Keeping up with the Joneses (Dutch edition)

There are so many fascinating lotteries in the world.

Each week, the Dutch Postcode Lottery (PCL) randomly selects a postal code, and distributes cash and a new BMW to lottery participants in that code. We study the effects of these shocks on lottery winners and their neighbors.

That from a new IZA paper. Not surprisingly,

…we find that the vast majority of BMW winners do not own a BMW six months after the lottery

*but*

…having an immediate neighbor win the PCL raises the probability that a household will buy a car in the next six months by close to 7 percentage points and reduces the mean age of its main car at the survey date by half a year (about a 7 percent decline). Relative to the modest effects of the lottery prizes on the consumption choices of winning households, these effects on neighbors are large.

Humans will never cease to fascinate me.

2 Responses

  1. You mean “keep up with the van den Bergs.”
    I read the paper, and did not see if they bothered to ask the neighbor if he had bought the new car from the lottery winner. With the local market saturated with unwanted BMWs, maybe winners were happy to sell quickly at a below market price.