State lotteries and education: do they really fix the education quagmire?

Abstract

During the latter half of the 20th century many states began to use the lottery as an alternative method to increasing the amount of revenue within their general funds. Apparently, this method was a lot more palatable than increasing taxes. Passing lottery legislation was easier in states where the funds were partially or wholly designated for primary, secondary, or higher education. The main purpose of this paper is to determine if the presence of a lottery impacts educational outcomes (high school graduations rates, bachelor degrees awarded, ACT, and SAT scores). Using state level data for the period 1985-2000 in a pooled time series regression model, the analysis indicates that the presence of a lottery is useful in models explaining educational outcomes.