2026-09-23T00:14:57Zhttps://dspace.mit.edu/server/oai/requestoai:dspace.mit.edu:1721.1/84132022-01-13T07:54:28Zcom_1721.1_7582com_1721.1_7581col_1721.1_131022
Jonathan Gruber and Joshua Angrist.
Kearney, Melissa Schettini, 1974-
Massachusetts Institute of Technology. Dept. of Economics.
Massachusetts Institute of Technology. Department of Economics
2005-08-23T19:59:44Z
2005-08-23T19:59:44Z
2002
2002
http://hdl.handle.net/1721.1/8413
50602001
Thesis (Ph.D.)--Massachusetts Institute of Technology, Dept. of Economics, 2002.
Includes bibliographical references.
This thesis investigates individual decision-making in response to government policies, in particular, state lotteries and the welfare "family cap." Despite considerable controversy surrounding the use of state lotteries as a means of public finance, little is known about their consumer consequences. Chapter one investigates two central questions about state lotteries and consumer behavior. First, do state lotteries primarily crowd out other forms of gambling, or do they crowd out non-gambling consumption? Second, does consumer demand for lottery games respond to expected returns, as maximizing behavior predicts, or do consumers appear to be misinformed about the risks and returns of lottery gambles? Analyses of multiple sources of micro-level gambling data demonstrate that lottery spending does not substitute for other forms of gambling. Household consumption data suggest that household lottery gambling crowds out approximately $43 per month, or two percent, of other household consumption, with larger proportional reductions among low-income households. Demand for lottery products responds positively to the expected value of the gamble, controlling for other moments of the gamble and product characteristics. This suggests that consumers of lottery products are not misinformed and are perhaps making fully-informed purchases. Chapter two investigates the nature of consumer choice under risk in the context of state lottery betting. Economists have traditionally modeled consumer preferences according to expected utility theory, but a recent body of literature challenges this model.
(cont.) An empirical test of the expected utility hypothesis finds that, in general, it is a reasonable description of observed consumer choices. However, the data offer some evidence in support of non-linear probability weighting in consumer preferences. The second application studied in this thesis is welfare reform. A number of states have recently instituted family cap policies, under which women who conceive a child while receiving cash assistance are not entitled to additional cash benefits. Chapter three investigates how fertility behavior responds to this change in government expenditure policy. The analysis takes advantage of the variation across states in the timing of family cap implementation to determine if these policies are discouraging women from having additional births. The data consistently demonstrate that the family cap does not lead to a reduction in births. This finding of no effect is robust to the incorporation of lead and lag effects, to considering separately total and higher-order births, and to limiting the sample to demographic groups with high welfare propensities.
by Melissa Schettini Kearney.
Ph.D.
127 p.
9777771 bytes
9777529 bytes
application/pdf
application/pdf
eng
Massachusetts Institute of Technology
M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.
http://dspace.mit.edu/handle/1721.1/7582
Economics.
Essays on public policy and consumer choice : applications to welfare reform and state lotteries
Thesis
application/pdf
false
Publication
unknown
unknown
<Publication xmlns="https://www.openaire.eu/cerif-profile/1.1/" id="e93cb9ec-4143-4a0e-abd3-85b0338f1b49">
<Type xmlns="https://www.openaire.eu/cerif-profile/vocab/COAR_Publication_Types">http://purl.org/coar/resource_type/c_1843</Type>
<Language>eng</Language>
<Title>Essays on public policy and consumer choice : applications to welfare reform and state lotteries</Title>
<PublishedIn>
<Publication>
</Publication>
</PublishedIn>
<PublicationDate>2002</PublicationDate>
<Authors>
<Author>
<DisplayName>Kearney, Melissa Schettini, 1974-</DisplayName>
<Affiliation>
<OrgUnit>
</OrgUnit>
</Affiliation>
</Author>
</Authors>
<Editors>
</Editors>
<Publishers>
<Publisher>
<DisplayName>Massachusetts Institute of Technology</DisplayName>
<OrgUnit />
</Publisher>
</Publishers>
<License>http://dspace.mit.edu/handle/1721.1/7582</License>
<Keyword>Economics.</Keyword>
<Abstract>This thesis investigates individual decision-making in response to government policies, in particular, state lotteries and the welfare "family cap." Despite considerable controversy surrounding the use of state lotteries as a means of public finance, little is known about their consumer consequences. Chapter one investigates two central questions about state lotteries and consumer behavior. First, do state lotteries primarily crowd out other forms of gambling, or do they crowd out non-gambling consumption? Second, does consumer demand for lottery games respond to expected returns, as maximizing behavior predicts, or do consumers appear to be misinformed about the risks and returns of lottery gambles? Analyses of multiple sources of micro-level gambling data demonstrate that lottery spending does not substitute for other forms of gambling. Household consumption data suggest that household lottery gambling crowds out approximately $43 per month, or two percent, of other household consumption, with larger proportional reductions among low-income households. Demand for lottery products responds positively to the expected value of the gamble, controlling for other moments of the gamble and product characteristics. This suggests that consumers of lottery products are not misinformed and are perhaps making fully-informed purchases. Chapter two investigates the nature of consumer choice under risk in the context of state lottery betting. Economists have traditionally modeled consumer preferences according to expected utility theory, but a recent body of literature challenges this model.</Abstract>
<Abstract>(cont.) An empirical test of the expected utility hypothesis finds that, in general, it is a reasonable description of observed consumer choices. However, the data offer some evidence in support of non-linear probability weighting in consumer preferences. The second application studied in this thesis is welfare reform. A number of states have recently instituted family cap policies, under which women who conceive a child while receiving cash assistance are not entitled to additional cash benefits. Chapter three investigates how fertility behavior responds to this change in government expenditure policy. The analysis takes advantage of the variation across states in the timing of family cap implementation to determine if these policies are discouraging women from having additional births. The data consistently demonstrate that the family cap does not lead to a reduction in births. This finding of no effect is robust to the incorporation of lead and lag effects, to considering separately total and higher-order births, and to limiting the sample to demographic groups with high welfare propensities.</Abstract>
<Access xmlns="http://purl.org/coar/access_right"
>
</Access>
</Publication>