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Eliminating the Black Market: Evidence from a Lottery Gambling Policy in Thailand

Author

Listed:
  • Natt Hongdilokkul
  • Archawa Paweenawat
  • Krislert Samphantharak
  • Suparit Suwanik

Abstract

This paper investigates the impacts and implications of a supply-side intervention of black market transactions using a natural experiment from lottery markets in Thailand. Between June 2003 and November 2006, the Thai government imposed a crackdown on the black-market lottery while introducing a new lottery with similar characteristics as a substitute. Using panel data of Thai households, we find that the intervention was effective in eliminating the black-market lottery. Household spending on the black-market lottery dropped sharply after June 2003 and increased again after November 2006. The substitution from the black-market lottery to the government lottery in 2003 was small, while the reverse substitution in 2006 was large. We also find that gambling was habitual and the intervention that breaks the habit had a long-term impact on gambling behavior, i.e., a persistent decrease in expenditures on both illegal and legal lotteries.

Suggested Citation

  • Natt Hongdilokkul & Archawa Paweenawat & Krislert Samphantharak & Suparit Suwanik, 2024. "Eliminating the Black Market: Evidence from a Lottery Gambling Policy in Thailand," PIER Discussion Papers 218, Puey Ungphakorn Institute for Economic Research.
    • Handle: RePEc:pui:dpaper:218
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    References listed on IDEAS

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    1. Jonathan Gruber & Nathaniel Hendren & Robert M. Townsend, 2014. "The Great Equalizer: Health Care Access and Infant Mortality in Thailand," American Economic Journal: Applied Economics, American Economic Association, vol. 6(1), pages 91-107, January.
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    3. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," Working Papers 680, Princeton University, Department of Economics, Industrial Relations Section..
    4. Enzo Valentini, 2009. "Underground Economy, Evasion and Inequality," International Economic Journal, Taylor & Francis Journals, vol. 23(2), pages 281-290.
    5. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
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    More about this item

    Keywords

    Household finance; Gambling; Black market; Addiction;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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