Publication Type
Journal Article
Version
acceptedVersion
Publication Date
2-2025
Abstract
We study the effects of lottery winning on consumption spending using newly available household survey data in Singapore. We find strong consumption responses to a transitory income shock via lottery wins. Lottery winners spend about half of their prizes within 12 months of winning. We show that consumption responses are stronger among households with more binding liquidity constraints and less risk aversion, which is consistent with the standard life-cycle model. The strong consumption response suggests that fiscal stimulus policies or other public transfer programs could be an effective means of boosting consumption spending of the economy in the short run.
Keywords
Lottery, Consumption, Marginal propensity to consume, Liquidity constraint, Risk preference
Discipline
Asian Studies | Behavioral Economics | Health Economics
Research Areas
Applied Microeconomics
Publication
Oxford Bulletin of Economics and Statistics
Volume
87
Issue
1
First Page
1
Last Page
25
ISSN
0305-9049
Identifier
10.1111/obes.12629
Publisher
Wiley
Citation
KIM, Seonghoon and KOH, Kanghyock.
Consumption responses to income shocks through lottery winning. (2025). Oxford Bulletin of Economics and Statistics. 87, (1), 1-25.
Available at: https://ink.library.smu.edu.sg/soe_research/2725
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1111/obes.12629