← Search

American Economic Review Vol. 101 No. 5 2011

The Effects of Lottery Prizes on Winners and Their Neighbors: Evidence from the Dutch Postcode Lottery

Peter Kuhn1; Peter Kooreman2; Adriaan R. Soetevent3; Arie Kapteyn4

1 Department of Economics, University of California, Santa Barbara, CA 93106. · 2 Department of Economics, Tilburg University, P.O.B. 90153, 5000 LE Tilburg, The Netherlands. · 3 Universiteit van Amsterdam. Fac. Economie en Bedrijfskunde/AE/IO, Roeterstraat 11, 1018 WB Amsterdam, The Netherlands. · 4 RAND, 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138.

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. JEL: D14, D91, H23, H27

DOI
10.1257/aer.101.5.2226
Volume
101
Issue
5
Pages
2226-2247
Language
en
Sources
bibtex:phds-export.bib crossref openalex

Cite