The effects of lottery prizes on winners and their neighbours: Evidence from the Dutch Postcode Lottery
Kuhn,P. Kooreman,P. Soetevent,A. Kapteyn,A.
Kuhn,P.
Kooreman,P.
Soetevent,A.
Kapteyn,A.
Abstract
Each week, the Dutch Postcode Lottery (PCL) randomly selects a postal code, and distributes cash and a new BMW to lottery participants in that code. We study the effects of these shocks on lottery winners and their neighbors. Consistent with the life-cycle hypothesis, the effects on winners' consumption are largely confined to cars and other durables. Consistent with the theory of in-kind transfers, the vast majority of BMW winners liquidate their BMWs. We do, however, detect substantial social effects of lottery winnings: PCL nonparticipants who live next door to winners have significantly higher levels of car consumption than other nonparticipants.
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Date
2011
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Research Projects
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Citation
Kuhn, P, Kooreman, P, Soetevent, A & Kapteyn, A 2011, 'The effects of lottery prizes on winners and their neighbours : Evidence from the Dutch Postcode Lottery', American Economic Review, vol. 101, no. 5, pp. 2226-2247. < http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.5.2226 >