The Economics of Lotteries: An Annotated Bibliography

This paper presents an annotated bibliography of all papers relating to the economics of lotteries as of early to mid 2011. All published scholarly papers that could be identified by the authors are included along with the published abstract where available.lotto, lottery, public finance, gambling

Reverse Electoral Business Cycles and Housing Markets

We argue that the political uncertainty generated by elections encourages private actors to delay investments that entail high costs of reversal, creating a pre-election decline in economic activity entitled a "reverse electoral business cycle." This incentive for delay becomes greater as policy differences between parties/candidates increase. Using new survey and observational data from the United States, we test these arguments. The individual-level analysis assesses whether respondents' perceptions of presidential candidates' policy differences increased the likelihood of postponing certain actions and purchases. For one of these items, housing, we collected observational data to examine whether electoral cycles indeed induce a pre-election decline in economic activity. The findings support the predictions and cannot be explained by existing theories of political business cycles.

Supercharged? Electricity Demand and the Electrification of Transportation in California

The rapid electrification of the transportation fleet in California raises important questions about the reliability, cost, and environmental implications for the electric grid. A crucial first element to understanding these implications is an accurate picture of the extent and timing of residential electricity use devoted to EVs. Although California is now home to over 650,000 electric vehicles (EVs), less than 5% of these vehicles are charged at home using a meter dedicated to EV use. This means that state policy has had to rely upon very incomplete data on residential charging use. This report summarizes the first phase of a project combining household electricity data and information on the adoption of electric vehicles over the span of four years. We propose a series of approaches for measuring the effects of EV adoption on electricity load in California. First, we measure load from the small subset of households that do have an EV-dedicated meter. Second, we estimate how consumption changes when households go from a standard residential electricity tariff to an EV-specific tariff. Finally, we suggest an approach for estimating the effect of EV ownership on electricity consumption in the average EV-owning household. We implement this approach using aggregated data, but future work should use household-level data to more effectively distinguish signal from noise in this analysis. Preliminary results show that households on EV-dedicated meters are using 0.35 kWh per hour from Pacific Gas and Electric (PGE); 0.38 kWh per hour from Southern California Edison; and 0.28 kWh per hour from San Diego Gas and Electric on EV charging. Households switching to EV rates without dedicated meters are using less electricity for EV charging: 0.30 kWh per hour in PGE. Our household approach applied to aggregated data is too noisy to be informative. These estimates should be viewed as evidence that more focused analysis with more detailed data would be of high value and likely necessary to produce rigorous analysis of the role EVs are playing in residential electricity consumption

Income Shocks, Mortgage Repayment Risk and Financial Distress Among UK Households

This paper examines the prevalence of mortgage arrears in the U.K using the British Household Panel Survey (BHPS). The majority of reported problems occur in the first few years after purchase. Episodes of unemployment, long-term sickness or relationship breakdown all predict repayment difficulties, as well as measures of leverage and income gearing at the point of origination. Using proxy measures for unemployment risk, ill-health risk and separation risk at the time of purchase, constructed from a variety of instruments, repayment difficulties are shown to be strongly correlated with ex ante repayment risk. This result raises questions about the efficiency of the mortgage lending process and the possibility that a significant proportion of mortgage arrears and defaults could be prevented by improved screening of repayment risk at the time of application.

The Effect of Income, Ethnicity/Race and Institutional Factors on Mortgage Borrower Behavior

Studies examining mortgage choice behavior generally assume a frictionless mortgage market in which borrower decisions are influenced only by economic variables. This study explores the interface between demographic and institutional factors inherent in mortgage market logistics and the information flow that affects borrower behavior. The efficiency of these processes is particularly important when studying inner city real estate markets, since these markets are disproportionately represented by low income and minority households. The effect of institutional factors was examined by conducting a survey of borrower behavior in metropolitan Washington, DC. The secondary data findings indicate that ethnicity /race and income are jointly sensitive to borrower decision, confirming the clientele effect. The primary data findings also indicate that institutional factors influence mortgage choice. Similarly, borrowers are influenced by the channel chosen to evaluate market information. However, income was not found to be a significant determinant of borrower behavior.

Housing Affordability Options for First Home Owner-Occupiers in Australia: A Simulation Analysis

This paper presents a simulation analysis of several policies, or policy proposals, for improving housing affordability for first home owner-occupiers in Australia: the First Home Owner Grant, housing equity partnerships and deposit loans. The focus is on the impact of these measures for housing demand, the private saving rate and house prices. The simulations apply a housing tenure choice model in which a representative adult household makes a lifetime plan concerning when to buy and sell a house, and the amount of housing and non-housing consumption over its adult lifetime. An insight from the lifecycle framework is that policies to improve housing affordability can have two effects on housing demand and house prices: a life-cycle timing effect and a liquidity effect; and it is possible that these effects will work in opposite directions on housing demand and therefore house pricHousing economics, household saving

Promoting Fruit and Vegetable Consumption: Are Coupons More Effective Than Pure Price Discounts?

