8 ms·

What We’ve Lost Playing the Lottery

70 points by fortran77 4y ago

bena 4y ago
> Alexander Hamilton was right: to the average person, the difference between one-in-three-million odds and one-in-three-hundred-million odds didn’t matter, but the difference between a three-million-dollar jackpot and a three-hundred-million-dollar jackpot mattered enormously. This is one of the most infuriating things about lotteries to me. The base Powerball jackpot is $20 million. Even cutting that in half for getting it in a lump sum and the taxes on it, that should be around $10 million. That's life changing. But I never hear about people buying tens of tickets when the jackpot is that low. It's always when the jackpot breaks $1 billion. Then people start buying tickets as if $900 million wasn't also equally life changing. And still for the exact same piss-poor chance of winning. But people try to justify it by saying the cost to return is so great. It's always great. It's great at a $20 million jackpot. Some people say it's just "harmless entertainment" because they can then fantasize about winning and what they'd do with the money. I ask why can't they just fantasize about buying the ticket? If you accept the odds are that against you and you're just imagining if you would win, you don't actually need to buy the ticket to do that.
- sidewndr46 4y ago
  You're correct. Buying a powerball ticket doesn't measurably change your chance of winning. But you're using an argument based in mathematics to try and convince people who either don't understand or understand but choose to ignore it. In essence, the facts you've chosen to present aren't relevant to convincing those individuals.
  - bena 4y ago
    Hence the annoyance. Doubly so when they claim to acknowledge the facts but buy the ticket anyway.
  - cookie_monsta 4y ago
    > Buying a powerball ticket doesn't measurably change your chance of winning. This doesn't feel right. There must be a statistical difference between zero chances of winning and 1 in a billion chances of winning. Close to imperceptible maybe, but zero is pretty absolute.
    - sidewndr46 4y ago
      I said "measurably". That is to say it has no impact on your life, other than reducing the amount of money you have. Anyone who took a basic combinatorics or discrete math class can explain the mathematical difference, which is obviously nonzero.
      - cookie_monsta 4y ago
        Well if we're changing the statement so that it's now about impact on life that's mostly correct, except if you're talking to the person who bought the winning ticket. But we were originally discussing if buying a ticket changed your chances of winning. Not buying a ticket you have zero chances in infinity. Buying a ticket you have 1 chance in 292 million. I don't think it matters that you have decided that 292 million is a really big number. It's certainly less than infinity and 1 is certainly more than zero. I don't know what kind of maths classes you would need to take to see what has changed there.
    - bena 4y ago
      Do you fear being struck by lightning (about 1 in a million)? Being attacked by a shark at the beach (about 1 in 4 million)? Do you panic a little bit every time you step outside? Or get into the water? Both of those events have a way higher chance of happening than any single person winning the lottery (1 in about 292.2 million). We don't panic because the chance of being struck by lightning doesn't measurably increase when we walk outside. The difference between 0 and 0.000000003 is insignificant. A foot is 12 inches. A foot and 0.000000003 inches is also close enough to 12 inches that it doesn't matter to record the inches. Lego bricks have a tolerance of about 0.001mm. That's what they mean when they say there is no measurable change. There's technically a change, but it's not a change that means anything.
- A4ET8a8uTh0 4y ago
  Your post is spot on. I think my parents called it 'dream tax'. Looking back, I am inclined to agree.
- bombcar 4y ago
  The lottery is an accepted tax on math morons, as my old teacher liked to say. And people have "learned" that and somehow think that when the expected return goes "positive" that it somehow isn't silly anymore. I would be interested to see it change so the jackpot doesn't go UP each time, but instead the number of winners goes UP somehow - perhaps by drawing an extra powerball if nobody has won for a certain period. The absolute sad part of it is the large percentage of people who play and shouldn't; you rarely see the well-off playing, but you will see poorer people playing (which makes some sense, Bill Gates winning wouldn't change him at all). Even sadder is what happens to the winners on average; the winner is often someone not good with money and they get given a large amount of the thing they're not good with.
  - waynesonfire 4y ago
    > The lottery is an accepted tax on math morons, as my old teacher liked to say. There is a difference between zero and a non-zero chance of winning, even if you hold just one ticket. Even if the probability is low, it's non-zero nevertheless. Someone always wins.
