Douglas M. Walker

Additional Evidence on the Relationship between Class Size and Student Performance

Much of the economic education literature suggests that the principles of economics class size does not significantly affect student performance. However, study methods have varied in terms of the aggregation level (student or class), the measure of performance (TUCE or course letter grade), and the class size measure (e.g., students who completed both the TUCE pretest and posttest). The authors perform an experiment with principles students using total exam points as the dependent variable in a model to explain student performance. By using the same instructor for all sections, the authors control variation in instruction, lecture material, and topic coverage; they also account for variation in student abilities. In contrast to many other studies, the authors find statistically significant evidence that small class size has a positive impact on student performance.

The Social Costs of Gambling: An Economic Perspective.

Much of the opposition to legalized gambling is based on analyses of the social costs that occur as a result of pathological gambling. It is our contention that many, if not most, authors who have contributed to this literature are either unclear or misguided in what they define as social costs. Instead of starting with a clear definition of what constitutes a social cost, these authors have adopted an ad hoc approach—using “common sense” to determine what constitutes losses to society and then attempting to quantify the impact of those activities. We believe this is not, as some suggest, simply a matter of semantics. Rather, it is a serious problem in the gambling literature. How do we differentiate between a consequence of pathological gambling that is a “social cost” and one that is not? Which of the consequences of addictive behaviors that are associated with gambling arise when gambling is legal, and which will be manifest in some form whether or not gambling is legal? In this article we explain the economic perspective on social costs. An understanding of this paradigm removes the subjectivity in the classification of pathological gamblings social costs. The paper has three major components. First, we introduce the economic notion of social costs. Using this paradigm, we differentiate between the “true” social costs related to pathological gambling, and other negative consequences that cannot legitimately be classified as social costs. Second, we evaluate a recent social cost study using the economics social cost paradigm. Third, we discuss two types of social costs that have been largely overlooked in the gambling literature. One is caused by gambling prohibition. The other occurs as a result of “rent seeking” that is related to the political process surrounding the legalization of gambling.

Do Casinos Cause Economic Growth

Casino gambling is a popular form of entertainment and is purported to have positive effects on host economies. The industry surely affects local labor markets and tax revenues. However, there has been little evidence on the effects of casino gambling on state eco- nomic growth. This paper examines that relationship using Granger- causality analysis modified for use with panel data. Our results indicate that there is no Granger-causal relationship between real casino revenues and real per capita income at the state level. The results are based on annual data from 1991 to 2005. These findings contradict an earlier study that found that casino revenues Granger-cause economic growth, using quarterly data from 1991 to 1996. Possible explanations for the differences in short- and long-run effects are discussed.

Methodological Issues in the Social Cost of Gambling Studies

The appropriate way to classify and measure the “social costs” of gambling is a very important, unresolved methodological issue that has been addressed by Collins and Lapsley (2000); Thompson, Gazel, and Rickman (1999); and Walker and Barnett (1999), among others. What should be included and excluded from social cost studies continues to be a controversial issue, as illustrated in the literature and recent conferences. This paper is an attempt to explain the “economics” conception of social costs in accessible language. By using a simple economic model and everyday examples, it shows that the economics methodology is better than the other methodologies currently available. There are four specific goals of the paper: (1) Discuss the importance of the social cost methodological debate and the state of research in the area; (2) Explain the Walker–Barnett definition of social cost in the context of a simple production possibilities frontier and indifference curve model; (3) Use simple illustrative examples to show why many of the alleged social costs should not be classified as such; and (4) Suggest a new method for analyzing the social costs and effects attributable to pathological gambling.

