sticity is relevant to the design of the lottery (Farrel 1). The way that the demand elasticity is derived is by comparing the rollover weeks with the non-rollover weeks. By doing this, the normal demand is recorded during the non-rollover weeks to see what level the demand is usually at. Then from there they can see how the demand increases as the lottery rolls over. Depending on rollovers for this study poses a problem. Rollovers should occur infrequently leaving the chance of not having enough variance in the data to create a reliable estimate (Farrel 2). However, one of the surprising details of the data is that rollovers occurred more regularly then if it was generated by “statistical chance” (Farrel 2). What this means to the U.K. lottery is that when ticket sales are at their mean level of 65 million with a 6-ball lottery; there is a one percent chance of rollover. Being that a high rollover rate is common in to all lotto games, the U.K. lottery yielded 19 rollovers from the 116 draws that were studied (Farrel 2). The reason for this high rate of rollovers is that the people that are choosing the numbers are choosing them in a non-uniform way. This means that they cover a smaller range of combinations with their numbers. This also helps in explaining why when someone does win there is usually more than one winner (Farrel 2). The Elasticity of Demand for Lotto TicketsAnd the Corresponding Welfare EffectsThis article did a study using the first 254 weeks of the Florida Lottery. The study shows evidence of the Florida Lottery price elasticity being near unity. This happens when employing a measure of lotto ticket price that is superior to that used by others (Mason 1). From these results it may be, in comparison to other states, that Florida has room to increase the odds to increase the price elasticity of demand to the revenue-maximizing level (Mason 1). Price Elasticity of Demand and an OptimalCash Discount Rate in ...
