Question

The “lucky store effect” in lottery ticket sales. In the American Economic Review (Vol. 98, 2008), University of Chicago researchers investigated the lucky store effect theory in lottery ticket sales, i.e., the theory that a lottery retail store that sold a large-prize-winning ticket will experience greater ticket sales the following week. The researchers examined the weekly ticket sales of all 24,400 active lottery retailers in Texas. The analysis showed that “the week following the sale of [a winning Lotto Texas ticket], the winning store experiences a 12 to 38 percent relative sales increase. . . . ” Consequently, the researchers project that future winning lottery retail stores will experience the lucky store effect. Is this study an example of descriptive statistics or inferential statistics? Explain.

Short answer

The study done by the researchers is an example of inferential statistics as it is utilizing sample data in order to make projections about the weekly ticket sales.

Step-by-step solution

Explaining lottery tickets

Lottery tickets are often bought by small investors with the hope of getting a huge prize. In some cases, the government put a ban on this as a lottery game is regarded as a form of gambling but many organizations still organize lottery games.

Reason behind the study on weekly ticket sales being inferential

In this study, the University of Chicago researchers are predicting whether the sales experienced by a retail store have increased or not with an increase in the sales of lottery tickets. After finding an increase in the sales by around 12 to 38 percent, the researchers predicted the future sales and so it is inferential.If the researchers had not predicted anything, the study would have been regarded as descriptive.