The effects of lottery prizes on winners and their neighbours: Evidence from the Dutch Postcode Lottery

P. Kuhn, P. Kooreman, A. Soetevent, A. Kapteyn

Research output: Contribution to journalArticleScientificpeer-review

94 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)2226-2247
JournalAmerican Economic Review
Volume101
Issue number5
Publication statusPublished - 2011

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