Consumer behaviour in lottery: the double hurdle approach and zeros in gambling survey data

Abstract

Governments world-wide increasingly rely on gambling revenues, increasing the importance of understanding who gambles and why. Previous literature used Tobit and Heckman models to statistically analyse participation in gambling. These models make strong assumptions about the nature of gambling participation. We examine the double hurdle model as an alternative to other statistical approaches to modelling gambling participation and spending for lotteries in the province of Alberta, Canada. Our results for lotteries, based on data from a 2002 survey of gambling prevalence in Alberta, clearly prefer the double hurdle model, which yields different results than the commonly used Tobit model. This has important implications for governments who rely on revenues from lottery to fund many different programs in their jurisdictions.

Consumer behaviour in the scratch card market: a double-hurdle approach

“…Along the same lines, marital status seems to have a negligible impact on the decision to gamble. This result is consistent with Humphreys et al (2010). Furthermore, individuals who regularly consume alcohol are 9% points more likely to gamble.…”

“…Additionally, individuals with undergraduate educational level are about 8% more International Gambling Studies 105 likely to play the Le Millionaire game than those with primary educational level only. This result is somewhat consistent with Humphreys et al (2010). They report a higher likelihood of gambling as years in education increase.…”

“…Correspondingly, Hraba et al (1990) find a negative correlation between being married and gambling. Conversely, in accordance with Humphreys et al (2010), married individuals are more likely to gamble than single people.…”

“…Men tend to seek excitement and financial gain when they gamble, while women do so to escape boredom and loneliness (Trevorrow & Moore, 1998). Hraba et al (1990) and Humphreys et al (2010) both report a positive effect of being male on gambling expenditure. The effect of residential area on gambling participation is less obvious.…”

“…Highly qualified individuals are likely to be more ambitious and have greater financial means to place a bet relative to poorly qualified individuals. Humphreys et al (2010) provide evidence of an increase in years of completed education which is correlated with an increased probability of participating in the lotto market.…”