The U.S. Department of Agriculture administers food and nutrition assistance programs that promote fruit and vegetable consumption. But consumption remains relatively low among program recipients as well as among the general U.S. population. The perceived high cost of produce is often cited as a deterrent to more consumption. This study looks at coupons and price discounts, two methods of lowering the cost of fruits and vegetables, and uses household purchase data and a consumer demand model to examine each method. Coupons influence consumer behavior through a price-discount effect and an informational/advertising effect. Because of this dual effect, the use of a coupon to increase fruit and vegetable purchases may be more effective than a pure price-discount policy or other noncoupon promotion. Assuming a coupon usage rate of 10 to 50 percent, lowering prices through a “10 percent off” coupon would increase average weekly fruit and vegetable quantities purchased by 2 to 11 percent, as compared with a 5- to 6-percent effect for a pure price discount.fruit and vegetable consumption, coupons, price discounts, consumer demand, dual effect of coupons, informational advertising effects, Food Consumption/Nutrition/Food Safety,

Institutions and the transition to adulthood: Implications for fertility tempo in low-fertility settings

The number of countries experiencing very low fertility has been rising in recent years, garnering increasing academic, political and media attention. There is now widespread academic agreement that the postponement of fertility is a major contributing factor in the very low levels of fertility that have occurred, and yet most policy discussions have been devoted to increasing the numbers of children women have. We discuss factors in three institutions--the educational system, the labour market and the housing market--that may inadvertently have led to childbearing postponement. We highlight important components of the timing of childbearing, including its changing place within the transition to adulthood across countries and the significance of the demands of childbearing versus childrearing. Using illustrations from Europe, North America, Japan, Australia and New Zealand, we argue that the following all lead to younger childbearing: 1) an open education system whereby it is relatively easy to return to school after having dropped out for a while; 2) a shorter, smoother, easier school-to-work transition; 3) easier re-entry into the labour market after having taken time out for childrearing or any other reason; 4) greater capability of integrating childrearing into a career; 5) easier ability to obtain a mortgage with a moderately small down payment, moderately low interest rate and a long time period over which to repay the loan; and 6) easier ability to rent a dwelling unit at an affordable price. Conversely, reversing any or all of these factors would lead, other things being equal, to postponement of childbearing.

"How Well Do Individuals Predict the Selling Prices of Their Homes?"

Self-reported home values are widely used as a measure of housing wealth by researchers; the accuracy of this measure, however, is an open empirical question, and requires some type of market assessment of the values reported. In this study, the authors examine the predictive power of self-reported housing wealth when estimating housing prices, utilizing the portion of the University of Michigan's Health and Retirement Study covering 1992-2006. They find that homeowners, on average, overestimate the value of their properties by 5–10 percent. More importantly, the authors establish a strong correlation between accuracy and the economic conditions at the time of the property's purchase. While most individuals overestimate the value of their property, those who buy during more difficult economic times tend to be more accurate; in some cases, they even underestimate the property's value. The authors find a surprisingly strong, likely permanent, and in many cases long-lived effect of the initial conditions surrounding the purchase of properties, and on how individuals value them. This cyclicality of the overestimation of house prices provides some explanation for the difficulties currently faced by many homeowners, who were expecting large appreciations in home value to rescue them in case of interest rate increases--which could jeopardize their ability to live up to their financial commitments.

Easy Money? Health and 401(k) Loans

Rising health care costs and declining personal savings rates are nearly synonymous with household medical debt. For some, defined contribution (DC) retirement savings plans provide a ready source of funds to meet these medical debts. We examine whether health status and health insurance coverage predict the likelihood of having a DC loan using data from the Federal Reserve’s triennial Survey of Consumer Finances from 1989 to 2007. We find that poor health raises the likelihood that a household will borrow from their DC plans, even controlling for other forms of debt, access to credit, and whether households are covered by health insurance. Our estimates of the amount of the DC loan, taking selection effects into account, indicates that DC loan amounts are also influenced by health status; those with poor health borrow more from their DC plans. Apart from health status, once a household decides to borrow from their retirement funds, race and education also influence how much to borrow. We argue that public policy can improve the long-term financial retirement security of households by offering more opportunities to save for medical emergencies, while cautiously maintaining the opportunity to borrow from DC plans.��Defined contribution retirement savings plans; pension debt; health insurance coverage; health status