data of lottery sales in 42 US states during the period of January 2003–December 2011. Thus, we have 4536 observations. The empirical results find that the effect of unemployment on lottery sales is nonlinear, heterogeneous, and time-varying, depending on the unemployment rates in different regimes. A rise (decrease) in unemployment will lead to a higher (lower) persistence effect of lottery sales. However, reducing unemployment rate is not a practical instrument for state governments to stabilize lottery markets. For the sellers of lottery tickets, designing new lottery products is a more efficient method for stimulating current lottery sales than anticipating the improvement in the unemployment rate.
ISSN:0303-8300
1573-0921
DOI:10.1007/s11205-015-1183-3