  - onion2k 4y ago
    Even sadder is what happens to the winners on average; the winner is often someone not good with money and they get given a large amount of the thing they're not good with. You don't need to be particularly good with money if you have more than you can ever spend.
    - Calavar 4y ago
      Most big lotto wins are in the seven to low eight digit range. You can absolutely blow away that amount of money in just a few years, and there are dozens of examples.
      - tmtvl 4y ago
        Off the top of my head, Evelyn Adams. Won the lottery twice, thirty years later she had blown through it all and was living in a trailer park.
- alexb_ 4y ago
  Something important to understand about gambling is that the entertaining part is not actually the prize, but the uncertainty between pulling the arm and getting the result. Buying a 20 dollar ticket to dream about a billion dollars for a day isn't a horrible use of money - it's just like any other form of entertainment. It only becomes a problem when people are addicted to that feeling of uncertainty.
  - danuker 4y ago
    Bah. Plenty of uncertainty guessing consumer confidence, inflation, and banks' and the Fed's monetary response. How much should I invest, save, or spend? It's a continuous game with your life savings at stake.
  - nicgrev103 4y ago
    Was going to say this. People pay for a lottery ticket to dream about what their life could be like if they won (similar to people who never launch that buiness idea). Many people derive a lot of happiness from this, moreover (in the uk) a large proportion of the takings goes to good causes and people generally accept it is extremely unlikely they will win but instead of just donating to charity they at least have a slim chance of a massive gain.
- rychco 4y ago
  On the very rare chance that I purchase a lottery ticket, it's almost always when the jackpot grows to an enormous sum that starts making headlines. I don't do this because of a cost-benefit analysis or anything like that. I don't expect to win regardless of the prize. I buy a ticket for fun. For a few days, I entertain the fantasy of winning & joke around with friends about the things I would do with it all.
  - elteto 4y ago
    This is a perfect example of how the “rational agents” theory breaks down. From a mathematical POV what you do is clearly irrational, yet as a human it is perfectly sensible to do what you do, spend a couple of $$, have a bit of fun and move on.
    - sicp-enjoyer 4y ago
      Why isn't it "rational" to purchase entertainment products you enjoy? Do you think economists actually rely on the axiom that humans are born with a perfect ability to play logic and probability games?
    - feoren 4y ago
      > From a mathematical POV what you do is clearly irrational The ticket costs the same whether the pot is small or large. For every lottery, there is a jackpot amount at which the expected value of a ticket exceeds its cost. Some lotteries occasionally approach this, even after taxes, although the chance of sharing the pot complicates that. Why is it "clearly irrational" to buy a ticket only when the EV is closer to 1, rather than when it's something like 0.2?
  - rm_-rf_slash 4y ago
    >I don't expect to win regardless of the prize. I buy a ticket for fun. Plenty of pleasant brain chemicals and time daydreaming for the low low cost of a couple bucks. It’s transactional entertainment, no different than dropping $2.99 to watch an old episode of Law and Order on Prime Video. Harmless fun for those who can afford it.
  - 4y ago
- darepublic 4y ago
  Aren't there situations where a lottery's prize makes a ticket puechasr plus ev? Hence the practice of some people forming big ticket purchasing collectives and pulling profit from these situations. Probably a very uncommon circumstance and conditional to the design of the lotto
  - reducesuffering 4y ago
    But EV isn't everything, skew and volatility also determine price or value. No +EV is worth $1,000 ticket for a single 0.0000000000001% chance of a bajillion dollars.
JohnJamesRambo 4y ago
- lordnacho 4y ago
  Bunch of MIT students went around buying loads of tickets a few years back. They found some angle in the probabilities. I bet their IQs are over 100.
  - fortran77 4y ago
    There was this famous example, and they weren't a bunch of "MIT students" https://www.battlecreekenquirer.com/story/news/2022/05/23/jerry-marge-go-large-based-michigan-couple-who-gamed-lottery/9826514002/ https://www.battlecreekenquirer.com/story/news/2022/05/23/je...
  - dangus 4y ago
    They definitely only did this because they figured out mathematical flaws in the game's design, so I'm not sure I would call this "playing" the lottery.
  - mercutio2 4y ago
    Their angle was minimizing the chance of sharing the winning ticket when the jackpot for the lottery was large enough that the expected return from an unshared winning ticket was positive. Of course this makes assumptions about how many people will join you in that analysis, but it was a pretty reasonable bet.
