The Lottery Tax

Pat Garofalo calls lottery tickets “a tax on those who can least afford it”:

Study after study has shown that lottery tickets are disproportionately purchased by low-income, less-educated people, and that lottery purchases go up when the economy and the unemployment rate gets worse. (22 state lotteries set sales records during the height of the Great Recession.)

James Gibney suggests a solution to this problem:

The research also shows, however, that the bigger the jackpot, the more affluent the ticket buyers.

One 2004 study by Emily Oster, now an economist at the University of Chicago, actually projected (with the usual academic caveats) a jackpot size at which Powerball becomes progressive: around $806 million.

Oster looked at buyers of Connecticut state lottery tickets by zip code and found that as the size of the jackpot grew, sales increased in richer areas: in fact, “at the highest jackpot levels the poorest 20% contribute only about 19% [of state sales] and the richest contribute close to 32%.” She suggested that “fewer games, with longer odds and higher jackpots, could allay some fears about regressivity.”