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State Lotteries and Agency Costs: Hidden Costs to Nonparticipants

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  • Richard B. Whitaker

Abstract

. Some nonparticipants support lotteries because they expect the lottery will shift a portion of their tax burden to participants. The principal‐agent model suggests that lotteries will result in an above normal increase in state expenditures. This paper finds that 77 percent of net lottery proceeds are utilized for above normal spending increases, suggesting that tax benefits to nonparticipants are greatly diminished.

Suggested Citation

  • Richard B. Whitaker, 2007. "State Lotteries and Agency Costs: Hidden Costs to Nonparticipants," American Journal of Economics and Sociology, Wiley Blackwell, vol. 66(3), pages 533-544, July.
    • Handle: RePEc:bla:ajecsc:v:66:y:2007:i:3:p:533-544
    DOI: 10.1111/j.1536-7150.2007.00525.x
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    References listed on IDEAS

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    Cited by:

    1. Kent Grote & Victor Matheson, 2011. "The Economics of Lotteries: An Annotated Bibliography," Working Papers 1110, College of the Holy Cross, Department of Economics.

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