- dangus 4y ago
  Does anyone with an IQ above 100 talk about IQ? Seriously, IQ is an incredibly irrelevant metric on whether/how you're educated and whether you make wise financial decisions. > Physicist Stephen Hawking, When asked his IQ, he replied: "I have no idea. People who boast about their IQ are losers." https://www.nytimes.com/2004/12/12/magazine/the-science-of-secondguessing.html https://www.nytimes.com/2004/12/12/magazine/the-science-of-s...
  - 4y ago
kwere 4y ago
>Dismissing long-standing ethical objections to the lottery, these new advocates reasoned that, since people were going to gamble anyway, the state might as well pocket the profits >The whole thing was hugely counterintuitive—the worse the odds of winning became, the more people wanted to play. Alexander Hamilton was right: to the average person, the difference between one-in-three-million odds and one-in-three-hundred-million odds didn’t matter, but the difference between a three-million-dollar jackpot and a three-hundred-million-dollar jackpot mattered enormously. Recognizing this, lottery commissioners began lifting prize caps and adding more numbers >The irony, as Cohen notes, is that this obsession with unimaginable wealth, including the dream of hitting a multimillion-dollar lottery jackpot, corresponded to a decline in financial security for most working people. Beginning in the nineteen-seventies and accelerating in the nineteen-eighties, the income gap between the rich and the poor widened, job security and pensions eroded, health-care costs and unemployment rose, and, for children born in those decades, our long-standing national promise—that education and hard work would render them better off than their parents—ceased to be true. Life, as it turned out, imitated the lottery: for most Americans, it was getting harder and harder to win. a tax on the desperate, ignorants and numerically illiterate. should be banned outside local charity with x prizes to tickets.
- skohan 4y ago
  I think it's also a perfect counterexample to the assumption of rationality by the Chicago school of economics.
  - sicp-enjoyer 4y ago
    That's not how economists use rationality. Individuals derive other enjoyments from gambling besides their earnings. This desire to seek things they like is the "rationality", purposeful behavior, not the ability to make optimal bets or play mathematical games.
    - nerdponx 4y ago
      Yet the economics literature is full of this exact misuse of the term "rationality", not to mention what economists say in their blogs, op-eds, and interviews. Not to mention the traditional econ 101 curriculum.
donretag 4y ago
https://archive.ph/VHiBT/ https://archive.ph/VHiBT/
xivzgrev 4y ago
One other aspect that wasn’t in the article is how vehemently states enforce their monopoly status on lotteries. I’ve worked at companies that run various sweepstakes, and there is a huge legal concern around not accidentally turning into an illegal lottery. You think just by not charging people to enter you avoid it? Oh no - the laws are setup where basically if you are running any kind of contest, you are an illegal lottery by default unless you meet certain criteria. A “contest” must be a game of skill. A “sweepstakes” may have winners randomly chosen, but you must have (free) alternative method of entry. Etc States are very clear: they are the only lottery games in town!
- elliekelly 4y ago
  Running any kind of legal sweepstakes in the US is such a massive pain in the ass that I genuinely don’t understand why anyone bothers.
- Archelaos 4y ago
  It is necessary, because companies might otherwise game the system like: "Give us your DNA and have a 1:1,000,000 chance to win a bottle of whiskey."
kibwen 4y ago
Proposal: have every US adult pay a flat $52 extra in taxes a year. This amounts to $1 a week. Let's say this collects $150 million a week, assuming 150 million taxpaying adults. Have the government hold a nationwide lottery where, every week, this $150 million pot gets split into 500 parts and handed out to 500 different people. That's 500 random people a week receiving $300,000 dollars, a life-changing amount of money for most people, and all it cost them was $1 to enter. Then, abolish all other lotteries (EDIT: referring to the state-run lotteries). Obviously this doesn't change the fundamental probability of lotteries, but most people are happy to pay $1 for a remote chance of winning $300,000 (and you can even let people opt out if they don't want to participate). It preserves the entertainment aspect (broadcast the pulls and make a weekly event out of it), creates a shared cultural touchstone (maybe dectuple the pot for the week of Christmas or something), while also eliminating the weird perversity of our current state-run lotteries that prey on gambling addicts. EDIT: Can I ask the downvoters to elaborate?
- nerdponx 4y ago
  I'm curious why this was downvoted myself, I actually like the idea.
- djbusby 4y ago
  Seems not-downvoted to me. I like the idea of more winners rather than more money for fewer winners. I don't like the national aspect. Nobody should be obligated to play.
