Abstract
Problem gambling is becoming a growing concern in the United States because of the proliferation of, and state support for, gambling opportunities. The economic cost along with the physical and mental health problems associated with problem gambling make it necessary to study how problem gambling can be reduced. Our study examines whether financial literacy could be a means to reducing gambling frequency in the United States. We use data from the Preference Parameter Study of Osaka University, Japan, and apply instrumental variable probit regression models. The results show that, generally, financial literacy does not have a relationship with gambling frequency, but the relationship is significant in the states where electronic gambling machines (EGMs) are available. The results imply that gamblers are irrational and fail to assess the risks of gambling as well as the probabilities that maximize expected payoffs. It appears that gamblers’ psychological gain from gambling outweighs the negative expected utility when there is easy access to gambling. Thus, rationality with regard to gambling decisions does not work unless the easy access to EGMs is controlled. Our results further show that males, older people, people with higher household income, and people who have easy access to gambling are likely to be frequent gamblers.
Similar content being viewed by others
References
Adebisi, T., Alabi, O., Arisukwu, O., & Asamu, F. (2021). Gambling in transition: Assessing youth narratives of gambling in Nigeria. Journal of Gambling Studies, 37, 59–82
Alessi, S., & Petry, N. (2003). Pathological gambling severity is associated with impulsivity in a delay dis- counting procedure. Behavioural Processes, 64(3), 345–354
American Gaming Association. (2020). State of the States 2019: The AGA Survey of the Commercial Casino Industry. https://www.americangaming.org/wp-content/uploads/2020/06/AGA-2020-State_of_the_States_FINAL.pdf.
American Psychiatric Association (APA). (2013). Diagnostic and statistical manual of mental disorders (DSM-5). (5th ed.). American Psychiatric Association.
Barnes, G. M., Welte, J. W., Tidwell, M. C. O., & Hoffman, J. H. (2011). Gambling on the lottery: Sociodemographic correlates across the lifespan. Journal of Gambling Studies, 27, 575–586. https://doi.org/10.1007/s10899-010-9228-7
Braunstein, S., & Welch, C. (2002). Financial literacy: An overview of practice, research, and policy. Federal Reserve Bulletin, 88, 445–457
Calado, F., & Griffiths, M. D. (2016). Problem gambling worldwide: An update and systematic review of empirical research (2000–2015). Journal of Behavioral Addictions, 5(4), 592–613
Calcagno, P. T., Walker, D. M., & Jackson, J. D. (2010). Determinants of the probability and timing of commercial casino legalization in the United States. Public Choice, 142, 69–90. https://doi.org/10.1007/s11127-009-9475-2
Cassetta, B. D., Kim, H. S., Hodgins, D. C., McGrath, D. S., Tomfohr-Madsen, L. M., & Tavares, H. (2018). Disordered gambling and psychosis: Prevalence and clinical correlates. Schizophrenia Research, 192, 463–464
Castren, S., Kontto, J., Alho, H., & Salonen, A. H. (2017). The relationship between gambling expenditure, socio-demographics, health-related correlates and gambling behavior—A cross-sectional population-based survey in Finland. Addiction, 113, 91–106
Churchill, S. A., & Farrell, L. (2018). The impact of gambling on depression: New evidence from England and Scotland. Economic Modelling, 68, 475–483
Clarke, D., Pulford, J., Bellringer, M., Abbott, M., & Hodgins, D. (2012). An exploratory study of problem gambling on casino versus non-casino electronic gaming machines. International Journal of Mental Health Addiction, 10, 107–121. https://doi.org/10.1007/s11469-010-9306-1
Clarke, D., Tse, S., Abbott, M., Townsend, S., Kingi, P., & Manaia, W. (2006). Key indicators of the transition from social to problem gambling. International Journal of Mental Health and Addiction, 4, 247. https://doi.org/10.1007/s11469-006-9024-x
Costa-Font, J., Giuliano, P., & Ozcan, B. (2018). The cultural origin of saving behavior. PLoS ONE, 13(9), e0202290. https://doi.org/10.1371/journal.pone.0202290
Cunningham-Williams, R. M., Cottler, L. B., Compton, W. M., III., & Spitznagel, E. L. (1998). Taking chances: Problem gamblers and mental health disorders-results from the St Louis Epidemiologic Catchment Area Study. American Journal of Public Health, 88(7), 1093–1096
Currie, S. R., Hodgins, D. C., Wang, J., El-Guebaly, N., Wynne, H., & Chen, S. (2006). Risk of harm among gamblers in the general population as a function of level of participation in gambling activities. Addiction, 101(4), 570–580
Dadayan, L. (2016). State revenues from gambling: Short-term relief, long-term disappointment. SUNY State University of New York. http://www.rockinst.org/pdf/government_finance/2016-04-12-Blinken_Report_Three.pdf. Accessed 27 June 2020.
