Lottery Sales and Household Risky Financial Investment: New Insights From CHFS Survey Data

Using data of 45,602 urban and rural households across 29 provinces from the 2017, 2019, and 2021 China Household Finance Survey (CHFS) and provincial-level lottery sales, this paper examines how lottery sales affect household investment in risky financial assets and explores the underlying mechanisms. Results from the Probit model show that increased regional lottery sales significantly raise both the likelihood of investing in risky financial assets and the proportion of such investments within household portfolios. Further analysis indicates that the household head’s risk preference mediates the relationship between lottery sales and risky financial investment. Additionally, subjective financial literacy enhances the positive impact of lottery sales on risky investments, whereas objective financial literacy has a dampening effect. The heterogeneity analysis shows that the positive effect of lottery sales is more pronounced among urban households, high-income households, and households in eastern China, with stronger effects on risky asset preference among highly educated households and on risky asset allocation among less-educated households. These findings illustrate how socio-cultural factors influence household financial behavior through psychological mechanisms and financial knowledge, providing new theoretical insights and empirical evidence regarding residents’ engagement in high-risk financial investments.