  - kibwen 4y ago
    As I mention in the comment, it's fine to let people opt out. And you don't need to tell anybody that you opted out, so you can still participate in the spectacle even if your chance of winning is now literally 0% (as opposed to "vanishingly close to 0%").
- cercatrova 4y ago
  Interesting proposal. However, will it stop the compulsive gamblers? Maybe they'll just find somewhere else to gamble. This already happens in countries where gambling is illegal like China. This reminds me of the No-Lose Lottery concept by Freakonomics as well: https://freakonomics.com/podcast/is-america-ready-for-a-no-lose-lottery/ https://freakonomics.com/podcast/is-america-ready-for-a-no-l...
MisterBastahrd 4y ago
Some people forget what it's like to be resource-limited. Not so much that a lottery ticket will make or break you, but enough that you can't afford to do the "nice" things like... go on a decent vacation, where 4 bucks a week isn't going to amount to anything. Now, if you go into the lottery with the idea that you're gonna win, you don't understand math. But if you buy a ticket every time the jackpot is above $100M, then you're usually taking a short mental vacation by dreaming about what you'd be doing with the money. You could go on the internet and look at the vacation places you'd be going to, or the homes you'd like to live in, etc. It gives people with limited means a sense of freedom from the dull lives they've been living. I'm not going to argue that the lottery isn't predatory or that it's a bad investment. I'm just saying that these stories usually result in comments where people with assets show their whole asses with disdain for people who aren't well off. It's not completely about the money or the math and it never has been... and for a generation that cringes every time boomers claim that Starbucks ate your savings, you've got some nerve complaining about people show spend $4 a week on a fantasy.
- rootusrootus 4y ago
  > But if you buy a ticket every time the jackpot is above $100M That's the only way I'll play. Once in a while I'll drop two bucks on a seriously large jackpot. If I think rationally, I'm pretty sure winning would ruin my life. But it's fun to fantasize about what that kind of money would enable. Two bucks buys me a day or so of that, once or twice a year. I don't get the appeal of scratch-its or regular casino gambling, though. Even if you win the jackpot, it's a pittance. I assume that kind of gambling is a different mindset, more focused on playing than winning.
- Karellen 4y ago
  I did see someone once say that lotteries aren't a tax on the stupid, or on innumeracy; they're a tax on hope. It's made me think about why a lot of people play in a different light ever since.
  - nerdponx 4y ago
    It also doesn't make the lottery any less predatory.
nicgrev103 4y ago
People pay for a lottery ticket to dream about what their life could be like if they won (similar to people who never launch that buiness idea). Many people derive a lot of happiness from this, moreover (in the uk) a large proportion of the takings goes to good causes and people generally accept it is extremely unlikely they will win but instead of just donating to charity they at least have a slim chance of a massive gain.
- Majromax 4y ago
  > People pay for a lottery ticket to dream about what their life could be like if they won (similar to people who never launch that buiness idea). That might describe the median player, but I doubt it describes the median ticket. It only takes one ticket per draw to dream of winning, but many players purchase multiples. That suggests that they are motivated by something other than the entertainment of fantasy.
  - deleted 4y ago
    [deleted]
  - ballenf 4y ago
    But buying 10 tickets means your odds are 10x higher! /s 10 times a number approximating zero is still a number approximating zero. The thinking that changed me is that my odds of winning are approximately the same whether I buy a ticket or not.
    - colinmhayes 4y ago
      eh, I wouldn't consider possible and not possible approximately the same no matter how close they are.
  - acuozzo 4y ago
    > That suggests that they are motivated by something other than the entertainment of fantasy. My father purchases multiple tickets, but he has no system and is clearly doing it for the high of hope.
giantg2 4y ago
If we get rid of the lottery, what am I going to daydream about while at the job I hate? Hope, even when it's an illusion, can be a powerful thing. I wonder if there's some other way to adapt this trait or side effect to other, less destructive, practices.
- EForEndeavour 4y ago
  > I wonder if there's some other way to adapt this trait or side effect to other, less destructive, practices. Enrolling in (but never finishing) online courses, subscribing to (but never watching) educational YouTube channels, downloading (but never reading) free or pirated textbooks, and bookmarking (but never returning to) tech blogs that all seem like they'd prepare you for a job you'd like.
  - giantg2 4y ago
