Made from Scratch: SNAP and Lottery Sales (In progress)

Abstract

On average, lotteries offer a negative return on investment, yet many billions of dollars are spent playing them. Using new data we construct from administrative data on store-level lottery ticket sales and their eligibility to accept SNAP benefits in Pennsylvania, we document that SNAP-eligible stores account for over 70% of lottery revenues, while making up only 45% of all lottery sellers. Furthermore, we find evidence that county-level lottery sales are positively correlated with disbursement of government transfer programs. Specifically, we find that counties with one percent higher unemployment insurance and SNAP transfers have draw lottery sales that are about 10% higher. Using the 2018–2019 government shutdown that affected SNAP disbursements, we estimate how much households respect the fungibility of money by estimating the pass-through of SNAP benefits to lottery sales.

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