People have long debated whether state-run lotteries exploit the poor or are a win-win that generates enjoyment and government revenues. We study socially optimal lottery design in an optimal taxation framework with biased consumers and estimate sufficient statistics for optimal policy. Lottery...

This paper provides general and empirically implementable sufficient statistics formulas for optimal nonlinear tax systems in the presence of preference heterogeneity. We study unrestricted tax systems on income and savings (or other commodities) that implement the optimal direct-revelation...