    I mean how do we leverage hope, or the illusion of hope, for positive things. How do we make it so you read that book, or learn that thing? The prospect of a good job is tempting and can give you hope, but there are so many other issues that it seems almost as unlikely as winning the lottery. I got good grades, got a masters, got experience, etc. I'm still making under $100k per year with almost nothing to look forward to career-wise. How do I start tricking myself into having hope?
- troyvit 4y ago
  Yeah and that's exactly what I pay for when I buy a lottery ticket. I'm not paying for a chance to win, I'm paying to put a stake in my daydreams, and it's joyful. Doesn't mean people need to plug hundreds of dollars a month into it I guess.
- colinmhayes 4y ago
  Right, the lottery can actually be an impressively cheap form of entertainment if used correctly.
leoedin 4y ago
I found it incredible that players "making less than $30,000 spend 13%" of their income on the lottery. That's completely absurd, given the odds of winning. I found sitting and spending a million dollars on an online lottery simulator stopped any hope of winning the lottery quite quickly. Even as an engineer it can be hard to get a feel for tiny odds until you sit there and repeatedly spend $1000 with nothing in return.
- Maxburn 4y ago
  I view lotteries as taxes on those that don't understand probability and money investing. That fits with those making that low of a salary. It's predatory, just like payday and title loans.
  - CamelCaseName 4y ago
    This is often repeated, but perhaps players understand all that very well. Perhaps it is the condescending observer[0] who says "lotteries are a tax on stupidity" who does not understand the player's utility function. [0] (not OP specifically, but in general)
  - acuozzo 4y ago
    > I view lotteries as taxes on those that don't understand probability and money investing. I did too until I realized what the purchasers of losing lottery tickets receive in exchange for their money: hope. They're purchasing the high of hoping for a better future; an escape into the dreams of riches.
    - Maxburn 4y ago
      I don't know if false hope is helping anyone.
  - Retric 4y ago
    The fantasy of winning has non zero utility to players. Spending 2$ on a 400+ Million dollar prize can be fun up until the moment know you actually lost. I enjoy the experience enough to delay checking the numbers and thus savor the experience for significantly longer. Similarly I don’t particularly feel the need to regularly play as the occasional ticket is enough to keep the near zero possibility of a future win alive. Never playing on the other hand kills the fantasy. So in terms of what value I personally get from ~8$/year, lottery tickets are awesome.
karaterobot 4y ago
> “Americans spend more on lottery tickets every year than on cigarettes, coffee, or smartphones,” Cohen writes, “and they spend more on lottery tickets annually than on video streaming services, concert tickets, books, and movie tickets combined.” That's amazing if true, though it sounds unbelievable to me. Given the other statistic that "[o]ne in two American adults buys a lottery ticket at least once a year, one in four buys one at least once a month" the avid players at the edge must be spending a heck of a lot for that to add up... I don't gamble at all, but I tend to think of lottery tickets as pretty harmless. I've never seen anybody show up to a gas station and buy more than a few dollars worth of tickets, though I'm sure there are outliers who would. It's just hard for me to credit this given my back of the envelope math and personal experience. Hopefully the actual book has citations and I can check on it.
- nerdponx 4y ago
  Some people spend $10-20 on them. And that adds up quickly if you do it multiple times a week.
- lottoooo1 4y ago
  In 2020 it was $26.692393b. From https://www.taxpolicycenter.org/statistics/lottery-revenue https://www.taxpolicycenter.org/statistics/lottery-revenue In 2020 Apple iPhone sales were $73.3b in the Americas, which includes South America. From https://www.businessofapps.com/data/apple-statistics/ https://www.businessofapps.com/data/apple-statistics/ Sounds dubious. But lotto sales were really, really high. $26.7b could have gone to something worthy. The reason lottos are bad, and which is really poorly articulated in this article about empathetic personal stories, is that they compete in the $1-3 category, where cultural products thrive. Unlike an income tax increase, which competes in the $1,000+ category (typically). But nonetheless similar to a sales tax (increase may be $0.10-$1.00 per purchase). It really is as simple as, "pay for this app it costs one coffee." We are all worse off competing against this bullshit. That said, Apple and Google could ban virtual slot machines, DraftKings, etc. and little of value would be lost, and its other developers would gain a lot, but nah, they don't do that, because they are greedy.
  - 4y ago
nitwit005 4y ago
What we lost was having the mafia run the lotteries instead.

