Gamblers, scratchers and their financial education
- 28 Downloads
We develop an online survey to investigate the characteristics of slot/videopoker players and scratchers (individuals buying tickets of scratch-off lotteries). We find evidence of a negative relationship between gambling and financial literacy. More specifically, after controlling for gender, education, income, employment status and area of residence: (1) slot and/or videopoker players have an 8% lower probability of answering correctly to all of the three standard financial education questions; (2) scratch-off players have a 10% lower probability of answering correctly to the (third) mutual fund risk diversification question, (3) a correct answer to all financial education questions raises by 14% the probability of declaring unwillingness to play due to lack of economic convenience. Scratch-off players are as well more impatient and more likely to sacrifice expected value for positive skewness and they overestimate the probability of winning at least the price of the ticket. Our findings suggest that scratchers and slot/videopoker players may be unable to evaluate the overall consequences of gambling on their economic wellbeing due to their lower financial education.
KeywordsGambling Scratch-off lotteries Financial education
JEL ClassificationG02 (Behavioral Finance: Underlying Principles) G11 (Portfolio Choice, Investment Decisions) A20 (Economics education and teaching of economics) D14 (Household Saving, Personal Finance)
We thank Pasquale Scaramozzino, Andrea Attar, Rocco Ciciretti, Iftekhar Hasan for their useful comments and suggestions. The usual disclaimer applies.
- Clotfelter, C. T., & Cook, P. J. (1991). Selling hope: State lotteries in America. Cambridge: Harvard University Press.Google Scholar
- Codagnone, C., Bogliacino, F., Ivchenko, A., Veltri, G., et al. (2014). Study on online gambling and adequate measures for the protection of consumers of gambling services. Final Report. European Commission, Brussels. http://ec.europa.eu/internal_market/gambling/docs/initiatives/140714-study-on-online-gambling-final-report_en.pdf.
- Cornish, D. B. (1978). Gambling: a review of the literature and its implications for policy and research. London: HMSO.Google Scholar
- Fornero, E., Monticone, C. (2011). Financial literacy and pension plan participation in Italy. Netspar Discussion Paper No. 01/2011-019.Google Scholar
- Griffiths, M. (1997). The National Lottery and instant scratchcards: A psychological perspective. The Psychologist: The Bulletin of the British Psychological Society, 10, 26–29.Google Scholar
- Griffiths, M. (2002). Are lottery scratchcards a “hard” form of gambling?. Journal of Gambling Issues.Google Scholar
- Jappelli T., Padula M. (2013). Investment in financial literacy and social security and portfolio choice. Centre for Studies in Economics and Finance.Google Scholar
- Stewart, I. (1996). It probably won’t be you. The Times Higher Educational Supplement, p. 14.Google Scholar
- Walker, M. B. (1992). The psychology of gambling. Oxford: Pergamon Press.Google Scholar