4 ms·

Expected value is really a dumb way to evaluate lottery tickets. I can't believe even supposedly good mathematicians use it. The next dumb way to evaluate lott

Expected value is really a dumb way to evaluate lottery tickets. I can't believe even supposedly good mathematicians use it. The next dumb way to evaluate lottery tickets is to compare it with other long odds (lightning strikes, marrying your favorite actor). If you want to play along, the probability of you winning the lottery is 10000000000000x more favorable than the probability of you existing in this universe. Buying lottery tickets is a simple framework. The upside of winning a lottery is significantly higher than the downside of losing one (per week or per month). So do it. The opposite is driving recklessly to save a minute of your commute. It has significantly higher downside risks than the upside of time savings. So don't do it. A lot of lottery-bashing people make 10000x worse sub-optimal decisions in their life and yet pick trashing a lottery ticket to feel superior about their decision making ability.

wizofaus 4y ago
There's basically nothing I'm totally sure of, but I do know the probability of my existing in this universe is 1.
- cwp 4y ago
  No. That's like flipping a coin and then saying the probability of getting heads is 1. The fact that something happened is not proof that it was guaranteed to happen.
  - wizofaus 4y ago
    Re-read what the GP claimed. Given the initial conditions of the universe, the probability it might eventually lead to my own existence may well be infinitessimal, but in the context of the probability of me winning the lottery (for example), my existence is already a given.
    - cwp 4y ago
      No, what he was saying was that the probability of you winning the lottery is quite high compared to the probability of you existing in the first place. His point was that mathematicians sometimes try to contextualize these very low probability scenarios so that lay-people don't collapse them all into a single "basically impossible" bucket. They're not wrong, but it's not a useful way to think about whether buying a lottery ticket is a good idea.
      - wizofaus 4y ago
        I'll quote: "the probability of you winning the lottery is 10000000000000x more favorable than the probability of you existing in this universe". That statement is categorically wrong. If you're going to consider the probability of my ever coming to existence in the first place, you need to count it as part of the probability of winning the lottery too. If it had said "the probability of anybody winning" I would've cut it some slack (though the probability that a universe might develop with sentient beings capable of inventing lotteries is still a prerequisite in both cases).
        CRConrad 4y ago
        > I'll quote: "the probability of you winning the lottery is 10000000000000x more favorable than the probability of you existing in this universe". That statement is categorically wrong. Yup -- it was written in a universe where the poster they replied to exists, so that probability is = 1 here.
Afton 4y ago
Bashing on lottery tickets due to EV also really feels like it's really missing the point. Lottery tickets are a mechanism for enjoying a fantasy. Sure you could technically just pretend that you won $10^9, but there is a hard cliff from >0% to 0%. I buy lottery tickets (very very occasionally, but who cares!) because it helps me enjoy a fantasy about being radically independently wealthy. There's no reason to hate on people for doing something that they enjoy, regardless of what the expected value is. For god's sake, I juggle! As a hobby! Can you imagine the expected return on THAT?
spoonjim 4y ago
Buying a single $1 lottery ticket is fine. But I see people in gas stations etc. who look like they are spending a very large fraction of their disposable income on lottery tickets. People asking for "$60 of X" when they look like they make $50K a year or less. That's fucking insane and if they make 10000x worse decisions in their life it must be like putting their fingers in the electrical socket.
- Firmwarrior 4y ago
  Yeah, I'll defend buying one lottery ticket, even a few per week, but more than that and you very quickly cross the line between "Fun Fantasy" and "Math Tax"
yellowapple 4y ago
> the probability of you winning the lottery is 10000000000000x more favorable than the probability of you existing in this universe. Is it, though? This claim ultimately hinges on the probability of life occurring in the universe, and that's pretty hard to assess given our lack of encounters with extraterrestrial life. Once life is established and subject to evolutionary processes, I hypothesize that intelligent life is - barring some mass extinction event preventing it - just about inevitable; evolution will select for greater and greater intelligence until the local lifeforms achieve sapience (and possibly beyond even that, i.e. levels of intelligence we mere apes are incapable of comprehending).
Miserlou57 4y ago
I had an argument with my boss about this. He is a business owner and pretty successful one, and he calls the lottery a poverty tax, or a stupidity tax. If it were a game you play in Vegas, then he’d be right. It’s my opinion that just buying one ticket, for say $2, essentially is a trivial and inconsequential amount of money that exposes you to incredible upside. Imagine if the ticket only cost a penny. At that point it’s practically free, but free exposure to life changing wealth. I don’t know if that counts as zero to 1 according to Peter Thiel, but it’s basically zero to something, for essentially nothing
- hamiltonians 4y ago
  but it does not cost a penny, hence strongly negative expected value and waste of money and time.
  - tracerbulletx 4y ago
    There are sometimes jackpot sizes that have a positive EV.
- aaaaaaaaata 4y ago
  What about the people who do hundreds in instant lottery, or dozens to hundreds of dollars every week for the standard games (and no, they aren't ALL pooled for a frigging office).
eutectic 4y ago
Probably the real value is even worse than the expected value, because money has diminishing returns to happiness.
guntars 4y ago
If buying a lottery ticket is a good idea, isn’t buying two better? How about spending everything you have on lottery tickets? Odds are the upside for you is still much larger than the downside. Maybe you’re saying that buying a single lottery ticket improves your odds of winning the lotto so much (infinitely many times in fact) that you just need one. There are a lot of lotteries in the world so.. get one of each? Also, how often should you buy one? One a week? One an hour? Maybe once a lifetime is enough, which is what I personally recommend. It’s almost like there is another variable that determines if this is a dumb idea, and it almost always is. Maybe those math professors are on to something after all.
- deltree7 4y ago
  No they aren't. Go back to the framework Upside(Gain) / Downside(Risk) is a pretty simple framework. All I'm saying is, Downside(Risk) is not f(Expected Value) Downside(Risk) is not f(p(winning))
thisismyswamp 4y ago
Being a bayesian, the probability of me existing in this universe is 1

wizofaus 4y ago

There's basically nothing I'm totally sure of, but I do know the probability of my existing in this universe is 1.