Dowling, N., Smith, D., & Thomas, T. (2005). Electronic gaming machines: Are they the ‘crack-cocaine’ of gambling? Addiction, 100(1), 33–45
Eisen, C., Ishii, K., Miyamoto, Y., Ma, X., & Hitokoto, H. (2016). To accept one’s fate or be its master: Culture, control, and workplace choice. Frontiers in Psychology, 7, 936
Falk, A., Becker, A., Dohmen, T., Enke, B., Huffman, D., & Sunde, U. (2018). Global evidence on economic preferences. The Quarterly Journal of Economics, 133(4), 1645–1692. https://doi.org/10.1093/qje/qjy013
Fornero, E., & Monticone, C. (2011). Financial literacy and pension plan participation in Italy. Journal of Pension Economics & Finance, 10(4), 547–564
Frederick, S., Loewenstein, G., & O’Donoghue, T. (2002). Time discounting and time preference: A critical review. Journal of Economic Literature, 40(2), 351–401
Gallup. (2018). Acceptance of gambling reaches new heights. https://news.gallup.com/poll/235379/acceptance-gambling-reaches-new-heights.aspx. Accessed 11 April 2020.
Gill, D., & Prowse, V. (2016). Cognitive ability, character skills, and learning to play equilibrium: A level-k analysis. Journal of Political Economy. https://doi.org/10.1086/688849
Griffiths, M. (2004). Betting your life on it. BMJ (Clinical Research ed.), 329(7474), 1055–1056. https://doi.org/10.1136/bmj.329.7474.1055
Guiso, L., Sapienza, P., & Zingales, L. (2006). Does culture affect economic outcomes? Journal of Economic Perspectives, 20, 23–48
Haydock, M., Cowlishaw, S., Harvey, C., & Castle, D. (2015). Prevalence and correlates of problem gambling in people with psychotic disorders. Comprehensive Psychiatry, 58, 122–129
Hing, N., & Russell, A. M. (2020). Proximal and distal risk factors for gambling problems specifically associated with electronic gaming machines. Journal of Gambling Studies, 36, 277–295
Houston, R. G., & Wilson, D. P. (2002). Income, leisure and proficiency: An economic study of football performance. Applied Economics Letters, 9(14), 939–943
Hurla, R., Kim, M., Singer, E., & Soman, D. (2017). Applying findings from financial literacy to encourage responsible gambling. In Behavioural economics in action (pp. 367–380). Rotman School of Management, University of Toronto.
Jaret, P. & Hogan, B. (2014). Losing everything to gambling addiction. AARP Bulletin. Accessed from https://www.aarp.org/health/brain-health/info-01-2014/gambling-addiction.html. Accessed 30 June 2020.
Kadoya, Y., & Khan, M. S. R. (2018). Can financial literacy reduce anxiety about life in old age? Journal of Risk Research, 21(12), 1533–1550
Kadoya, Y., & Khan, M. S. R. (2020). What determines financial literacy in Japan? Journal of Pension Economics & Finance, 19(3), 353–371
Kadoya, Y., Khan, M. S. R., Hamada, T., & Dominquez, A. (2018). Financial literacy and anxiety about life in old age: Evidence from the USA. Review of Economics of the Household, 16, 859–878
Kadoya, Y., Khan, M. S. R., Oba, H., & Narumoto, J. (2020). Factors affecting knowledge about the adult guardianship and civil trust systems: evidence from Japan. Journal of Women & Aging. https://doi.org/10.1080/08952841.2020.1727711
Kessler, R. C., Hwang, I., LaBrie, R., Petukhova, M., Sampson, N. A., Winters, K. C., et al. (2008). DSMIV pathological gambling in the National Comorbidity Survey Replication. Psychological Medicine, 38(9), 1351–1360
Khan, M. S. R., Putthinun, P., Watanapongvanich, S., Yuktadatta, P., Uddin, M. A., & Kadoya, Y. (2021). Do financial literacy and financial education influence smoking behavior in the United States? International Journal of Environmental Research and Public Health, 18, 2579. https://doi.org/10.3390/ijerph18052579
Klapper, L., & Panos, G. A. (2011). Financial literacy and retirement planning: The Russian case. Journal of Pension Economics & Finance, 10(4), 599–618
Leeman, R. F., & Potenza, M. N. (2012). Similarities and differences between pathological gambling and substance use disorders: A focus on impulsivity and compulsivity. Psychopharmacology (Berl), 219(2), 469–490
Lorenz, V. C., & Yaffee, R. A. (1986). Pathological gambling: Psychosomatic, emotional and marital difficulties as reported by the gambler. Journal of Gambling Studies, 2, 40–49. https://doi.org/10.1007/BF01019933
Lusardi, A., Michaud, P. C., & Mitchell, O. (2011). Optimal financial literacy and saving for retirement. RAND Working Paper Series, No. WR-905-SSA.
