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I think if you could educate people on their expected return from a lottery ticket purchase, they wouldn't play at all. Telling people that they have a 95% cha

I think if you could educate people on their expected return from a lottery ticket purchase, they wouldn't play at all. Telling people that they have a 95% chance of winning nothing at all is not a good way of selling lottery tickets.

basementcat 7y ago
Expected return may be helpful but imo not sufficient without variance. Some cumulative jackpots are large enough that the expected return is actually profitable but the probability of actually hitting the numbers is vanishingly small.
- gylterud 7y ago
  However, even with positive expectation value, you should not always play. One should first check the Kelly criterion, which is well explained Russel O’Connor’s blog post: “Do Not Play the Lottery Unless You Are a Millionaire” http://r6.ca/blog/20090522T015739Z.html http://r6.ca/blog/20090522T015739Z.html
p1necone 7y ago
I think it's naive to value a lottery based solely on your monetary expected value. The value of money doesn't increase linearly, and isn't the same for everyone. $20 could have an inconsequential effect on my quality of life, while winning say $2 million could be a total life changer. Likewise, the difference in impact between winning $0 and winning $2 million is likely a lot larger than the difference between winning $2 million and winning $4 million. So a straight EV calculation doesn't really tell the whole story. There's also the entertainment value of participating in the lottery to consider, even when you win nothing.
- p1necone 7y ago
  Personally I like to think of lotteries as a binary thing - either I win enough money to retire now, or I don't.
  - taneq 7y ago
    I think there's more nuance than that. Winning enough to pay most of your house off wouldn't necessarily let you retire but it'd make you a lot more comfortable, for instance.
solveit 7y ago
I have a graduate degree in maths and have played the lottery. The expected return isn't the point.

basementcat 7y ago

Expected return may be helpful but imo not sufficient without variance. Some cumulative jackpots are large enough that the expected return is actually profitable but the probability of actually hitting the numbers is vanishingly small.

gylterud 7y ago
However, even with positive expectation value, you should not always play. One should first check the Kelly criterion, which is well explained Russel O’Connor’s blog post: “Do Not Play the Lottery Unless You Are a Millionaire” http://r6.ca/blog/20090522T015739Z.html http://r6.ca/blog/20090522T015739Z.html

p1necone 7y ago

I think it's naive to value a lottery based solely on your monetary expected value. The value of money doesn't increase linearly, and isn't the same for everyone. $20 could have an inconsequential effect on my quality of life, while winning say $2 million could be a total life changer. Likewise, the difference in impact between winning $0 and winning $2 million is likely a lot larger than the difference between winning $2 million and winning $4 million. So a straight EV calculation doesn't really tell the whole story. There's also the entertainment value of participating in the lottery to consider, even when you win nothing.

p1necone 7y ago
Personally I like to think of lotteries as a binary thing - either I win enough money to retire now, or I don't.
- taneq 7y ago
  I think there's more nuance than that. Winning enough to pay most of your house off wouldn't necessarily let you retire but it'd make you a lot more comfortable, for instance.

solveit 7y ago

I have a graduate degree in maths and have played the lottery. The expected return isn't the point.