The Determinants of Gambling Behavior
- Presenter:
Chair: Catherine McLaughlin; Discussant: Robert Kaestner Mon June 5, 2006 13:45-15:15 Room 225
Gambling has become an important public health issue. Gambling has been associated with suicides, marital violence, substance abuse, increased morbidity, and violent crime. Although gambling is primarily an economic activity, no single theory of the demand for gambles has gained wide-spread acceptance among economists. This paper presents a new model of the demand for gambling that is based on the standard economic assumptions that resources are scarce and consumer’s utility increases with income at a decreasing rate. It suggests that those who gamble have a labor market perspective, and as such, they regard the utility gain from gambling not only as related to the income gained but also to the work avoided.
This model is tested using the 2000 Survey of Gambling in the U.S., a nationally representative survey of 2,631 respondents. The existence of relationships that were suggested by the theory were tested for, using a system of 3 regression equations. It was found that whether a person gambled or not depended on whether they had a labor market orientation, as determined by their labor market experience. It was also found that the amount of gambling was determined by education and factors that were associated with labor market imperfections-such as, the respondent’s race, his health, whether he was obese, and the unemployment level in the respondent’s local market. Both sets of results are generally consistent with the theory.
This study has implications for public policy. It suggests that the findings from other studies that pathological gambling is more likely among certain racial groups may instead reflect the fact that certain races are more likely to engage in non-pathological gambling because of labor market imperfections, and among those who engage non-pathological gambling, these racial groups are no more likely than members of other races to become pathological gamblers. This has implications for programs that intervene to reduce pathological gambling.
By showing the connection between the labor market and gambling, this study has also demonstrated that states that use lotteries to obtain revenues are methodically and disproportionately drawing on the resources of those who are least advantaged in society. This has implications for horizontal equity and tax justice.