70 points by fortran77 4y ago

bena 4y ago

> Alexander Hamilton was right: to the average person, the difference between one-in-three-million odds and one-in-three-hundred-million odds didn’t matter, but the difference between a three-million-dollar jackpot and a three-hundred-million-dollar jackpot mattered enormously. This is one of the most infuriating things about lotteries to me. The base Powerball jackpot is $20 million. Even cutting that in half for getting it in a lump sum and the taxes on it, that should be around $10 million. That's life changing. But I never hear about people buying tens of tickets when the jackpot is that low. It's always when the jackpot breaks $1 billion. Then people start buying tickets as if $900 million wasn't also equally life changing. And still for the exact same piss-poor chance of winning. But people try to justify it by saying the cost to return is so great. It's always great. It's great at a $20 million jackpot. Some people say it's just "harmless entertainment" because they can then fantasize about winning and what they'd do with the money. I ask why can't they just fantasize about buying the ticket? If you accept the odds are that against you and you're just imagining if you would win, you don't actually need to buy the ticket to do that.

sidewndr46 4y ago
You're correct. Buying a powerball ticket doesn't measurably change your chance of winning. But you're using an argument based in mathematics to try and convince people who either don't understand or understand but choose to ignore it. In essence, the facts you've chosen to present aren't relevant to convincing those individuals.
- bena 4y ago
  Hence the annoyance. Doubly so when they claim to acknowledge the facts but buy the ticket anyway.
- cookie_monsta 4y ago
  > Buying a powerball ticket doesn't measurably change your chance of winning. This doesn't feel right. There must be a statistical difference between zero chances of winning and 1 in a billion chances of winning. Close to imperceptible maybe, but zero is pretty absolute.
  - sidewndr46 4y ago
    I said "measurably". That is to say it has no impact on your life, other than reducing the amount of money you have. Anyone who took a basic combinatorics or discrete math class can explain the mathematical difference, which is obviously nonzero.
    - cookie_monsta 4y ago
      Well if we're changing the statement so that it's now about impact on life that's mostly correct, except if you're talking to the person who bought the winning ticket. But we were originally discussing if buying a ticket changed your chances of winning. Not buying a ticket you have zero chances in infinity. Buying a ticket you have 1 chance in 292 million. I don't think it matters that you have decided that 292 million is a really big number. It's certainly less than infinity and 1 is certainly more than zero. I don't know what kind of maths classes you would need to take to see what has changed there.
  - bena 4y ago
    Do you fear being struck by lightning (about 1 in a million)? Being attacked by a shark at the beach (about 1 in 4 million)? Do you panic a little bit every time you step outside? Or get into the water? Both of those events have a way higher chance of happening than any single person winning the lottery (1 in about 292.2 million). We don't panic because the chance of being struck by lightning doesn't measurably increase when we walk outside. The difference between 0 and 0.000000003 is insignificant. A foot is 12 inches. A foot and 0.000000003 inches is also close enough to 12 inches that it doesn't matter to record the inches. Lego bricks have a tolerance of about 0.001mm. That's what they mean when they say there is no measurable change. There's technically a change, but it's not a change that means anything.
A4ET8a8uTh0 4y ago
Your post is spot on. I think my parents called it 'dream tax'. Looking back, I am inclined to agree.
bombcar 4y ago
The lottery is an accepted tax on math morons, as my old teacher liked to say. And people have "learned" that and somehow think that when the expected return goes "positive" that it somehow isn't silly anymore. I would be interested to see it change so the jackpot doesn't go UP each time, but instead the number of winners goes UP somehow - perhaps by drawing an extra powerball if nobody has won for a certain period. The absolute sad part of it is the large percentage of people who play and shouldn't; you rarely see the well-off playing, but you will see poorer people playing (which makes some sense, Bill Gates winning wouldn't change him at all). Even sadder is what happens to the winners on average; the winner is often someone not good with money and they get given a large amount of the thing they're not good with.