Lusardi, A., & Mitchell, O. S. (2008). Planning and financial literacy: How do women fare? American Economic Review, 98(2), 413–417
Lusardi, A., & Mitchell, O. S. (2011). Financial literacy around the world: An overview. Journal of Pension Economics & Finance, 10(4), 497–508
Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5–44
Lusardi, A., Mitchell, O. S., & Curto, V. (2010). Financial literacy among the young. Journal of Consumer Affairs, 44, 358–380
Manzenreiter, W. (2013). Playing against all odds: Pachinko and the culture of risk-taking in Japan’s crisis economy. Leisure Studies, 32(3), 283–298
Markus, H. R., & Kitayama, S. (1991). Culture and the self: Implications for cognition, emotion, and motivation. Psychological Review, 98, 224–253. https://doi.org/10.1037/0033-295X.98.2.224
Martin, R. J., Usdan, S., Nelson, S., Umstattd, M. R., LaPlante, D., Perko, M., et al. (2010). Using the theory of planned behavior to predict gambling behavior. Psychology of Addictive Behaviors, 24(1), 89–97
Medeiros, G. C., Leppink, E., Yaemi, A., Mariani, M., Tavares, H., & Grant, J. (2015). Gambling disorder in older adults: A cross-cultural perspective. Comprehensive Psychiatry, 58, 116–121
Mestre-Bach, G., Steward, T., Balodis, I. M., Vintró-Alcaraz, C., Granero, R., Fernández-Aranda, F., Menchón, J. M., Jiménez-Murcia, S., & Potenza, M. N. (2021). A comparison of gambling-related cognitions and behaviors in gamblers from the United States and Spain. Journal of Gambling Studies, 37, 319–333. https://doi.org/10.1007/s10899-020-09971-0
Moodie, C., & Finnigan, F. (2006). Association of pathological gambling with depression in Scotland. Psychological Reports, 99(2), 407–417
Morling, B., Kitayama, S., & Miyamoto, Y. (2002). Cultural practices emphasize influence in the United States and adjustment in Japan. Personality and Social Psychology Bulletin, 28, 311–323
National Council on Problem Gambling (NCPG). (2020). FAQ www.ncpgambling.org/help-treatment/faq/. Accessed 9 May 2020.
North American Foundation for Gambling Addiction Help (NAFGAH). (2020). Gambling and gambling addiction. http://nafgah.org. Accessed 9 May 2020.
Nower, L., & Blaszczynski, A. (2008). Characteristics of problem gamblers 56 years of age or older: A statewide study of casino self-excluders. Psychology and Aging, 23(3), 577–584
Nower, L., Volberg, R. A., & Caler, K. R. (2017). The prevalence of online and land-based gambling in new jersey. Report to the new jersey division of gaming enforcement. Authors.
Ono, S., Yuktadatta, P., Taniguchi, T., Iitsuka, T., Noguchi, M., Tanaka, S., Ito, H., Nakamura, K., Yasuhara, N., Miyawaki, C., Mikura, K., Khan, M.S.R., & Kadoya, Y. (2021). Financial literacy and exercise behavior: Evidence from Japan. Sustainability, 13(8), 4189.
Sekita, S. (2011). Financial literacy and retirement planning in Japan. Journal of Pension Economics & Finance, 10(4), 637–656
Shaffer, H. J. (2005). From disabling to enabling the public interest: Natural transitions from gambling exposure to adaptation and self-regulation. Addiction, 100(9), 1227–1230
Shoham, A., & Malul, M. (2012). The role of cultural attributes in savings rate. Cross Cultural Management: An International Journal, 19(3), 304–314
Simmons, J. L., Whelan, J. P., Meyers, A. W., & Wickwire, E. M. (2016). Gambling outcome expectancies and gambling behavior among African-American adolescents: Gender as a moderating variable. Journal of Gambling Studies, 32, 205–215. https://doi.org/10.1007/s10899-015-9521-6
St-Pierre, R. A., Walker, D. M., Derevensky, J., & Gupta, R. (2014). How availability and accessibility of gambling venues influence problem gambling: A review of the literature. Gaming Law Review and Economics, 18, 150–172. https://doi.org/10.1089/glre.2014.1824
Subramaniam, M., Abdin, E., Shahwan, S., Vaingankar, J. A., Picco, L., Browning, C. J., Thomas, S. A., & Chong, S. A. (2015). Culture and age influences upon gambling and problem gambling. Addictive Behaviors Reports, 1, 57–63. https://doi.org/10.1016/j.abrep.2015.04.004
Thompson, W. N., Tanioka, I., & Fujimoto, K. (2005). Pachinko players in Japan: Subculture, cult, or ordinary citizens at leisure? Gaming Law Review, 9(6), 592–598
Toneatto, T., & Nguyen, L. (2007). Individual characteristics and problem gambling behavior. In G. Smith, D. C. Hodgins, & R. J. Williams (Eds.), Research and measurement issues in gambling studies. (pp. 279–303). Academic Press.
