SMU SOE Seminar (Aug 8, 2018): Consumption Responses to Income Shocks through Lottery Winning

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ABSTRACT We study the effects of unearned income via lottery winning on consumption using newly available, nationally representative household survey day. We find that a $1 increase of lottery prize in the last 12 months raises monthly total consumption expenditure by $0.09. This consumption response is mainly driven by increases in non-durable spending. Our heterogeneity analyses provide further evidence on possible mechanisms of consumption responses to an income shock. The consumption responses to a $1 increase in lottery prize are larger among households that have stronger liquidity constraint, a shorter-term time horizon for financial planning, and greater risk aversion. Keywords: Lottery, Consumption, Saving JEL Codes: D12, D14 Click here to view the CV.
		PRESENTER Kanghyock Koh Ulsan National Institute of Science of Science and Technology
		RESEARCH FIELDS Health Economics Labor Economics
		DATE: 8 August 2018 (Wednesday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903