cwp 4y ago
No. That's like flipping a coin and then saying the probability of getting heads is 1. The fact that something happened is not proof that it was guaranteed to happen.
- wizofaus 4y ago
  Re-read what the GP claimed. Given the initial conditions of the universe, the probability it might eventually lead to my own existence may well be infinitessimal, but in the context of the probability of me winning the lottery (for example), my existence is already a given.
  - cwp 4y ago
    No, what he was saying was that the probability of you winning the lottery is quite high compared to the probability of you existing in the first place. His point was that mathematicians sometimes try to contextualize these very low probability scenarios so that lay-people don't collapse them all into a single "basically impossible" bucket. They're not wrong, but it's not a useful way to think about whether buying a lottery ticket is a good idea.
    - wizofaus 4y ago
      I'll quote: "the probability of you winning the lottery is 10000000000000x more favorable than the probability of you existing in this universe". That statement is categorically wrong. If you're going to consider the probability of my ever coming to existence in the first place, you need to count it as part of the probability of winning the lottery too. If it had said "the probability of anybody winning" I would've cut it some slack (though the probability that a universe might develop with sentient beings capable of inventing lotteries is still a prerequisite in both cases).
      - CRConrad 4y ago
        > I'll quote: "the probability of you winning the lottery is 10000000000000x more favorable than the probability of you existing in this universe". That statement is categorically wrong. Yup -- it was written in a universe where the poster they replied to exists, so that probability is = 1 here.

Afton 4y ago

Bashing on lottery tickets due to EV also really feels like it's really missing the point. Lottery tickets are a mechanism for enjoying a fantasy. Sure you could technically just pretend that you won $10^9, but there is a hard cliff from >0% to 0%. I buy lottery tickets (very very occasionally, but who cares!) because it helps me enjoy a fantasy about being radically independently wealthy. There's no reason to hate on people for doing something that they enjoy, regardless of what the expected value is. For god's sake, I juggle! As a hobby! Can you imagine the expected return on THAT?

spoonjim 4y ago

Buying a single $1 lottery ticket is fine. But I see people in gas stations etc. who look like they are spending a very large fraction of their disposable income on lottery tickets. People asking for "$60 of X" when they look like they make $50K a year or less. That's fucking insane and if they make 10000x worse decisions in their life it must be like putting their fingers in the electrical socket.

Firmwarrior 4y ago
Yeah, I'll defend buying one lottery ticket, even a few per week, but more than that and you very quickly cross the line between "Fun Fantasy" and "Math Tax"

yellowapple 4y ago

> the probability of you winning the lottery is 10000000000000x more favorable than the probability of you existing in this universe. Is it, though? This claim ultimately hinges on the probability of life occurring in the universe, and that's pretty hard to assess given our lack of encounters with extraterrestrial life. Once life is established and subject to evolutionary processes, I hypothesize that intelligent life is - barring some mass extinction event preventing it - just about inevitable; evolution will select for greater and greater intelligence until the local lifeforms achieve sapience (and possibly beyond even that, i.e. levels of intelligence we mere apes are incapable of comprehending).

Miserlou57 4y ago

I had an argument with my boss about this. He is a business owner and pretty successful one, and he calls the lottery a poverty tax, or a stupidity tax. If it were a game you play in Vegas, then he’d be right. It’s my opinion that just buying one ticket, for say $2, essentially is a trivial and inconsequential amount of money that exposes you to incredible upside. Imagine if the ticket only cost a penny. At that point it’s practically free, but free exposure to life changing wealth. I don’t know if that counts as zero to 1 according to Peter Thiel, but it’s basically zero to something, for essentially nothing

hamiltonians 4y ago
but it does not cost a penny, hence strongly negative expected value and waste of money and time.
- tracerbulletx 4y ago
  There are sometimes jackpot sizes that have a positive EV.
aaaaaaaaata 4y ago
What about the people who do hundreds in instant lottery, or dozens to hundreds of dollars every week for the standard games (and no, they aren't ALL pooled for a frigging office).

eutectic 4y ago

Probably the real value is even worse than the expected value, because money has diminishing returns to happiness.

guntars 4y ago

If buying a lottery ticket is a good idea, isn’t buying two better? How about spending everything you have on lottery tickets? Odds are the upside for you is still much larger than the downside. Maybe you’re saying that buying a single lottery ticket improves your odds of winning the lotto so much (infinitely many times in fact) that you just need one. There are a lot of lotteries in the world so.. get one of each? Also, how often should you buy one? One a week? One an hour? Maybe once a lifetime is enough, which is what I personally recommend. It’s almost like there is another variable that determines if this is a dumb idea, and it almost always is. Maybe those math professors are on to something after all.

deltree7 4y ago
No they aren't. Go back to the framework Upside(Gain) / Downside(Risk) is a pretty simple framework. All I'm saying is, Downside(Risk) is not f(Expected Value) Downside(Risk) is not f(p(winning))

thisismyswamp 4y ago

Being a bayesian, the probability of me existing in this universe is 1