Elsevier

The Journal of Socio-Economics

Volume 37, Issue 6, December 2008, Pages 2492-2504
The Journal of Socio-Economics

Something for nothing: A model of gambling behavior

https://doi.org/10.1016/j.socec.2008.02.011Get rights and content

Abstract

Gambling is an ancient economic activity, but despite its universality and importance, no single explanation for the demand for gambles has gained ascendance among economists. This paper suggests that the demand for gambles is based on the ability to obtain “something for nothing.” That is, the gain from gambling is not merely additional income, but additional income for which the gambler does not need to work. Thus, to fully understand gambling behavior, it must be placed in a labor supply context. The theory is tested empirically using the Survey of Gambling in the U.S. Support for the theory is found.

Section snippets

Model

The following model of the demand for gambles was first presented in Nyman (2004). To show how gambling winnings are evaluated from a labor supply perspective, it is useful first to describe the standard labor supply model where the consumer–worker derives utility from income, y, and leisure, l. At wage rate w, he faces a constraint on his earnings based on the total amount of time available for both work and leisure. The total time available is normalized to unity, so the individual's problem

Data

The data come from the Survey of Gambling in the U.S., a random-digit-dial telephone survey of the U.S. population aged 18 and older (see Welte et al., 2002 for a detailed description of the data). This survey was conducted between August 1999 and October 2000, and represented an 84-page interview requesting information on the demographic and economic characteristics of the respondent, the respondent's drug and alcohol use, and the respondent's gambling history over the last 12 months. Like

Results

Descriptive statistics for those respondents included in the “decision to gamble” regression equation are presented in Table 1 and the results of the logistic regression are presented in Table 2. Coefficients, odd ratios and significance levels of the regression coefficients are reported. Workers were more likely to gamble, and this was even true of those who had worked at one time but were not now working. For the latter group, the significant regression coefficient suggests that past working

Discussion

Gambling can take many forms and may have a number of motivations, but one motivation appears to be the attraction of gaining “something for nothing.” The empirical results in this paper suggest that this motivation is a factor in determining whether a person participates in a wide variety of gambling games. Specifically, working appears to increase significantly the likelihood of gambling. Furthermore, among those who are not now working, those who have worked in the past have a significantly

Acknowledgements

The authors would like to thank Morris Altman and an anonymous reviewer for helpful comments. Any remaining errors or oversights are solely the authors’ responsibility.

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