Should problem gamblers be offered a Pigouvian subsidy?

The DSM-5 recognises “Gambling disorder” as a non-substance-related and addictive Disorder. Habitual gambling with electronic gaming machines (EGMs) can generate negative externalities. The proposed clinical trial is an application of Gossen’s (1854) model of consumer behaviour, which posits that consumption is constrained by time rather than income. Reducing the mean price of an EGM gamble is reduced to zero, increases the mean number of gambles required to lose a fixed stake to infinity, in effect replacing the problem gambler’s income constraint with a time constraint (Rowell & Gyrd-Hansen 2014).

The aim of the proposed clinical trial is to test under what conditions might a Pigouvian subsidy provided in the form of an actuarially fair EGM, minimize the negative externalities generated by problem gambling.

Project members

Contact and investigator

Dr David Rowell

Postdoctoral Research Fellow
Centre for the Business and Economics of Health