ⓡ, Benjamin Lockwood. <br/><br/>
The Optimal Design of State-Run Lotteries / 
Benjamin Lockwood ⓡ, Hunt Allcott ⓡ, Dmitry Taubinsky ⓡ, Afras Y. Sial. 
 - Cambridge, Mass.  National Bureau of Economic Research  2021. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w28975 .
 - Working Paper Series (National Bureau of Economic Research)  no. w28975. .
<br/><br/> June 2021. 
<br/><br/> People have long debated whether state-run lotteries exploit the poor or are a win-win that generates enjoyment and government revenues. We study socially optimal lottery design in an optimal taxation framework with biased consumers and estimate sufficient statistics for optimal policy. Lottery sales respond more to changes in jackpot expected values than to changes in price or lower prizes, consistent with a specific type of probability weighting. In our survey, bias proxies such as innumeracy decline with income and explain 43 percent of lottery spending. In our model, current multi-state lottery designs increase welfare but may harm heavy-spending low-income people. 
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