- waynesonfire 4y ago
  > The lottery is an accepted tax on math morons, as my old teacher liked to say. There is a difference between zero and a non-zero chance of winning, even if you hold just one ticket. Even if the probability is low, it's non-zero nevertheless. Someone always wins.
- onion2k 4y ago
  Even sadder is what happens to the winners on average; the winner is often someone not good with money and they get given a large amount of the thing they're not good with. You don't need to be particularly good with money if you have more than you can ever spend.
  - Calavar 4y ago
    Most big lotto wins are in the seven to low eight digit range. You can absolutely blow away that amount of money in just a few years, and there are dozens of examples.
    - tmtvl 4y ago
      Off the top of my head, Evelyn Adams. Won the lottery twice, thirty years later she had blown through it all and was living in a trailer park.
alexb_ 4y ago
Something important to understand about gambling is that the entertaining part is not actually the prize, but the uncertainty between pulling the arm and getting the result. Buying a 20 dollar ticket to dream about a billion dollars for a day isn't a horrible use of money - it's just like any other form of entertainment. It only becomes a problem when people are addicted to that feeling of uncertainty.
- danuker 4y ago
  Bah. Plenty of uncertainty guessing consumer confidence, inflation, and banks' and the Fed's monetary response. How much should I invest, save, or spend? It's a continuous game with your life savings at stake.
- nicgrev103 4y ago
  Was going to say this. People pay for a lottery ticket to dream about what their life could be like if they won (similar to people who never launch that buiness idea). Many people derive a lot of happiness from this, moreover (in the uk) a large proportion of the takings goes to good causes and people generally accept it is extremely unlikely they will win but instead of just donating to charity they at least have a slim chance of a massive gain.
rychco 4y ago
On the very rare chance that I purchase a lottery ticket, it's almost always when the jackpot grows to an enormous sum that starts making headlines. I don't do this because of a cost-benefit analysis or anything like that. I don't expect to win regardless of the prize. I buy a ticket for fun. For a few days, I entertain the fantasy of winning & joke around with friends about the things I would do with it all.
- elteto 4y ago
  This is a perfect example of how the “rational agents” theory breaks down. From a mathematical POV what you do is clearly irrational, yet as a human it is perfectly sensible to do what you do, spend a couple of $$, have a bit of fun and move on.
  - sicp-enjoyer 4y ago
    Why isn't it "rational" to purchase entertainment products you enjoy? Do you think economists actually rely on the axiom that humans are born with a perfect ability to play logic and probability games?
  - feoren 4y ago
    > From a mathematical POV what you do is clearly irrational The ticket costs the same whether the pot is small or large. For every lottery, there is a jackpot amount at which the expected value of a ticket exceeds its cost. Some lotteries occasionally approach this, even after taxes, although the chance of sharing the pot complicates that. Why is it "clearly irrational" to buy a ticket only when the EV is closer to 1, rather than when it's something like 0.2?
- rm_-rf_slash 4y ago
  >I don't expect to win regardless of the prize. I buy a ticket for fun. Plenty of pleasant brain chemicals and time daydreaming for the low low cost of a couple bucks. It’s transactional entertainment, no different than dropping $2.99 to watch an old episode of Law and Order on Prime Video. Harmless fun for those who can afford it.
- 4y ago
darepublic 4y ago
Aren't there situations where a lottery's prize makes a ticket puechasr plus ev? Hence the practice of some people forming big ticket purchasing collectives and pulling profit from these situations. Probably a very uncommon circumstance and conditional to the design of the lotto
- reducesuffering 4y ago
  But EV isn't everything, skew and volatility also determine price or value. No +EV is worth $1,000 ticket for a single 0.0000000000001% chance of a bajillion dollars.

