Windfall money and outbound tourism: A natural experiment from lottery winnings

Abstract

Income is a relevant factor for explaining outbound tourism demand. However, when working with regional- or country-level data, it is difficult to disentangle the role of income in stimulating tourism travelling from other factors that correlate with greater income levels. This paper exploits a natural experiment from Spanish Christmas Lottery to estimate the causal effect of income shocks on outbound tourism. We leverage the staggered and quasi-random assignment of lottery winnings across Spanish regions to estimate the elasticity of outbound annual trips and expenditure to windfall gains. Using difference-in-differences with the amount of lottery prizes as an indicator of treatment intensity, we show that lottery winnings per capita increase both the annual number of tourism trips and expenditure per capita. This effect operates during the first 2 years following the draw, which is likely explained by bandwagon and income multiplier effects.

Household structure decisions and positive wealth shocks: a natural experiment from the Spanish Christmas lottery

“…Ghomi et al (2023) showed that El Gordo winnings decrease the unemployment rate. Boto-García et al (2023) suggested that these unexpected gains increase both the annual number of outbound tourism trips and the corresponding average spending. In both cases, it is assumed that the winning province (or provinces) is randomly assigned and the winners tend to be geographically clustered (Bagues & Esteve-Volart, 2016).…”