Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/246689 
Year of Publication: 
2021
Series/Report no.: 
School of Economics Discussion Papers No. 2104
Publisher: 
University of Kent, School of Economics, Canterbury
Abstract: 
The Spanish Christmas Lottery is one of the most common lottery games played in Spain. This paper analyses how local windfall gains from the Christmas Lottery can affect household consumption behavior. We find that there is a significant increase in goods consumption in the winning Regions. More precisely, we find that durable goods are sensitive to lottery winnings, meaning that those households living in the winning Regions of the lottery spend more on this type of goods. Non-durable goods do not seem to react to the income shock, as the estimated effect is inelastic, although the effect is statistically significant. Despite these findings are inline with the theoretical predictions, these results imply a violation of the Permanent Income Hypothesis for long-life goods, as households do not smooth their consumption when a one-time and positive income shock occurs.
Subjects: 
Consumption
Durable goods
Non-durable goods
Lottery
PIH
Winning Region
JEL: 
C01
C23
C26
C55
C93
D12
D14
Document Type: 
Working Paper

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