Turner, N. E., Macdonald, J., & Somerset, M. (2008). Life skills, mathematical reasoning and critical thinking: A curriculum for the prevention of problem gambling. Journal of Gambling Studies, 24(3), 367–380
Volberg, R. A., McNamara, L. M., & Carris, K. L. (2018). Risk Factors for problem gambling in California: Demographics, comorbidities and gambling participation. Journal of Gambling Studies, 34, 361–377. https://doi.org/10.1007/s10899-017-9703-5
Watanapongvanich, S., Binnagan, P., Putthinun, P., Khan, M. S. R., & Kadoya, Y. (2020). Financial literacy and gambling behavior: Evidence from Japan. Journal of Gambling Studies. https://doi.org/10.1007/s10899-020-09936-3
Watanapongvanich, S., Khan, M. S. R., Putthinun, P., Ono, S., & Kadoya, Y. (2021). Financial literacy, financial education, and smoking behavior: Evidence from Japan. Frontiers in Public Health, 8, 612976. https://doi.org/10.3389/fpubh.2020.612976
Weatherly, J. N. (2013). Comparing the contingencies that maintain gambling behavior in an online sample of younger and older adults. Analysis of Gambling Behavior, 7(2), 53–58
Welte, J. W., Barnes, G. M., Tidwell, M.-C.O., & Hoffman, J. H. (2009). The association of form of gambling with problem gambling among American youth. Psychology of Addictive Behaviors, 23(1), 105–112. https://doi.org/10.1037/a0013536
Welte, J. W., Barnes, G. M., Tidwell, M. O., & Hoffman, J. H. (2011). Gambling and problem gambling across lifespan. Journal of Gambling Studies, 27(1), 49–61
Welte, J. W., Barnes, G. M., Tidwell, M. C., Hoffman, J. H., & Wieczorek, W. F. (2015). Gambling and problem gambling in the United States: Changes between 1999 and 2013. Journal of Gambling Studies, 31(3), 695–715. https://doi.org/10.1007/s10899-014-9471-4
Welte, J. W., Barnes, G. M., Wieczorek, W. F., Tidwell, M.-C.O., & Hoffman, J. H. (2007). Type of gambling and availability as risk factors for problem gambling: A Tobit regression analysis by age and gender. International Gambling Studies, 7(2), 183–198
Welte, J. W., Wieczorek, W. F., Barnes, G. M., Tidwell, M.-C.O., & Hoffman, J. H. (2004). The relationship of ecological and geographic factors to gambling behavior and pathology. Journal of Gambling Studies, 20, 405–423
Williams, R. J., Volberg, R. A., & Stevens, R. M. (2012). The population prevalence of problem gambling: methodological influences, standardized rates, jurisdictional differences, and worldwide trends. Ontario Problem Gambling Research Centre.
Wong, G., Zane, N., Saw, A., & Chan, A. K. K. (2013). Examining gender differences for gambling engagement and gambling problems among emerging adults. Journal of Gambling Studies, 29, 171–189. https://doi.org/10.1007/s10899-012-9305-1
Xiao, J. J., & Porto, N. (2019). Financial education and insurance advice seeking. The Geneva Papers on Risk and Insurance—Issues and Practice, 44, 20–35. https://doi.org/10.1057/s41288-018-0108-1.
Yoshino, N., Morgan, P. J., & Trinh, L. Q. (2017). Financial literacy in Japan: Determinants and impacts. ADBI Working Paper Series, 796, Tokyo: Asian Development Bank Institute.
Acknowledgements
This research used micro data from the Preference Parameters Study of Osaka University’s 21st Century COE Program ‘Behavioral Macrodynamics Based on Surveys and Experiments’ and its Global COE project ‘Human Behavior and Socioeconomic Dynamics’.
Funding
This work is supported by JSPS KAKENHI Grant Numbers 19K13739, 19K13684; and RISTEX, JST.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The authors declare no conflicts of interest associated with this manuscript.
Ethical Approval
This study was conducted in accordance with the declaration of Helsinki to comply with ethical requirements. All subjects were informed about the survey beforehand and all of them had provided consent to take part in the survey.
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Watanapongvanich, S., Khan, M.S.R., Putthinun, P. et al. Financial Literacy and Gambling Behavior in the United States. J Gambl Stud 38, 445–463 (2022). https://doi.org/10.1007/s10899-021-10030-5
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10899-021-10030-5