Gambling motivation and involvement: A review of social

price of heroin would probably mean little for consumption patterns. Those who
had not bought heroin earlier would not likely start buying if the price was reduced
by, for instance, 20 percent. Also, those already addicted to heroin would be largely
insensitive to price changes. Even if the price was raised 200 percent, they would
buy about the same amount of heroin; they would not buy less heroin and spend
their money on beer, cigarettes or something else instead. In short, the consumption
of a highly addictive substance like heroin would not show the price elasticity of
demand typical of consumer goods in general, i.e. where, if the price goes up, consumption
goes down, and vice versa.
Consumption patterns thus tell us something about the addictiveness of goods.
Since gambling is considered to make some people addicted, it is therefore of interest
to see what economists have found regarding the consumptions patterns of gambling
products. Such economic investigations are relatively few in number and most
concern lotteries, a form of gambling that is generally regarded to have a low potential
for creating problem gambling or attracting those who already are addicted.
The principal issue under investigation in these studies is the price elasticity of
demand. If price elasticity exists, lowering of the price of a gambling product will
lead to increased consumption, while an increase in price will cause consumption
to fall. The more elastic the demand is, the greater the increase in consumption if
the price is lowered, and vice versa if the price is raised. If a lottery product is made
more attractive by some modification, such as a larger jackpot or an instant-win
auxiliary draw, this is equivalent to a price cut since the consumer gets more gambling
for the same purchase price; hence, consumption should rise. Income elasticity
may also be discussed, i.e. the impact on consumption of gambling products caused
by increases or decreases to average wages. Cross-price elasticies are measures of the
demand for products in relations of substitution and complementarity. In a relation
of substitution, a rise in price for one product, which causes a decrease in consumption,
leads to an increase in the consumption of substitute products; in a relation
of complementarity, a rise in the price of one product, and thereby a decrease in
consumption, leads to a decrease in the consumption of complementary products
as well. Lowered prices cause the inverse effects. Since gambling markets are often
strictly regulated – through state monopolies and fixed payout rates – cross-price
elasticies may be small and difficult to measure [162].
Most studies find significant price elasticity in lotteries and some other forms
of gambling, often comparable to that of other consumer goods. A review of the
literature is found in the Australian Productivity Commission report [56 Ch. 5 ], and a
good deal of the American literature is summed up by Thalheimer [163]. Among the
findings might be mentioned that the size of the jackpot is a good predictor of lottery
sales: the bigger the jackpot, the larger the sales [51]. A large roll-over jackpot
increases not only the pure economic utility of entering the lottery, but also the process
utility value of entering the lottery: the consumer gets more pleasure, excitement
and entertainment out of buying a lottery ticket when the jackpot is higher. This is
32 G A M B L I N G M O T I VAT I O N A N D I N V O LV E M E N T