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By Ray Gronberg, The Herald-Sun
 

DURHAM — Lottery critics who say the game doesn’t really produce much extra money for schools are partly right, but not necessarily because legislatures across the country are prone to channeling other types of revenue away from education.

Recent academic studies have found that school systems in states like North Carolina that formally reserve lottery proceeds for education actually do profit from the game, even if they don’t see or spend a dollar for every dollar in revenue that in theory should come their way.

"The strongest empirical work done on that question has shown that the earmarking sticks," said Melissa Kearney, an analyst who works for the Brookings Institution in Washington, D.C. "In economics, we call it the ‘flypaper effect.’ Education spending actually does go up."

The two research papers Kearney and other analysts say represent the state of the art on the subject agree that in states that earmark all their lottery money for education, every dollar of lottery revenue generates about 70 to 80 cents for school programs.

While that’s not the one-to-one return lottery advocates and the public might prefer, it contradicts economic theories and earlier studies that denied the possibility of any benefit because of the chance legislators would siphon other revenues away from the schools once lottery money starts rolling in.

"Economists are interested in why 70 percent makes it," said Bill Evans, a University of Maryland professor who co-authored the 2005 paper that’s the more recent of the two that address the matter. "It’s surprising to us that so much makes it."

The problem, however, is that whether the schools get 70 cents or the full $1, lottery revenues only amount to a drop in the bucket. (more…)

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