Work

Gambling, Saving, and Lumpy Liquidity Needs

Year: 2020

Type: article

Abstract: I present evidence that unmet liquidity needs for indivisible, “lumpy,” expenditures increase demand for betting as a second-best method of liquidity generation in the presence of financial constraints. With a sample of 1,708 sports bettors in Kampala, Uganda, I show that participants’ targeted payouts are linked to anticipated expenditures, while winnings increase lumpy expenditures disproportionately. I show that a randomized savings treatment decreases demand for betting. And I use two lab-in-the-field experiments to show that unmet liquidity needs and saving ability are important mechanisms. These results cannot be explained by betting as a purely normal good. (JEL C93, D81, G51, L83, O12, O16)

Source: American Economic Journal Applied Economics

DOI: 10.1257/app.20180177

Author: Sylvan Herskowitz

Institution: International Food Policy Research Institute

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W3114096749

FWCI: 5.117

Cites: 42

Cited by: 19

Related to: 10