Friday, August 25, 2006

Fun with Statistics - Gambling Addiction Addition

In this edition of Fun with Statistics I want to look into this Korea Times quote:

The gambling industry has grown to a 17 trillion won business. If you include the 15 trillion won legal gambling industry _ including horseracing, lotteries and casinos _ the nation spends over 30 trillion won on gambling. Moreover, illegal gambling parlors are often located in residential areas. 

According to a government report in 2002, 3,000,000 Koreans or 9.3 percent of adult population were addicted to gambling.

So lets compare apples to apples. According to this Joongang Ilbo report spending on legal gambling in Korea was 11.5 billion won in 2002. To calculate illegal gambling, let us assume the same growth rate (about) 30%, which gives about 13 billion won illegal gambling in 2002. Now this figure could be inflated given, as the KT suggests, the boom in illegal gambling such as "Sea Story". In any case we will use a total figure of 14.5 billion.

Now according to the National Statistics Office combined leisure and "Other" expenditure in 2003 (closest number available) was about 400,000 per month. Take that times 12 (months in the year) and 3,000,000 (the addicted), you get 14.4 billion won in what could be called "gambling demand".

What is interesting here is that these 3 million people are NOT overspending on gambling, rather they are spending pretty much exactly how much an average Korean spends on leisure and discretionary items. They are simply doing it a different way. These 3 million are not say gambling the grocery bill, or the electric bill.

Now keep in mind the assumption we made about the growth of illegal gambling in relation to legal gambling. We stated the growth rates were the same, which as I mentioned may not be case since the KT intimates that illegal gambling has boomed in relation to legal gambling. If the KT is correct, this would mean the illegal figure, and therefore the overall figure, is less. In other words, in light of the assumption, the 3 million people were gambling an smaller proportion of their leisure and discretionary spending than the 100% indicated above.

This begs two questions. First, is there a substantial differences in gambling addition between income levels in Korea? All these stats are "on average" so such an imbalance could be covered up by the statistics. Second, how were these 3 million people classified as "gambling addicts", in other words I call BS on the 3 million figure.  For what its worth the National Association of State and Provincial Lotteries cites a Harvard University Study that places "gambling addiction" in the US and Canada at less than 4% max. This is much less than the 10% stated above.

Finally, as part of my research, I found a self diagnostic question on Gambling addiction:

I have felt regret over my gambling. (agree/disagree)

You bet I have. I really regret betting on that 4th horse in the 6th race at Santa Anita a few years back!


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