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

with Evi Pappa and Isabel Mico-Millan, Journal of Monetary Economics, April 2024

We exploit the Spanish Christmas lottery and consumer confidence survey data to investigate the impact of highly geographically clustered lottery winnings on consumer sentiment and durable consumption. Albeit not receiving lottery prizes, consumers in winning provinces become significantly more optimistic about the Spanish macroeconomic conditions than those living elsewhere. This variation in sentiment is shown to be orthogonal to changes in regional fundamentals and leads to a rise in spending intentions. Young, less educated, low-income, and unemployed individuals react stronger to the lottery shock. At the regional level, lottery wins significantly increase car licenses, reduce unemployment, and intensify job creation and prices.