Do U.S. Gambling Industries Cannibalize Each Other

Many states facing recent fiscal crises have looked to legalized gambling in an attempt to ease fiscal constraints. Although there has been some research on the economic effects of gambling, no study has offered a comprehensive analysis of the interindustry relationships of lotteries, casinos, horse racing, and greyhound racing. In this article, we use seemingly unrelated regression (SUR) estimation to analyze the relationships among gambling industries in the United States. Our results indicate that some industries “cannibalize” each other (e.g., casinos and lotteries, and horse and dog racing), whereas other industries help each other (e.g., casinos and horse racing, dog racing and lotteries, and horse racing and lotteries). The study also examines the effects of adjacent-state gambling and a variety of demographic variables. This analysis provides a foundation for further research on how to optimize tax revenues from legalized gambling.

Problems in Quantifying the Social Costs and Benefits of Gambling

As casinos and other forms of gambling spread across the United States, voters and policymakers are becoming increasingly interested in the potential costs and benefits from expansion in gambling industries. Since the mid-1990s, a variety of cost-benefit research has been published, much of it using flawed methodologies. This paper examines some of the most important areas of debate and disagreement among gambling researchers, and explains why the quantification of the costs and benefits of gambling is problematic.

The Effect of Legalized Gambling on State Government Revenue

Legalized gambling is an attractive option to state governments facing tightening fiscal constraints. Yet, the empirical evidence on the effect of gambling on state revenues is limited. Most studies examine a single industry in a single state, and for a relatively short period of time. This study provides a more general analysis of gambling industries and their effects on state revenues. We use data on gambling volume and state government revenues net of federal government transfers for all 50 states from 1985 to 2000. We find that lotteries and horse racing tend to increase state revenues, while casinos and greyhound racing tend to decrease state revenues.

The impact of casinos on fatal alcohol-related traffic accidents in the United States

Casinos have been introduced throughout the U.S. to spur economic development and generate tax revenues. Yet, casinos may also be associated with a variety of social ills. One issue that has not been empirically tested in the literature is whether there is a link between casino expansion and alcohol-related fatal traffic accidents. We suspect a link may exist since casinos often serve alcohol to their patrons and, by their dispersed nature, could impact driving distances after drinking. Using the variation in the timing and location of casino openings over a 10-year period, we isolate the impact of casino introduction on alcohol-related fatal accidents. Results indicate that there is a strong link between the presence of a casino in a county and the number of alcohol-related fatal traffic accidents. However, this relationship is negatively related to the local-area (county) population. Results prove durable, as we subject them to robustness checks.

Are gamblers more likely to commit crimes? An empirical analysis of a nationally representative survey of US young adults

We examine the relationship between gambling and criminal behaviour using data from the National Longitudinal Study of Adolescent Health (Add Health). Our data set includes survey responses from 6145 young adults. The results of our empirical analysis are consistent with the gambling literature in which it is suggested that higher gambling losses increase the propensity to commit crime. This study complements the current literature, as our data and empirical analysis allow us to control for many variables that have been neglected in previous studies, including various forms of gambling. Our findings provide useful information on the general relationship between gambling behaviour and criminal behaviour.

Setting Win Limits: An Alternative Approach to “Responsible Gambling”?

Social scientists, governments, and the casino industry have all emphasized the need for casino patrons to “gamble responsibly.” Strategies for responsible gambling include self-imposed time limits and loss limits on gambling. Such strategies help prevent people from losing more than they can afford and may help prevent excessive gambling behavior. Yet, loss limits also make it more likely that casino patrons leave when they are losing. Oddly, the literature makes no mention of “win limits” as a potential approach to responsible gambling. A win limit would be similar to a loss limit, except the gambler would leave the casino upon reaching a pre-set level of winnings. We anticipate that a self-imposed win limit will reduce the gambler’s average loss and, by default, also reduce the casino’s profit. We test the effect of a self-imposed win limit by running slot machine simulations in which the treatment group of players has self-imposed and self-enforced win and loss limits, while the control group has a self-imposed loss limit or no limit. We find that the results conform to our expectations: the win limit results in improved player performance and reduced casino profits. Additional research is needed, however, to determine whether win limits could be a useful component of a responsible gambling strategy.