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Published online by Cambridge University Press: 07 November 2014
Lottery tickets have been bought and sold in many countries for several centuries. There are many discussions of the historical social customs attending lotteries; the psychological, gambling, and fraudulent aspects of lotteries; the moral issues involved in the state licensing of lotteries; the lottery as a source of government revenue; and the mechanics of drawing. Economists have generally neglected to study the historical significance of lotteries. Friedman and Savage have suggested that the lottery may be a fruitful source of historical economic data; more recently, Aitken examined in some detail a large lottery firm which operated in the United States between 1821 and 1834. The purpose of this paper is to set down systematically quantitative measures of two essential lottery features: the inequality of the prize distribution and the actuarial value of the gamble. Some interesting historical comparisons can be made, and some hypotheses are suggested by the data which might be the subject of further research.
The lotteries of this study are restricted to those with cash prizes to lend some uniformity to the lottery terms and, from the consumer's point of view, to make all alternatives money incomes. The selection of the sample can best be described by giving a short history of English and United States lotteries.
1 For a bibliography see United States Library of Congress, Division of Bibliography, Lotteries in the U.S. and Foreign Countries, with Emphasis on Their Use as a Means of Raising Government Revenues (Washington: Government Printing Office, 1934)Google Scholar; Supplement (1942).
2 Friedman, Milton and Savage, L. J., “The Utility Analysis of Choices Involving Risk,” Journal of Political Economy, LVI, 08, 1948, 279–304.CrossRefGoogle Scholar
3 Aitken, Hugh G. J., “Yates and McIntyre: Lottery Managers,” Journal of Economic History, XII, no. 1, 1935, 36–57.Google Scholar
4 Two historical works are extremely valuable in providing information about the times and terms of English lotteries: Ashton, John, A History of English Lotteries (London, 1893)Google Scholar; and Ewen, C. L'Estrange, Lotteries and Sweepstakes (London, 1932).Google Scholar
5 Ewen, , Lotteries and Sweepstakes, 199–240.Google Scholar
6 These papers were all on microfilm in the library of the University of Chicago. The most fruitful sources were the Daily Advertiser, London Evening Post, Morning Chronicle, Palladium, and The Times.
7 Ewen, , Lotteries and Sweepstakes, 234.Google Scholar
8 Brooks, Henry Mason, The Olden Time Series (Boston, 1886)Google Scholar; Doyle, Thomas, Five Years in a Lottery Office (Boston, 1841)Google Scholar; Muller, Helen M., The Reference Shelf (New York, 1935), vol. X, no. 2Google Scholar; Stiness, John Henry, A Century of Lotteries in Rhode Island (Providence, 1898).Google Scholar
9 Advertisements were most plentiful in the Maryland Gazette, New York Evening Post, Pennsylvania Gazette, and the Pennsylvania Journal and Weekly Advertiser.
10 These handbills, which are called “Prospecta de Premios, Lotería Nacional,” were published by the Lottery Director General in Madrid approximately six months before the date of the drawing. The author obtained these advertisements from Sén. José Vergara Doncel.
11 France, , Journal officiel de la République française, Part I, Lois et décrets (Paris: Imprimerie Nationale, 1947–1949).Google Scholar
12 Yntema, Dwight B., “Measures of the Inequality in the Personal Distribution of Wealth or Income,” Journal of the American Statistical Association, XXVIII, 12, 1933, 427.Google Scholar
13 Ewen, , Lotteries and Sweepstakes, 238 f.Google Scholar
14 Personal letter.
15 Money lotteries are not conducted legally in the United States today, but American business enterprises do conduct contests. An interesting project would be to compare the inequalities in the distributions of contest prizes with: (1) inequalities of the early money lotteries; (2) the inequalities of income in the United States before and after the Second World War, to give some quantitative evidence for or against a relationship between the inequality of lottery prizes and the inequality of incomes.
16 Ewen, , Lotteries and Sweepstakes, 124.Google Scholar
