The Sentimental Propagation of Lottery Winnings: Evidence from the Spanish Christmas Lottery

We leverage a unique natural experiment, the Spanish Christmas lottery, to investigate the impact of highly geographically clustered winnings on macroeconomic aggregates, and on sentiment and durable consumption, using survey evidence. Lottery winnings reduce significantly unemployment and increase job creation and CPI prices. We claim that the mechanism behind the propagation of lottery wins works through sentiment: lottery wins boost sentiment and positive sentiment spurs economic activity. Albeit not receiving wins, households in winning provinces become more optimistic on impact and significantly increase their durable consumption (for furniture and vehicles) six months after the shock. We discard alternative explanations for the propagation of lottery win shocks.

The Sentimental Propagation of Lottery Winnings: Evidence from the Spanish Christmas Lottery Articles