The dummies' guide to lottery design

This paper outlines the issues relevant to the operation of lottery games. We consider how such games should be designed, what a portfolio of games might look like, how the operator should be regulated, how spending on lottery games should be taxed, and what considerations are relevant to the use of the revenue from such games. Our research suggests that the lottery tickets sales depend positively on the proportion of revenue returned as prizes (i.e the mean of the prize distribution), the skewness in the prize distribution (e.g how much of the prize money goes to the jackpot), and negatively on the variance in the prize distribution. Thus good causes revenue might be higher if the game were meaner (less of the stakes used as prize money), or if more of the prize money was used for the jackpot, or if the variance in the expected prizes were reduced. In practice, it is difficult to change one aspect of the design of the prize distribution without having a counterveiling effect on another aspect. Thus, it is difficult to make judgements about the merits of alternative game designs without looking at all of the parameters being proposed. We find no empirical evidence to suggest that there is any merit in having much of the take-out (the revenue that is not returned as prizes) dedicated to good-causes, and no evidence that the nature of the operator might make any difference. The current “beauty contest” process of choosing an operator is fraught with risk and we suggest that, subject to a probity check, the license should be auctioned

Child Support and Educational Outcomes: Evidence from the British Household Panel Survey

There is some evidence to support the view that Child Support (CS), despite low compliance rates and a strong interaction with the welfare system, has played a positive role in reducing child poverty among non-intact families. However, relatively little research has addressed the role of CS on outcomes for the children concerned. There are good reasons for thinking that CS could leverage better outcomes than other forms of income support and, using a sample of dependent children in non-intact families from the British Household Panel Survey (BHPS), we find that CS received has an effect which is at least 10 times as large as that associated with variations in other sources of total household net income for two key educational outcomes: namely school leaving at the age of 16, and attaining 5 or more good GCSEs. We show that this remarkable and strong result is robust and, in particular, can be given a causal interpretation

Geodesic Rosen Continued Fractions

We describe how to represent Rosen continued fractions by paths in a class of graphs that arise naturally in hyperbolic geometry. This representation gives insight into Rosen's original work about words in Hecke groups, and it also helps us to identify Rosen continued fraction expansions of shortest length

Do NEETs Need Grit?

This paper investigates the relationship between personality traits in adolescence and education and labour market choices. In particular, we investigate the impact of grit (a tendency and ability to sustain interest in long term goals - perseverance) on the risk of youths being NEET – "Not in Education, Employment or Training". Thus, our focus is on early drop-out from the labour market and education at age 18-20. Individuals with high levels of grit are less likely to be out of education or employment, while low self-esteem and external locus of control increase the chances of experiencing these conditions.We use propensity score matching to control for a rich set of adolescent and family characteristics and our results show that personality traits do affect education and employment choices. We test the robustness of our results using the methodology proposed by Altonji et al. (2005) that consists of making hypotheses about the correlation between the unobservables and observables that determine the outcomes and the unobservables that influence personality

Differences by Degree: Evidence of the Net Financial Rates of Return to Undergraduate Study for England and Wales

This paper uses the Quarterly Labour Force Survey, the latest and largest dataset available, to provide independent estimates of returns to higher education qualifications in the UK for graduates with different degree majors, class of first degree, and postgraduate qualifications. For reasons of sample size, we collapse various undergraduate degrees into four broad subject groups: STEM (Science, Technology, Engineering and Mathematics - and here we also include Medicine); LEM (Law, Economics and Management), OSSAH (other social sciences, arts and humanities which includes languages), and COMB (those with degrees that combine more than one subject). We adopt a method which allows our data to identify the effects of experience on earnings separately from cohort effects in wages for different degree majors. We also allow for tuition fees and the tax system in calculating the NPV associated with higher education (and also the loan scheme). Ordinary Least Squares estimates show high average returns for women that does not differ by subject. For men, we find very large returns for LEM but not for other subjects. Degree class has large effects in all subjects suggesting the possibility of large returns to effort and ability. Postgraduate study has large effects, independently of first degree class. A large rise in tuition fees across all subjects has only a modest impact on relative rates of return suggesting that little substitution across subjects would occur. The strong message that comes out of this research is that even a large rise in tuition fees makes little difference to the quality of the investment – those subjects that offer high returns (LEM for men, and all subjects for women) continue to do so. And those subjects that do not (especially OSSAH for men) will continue to offer poor returns. The effect of fee rises is dwarfed by existing cross subject differences in returns.Rate of return, college premium

Education Choice under Uncertainty and Public Policy

We analyse how progressive taxation and education subsidies affect schooling deci- sions when the returns to education are stochastic. We use the theory of real options to solve the problem of education choice in a dynamic, life-cycle consistent, stochastic model. We show that education attainment will be an increasing function of the risk associated with education. Furthermore, this result holds whether or not agents can borrow in order to pay for education and regardless of the degree of risk aversion. We also examine the link between consumption over the life-cycle and education choice to show that higher initial wealth will usually - but not always - have a positive effect on education attainment. Finally we show that progressive taxes will tend to reduce education attainment for the poor but increase it for the rich.Education Choice; Dynamic Optimization, Optimal Stopping, Uncertainty