JohnJamesRambo 4y ago

lordnacho 4y ago
Bunch of MIT students went around buying loads of tickets a few years back. They found some angle in the probabilities. I bet their IQs are over 100.
- fortran77 4y ago
  There was this famous example, and they weren't a bunch of "MIT students" https://www.battlecreekenquirer.com/story/news/2022/05/23/jerry-marge-go-large-based-michigan-couple-who-gamed-lottery/9826514002/ https://www.battlecreekenquirer.com/story/news/2022/05/23/je...
- dangus 4y ago
  They definitely only did this because they figured out mathematical flaws in the game's design, so I'm not sure I would call this "playing" the lottery.
- mercutio2 4y ago
  Their angle was minimizing the chance of sharing the winning ticket when the jackpot for the lottery was large enough that the expected return from an unshared winning ticket was positive. Of course this makes assumptions about how many people will join you in that analysis, but it was a pretty reasonable bet.
dangus 4y ago
Does anyone with an IQ above 100 talk about IQ? Seriously, IQ is an incredibly irrelevant metric on whether/how you're educated and whether you make wise financial decisions. > Physicist Stephen Hawking, When asked his IQ, he replied: "I have no idea. People who boast about their IQ are losers." https://www.nytimes.com/2004/12/12/magazine/the-science-of-secondguessing.html https://www.nytimes.com/2004/12/12/magazine/the-science-of-s...
- 4y ago

kwere 4y ago

>Dismissing long-standing ethical objections to the lottery, these new advocates reasoned that, since people were going to gamble anyway, the state might as well pocket the profits >The whole thing was hugely counterintuitive—the worse the odds of winning became, the more people wanted to play. Alexander Hamilton was right: to the average person, the difference between one-in-three-million odds and one-in-three-hundred-million odds didn’t matter, but the difference between a three-million-dollar jackpot and a three-hundred-million-dollar jackpot mattered enormously. Recognizing this, lottery commissioners began lifting prize caps and adding more numbers >The irony, as Cohen notes, is that this obsession with unimaginable wealth, including the dream of hitting a multimillion-dollar lottery jackpot, corresponded to a decline in financial security for most working people. Beginning in the nineteen-seventies and accelerating in the nineteen-eighties, the income gap between the rich and the poor widened, job security and pensions eroded, health-care costs and unemployment rose, and, for children born in those decades, our long-standing national promise—that education and hard work would render them better off than their parents—ceased to be true. Life, as it turned out, imitated the lottery: for most Americans, it was getting harder and harder to win. a tax on the desperate, ignorants and numerically illiterate. should be banned outside local charity with x prizes to tickets.

skohan 4y ago
I think it's also a perfect counterexample to the assumption of rationality by the Chicago school of economics.
- sicp-enjoyer 4y ago
  That's not how economists use rationality. Individuals derive other enjoyments from gambling besides their earnings. This desire to seek things they like is the "rationality", purposeful behavior, not the ability to make optimal bets or play mathematical games.
  - nerdponx 4y ago
    Yet the economics literature is full of this exact misuse of the term "rationality", not to mention what economists say in their blogs, op-eds, and interviews. Not to mention the traditional econ 101 curriculum.

donretag 4y ago

https://archive.ph/VHiBT/ https://archive.ph/VHiBT/

xivzgrev 4y ago

One other aspect that wasn’t in the article is how vehemently states enforce their monopoly status on lotteries. I’ve worked at companies that run various sweepstakes, and there is a huge legal concern around not accidentally turning into an illegal lottery. You think just by not charging people to enter you avoid it? Oh no - the laws are setup where basically if you are running any kind of contest, you are an illegal lottery by default unless you meet certain criteria. A “contest” must be a game of skill. A “sweepstakes” may have winners randomly chosen, but you must have (free) alternative method of entry. Etc States are very clear: they are the only lottery games in town!

elliekelly 4y ago
Running any kind of legal sweepstakes in the US is such a massive pain in the ass that I genuinely don’t understand why anyone bothers.
Archelaos 4y ago
It is necessary, because companies might otherwise game the system like: "Give us your DNA and have a 1:1,000,000 chance to win a bottle of whiskey."

kibwen 4y ago

Proposal: have every US adult pay a flat $52 extra in taxes a year. This amounts to $1 a week. Let's say this collects $150 million a week, assuming 150 million taxpaying adults. Have the government hold a nationwide lottery where, every week, this $150 million pot gets split into 500 parts and handed out to 500 different people. That's 500 random people a week receiving $300,000 dollars, a life-changing amount of money for most people, and all it cost them was $1 to enter. Then, abolish all other lotteries (EDIT: referring to the state-run lotteries). Obviously this doesn't change the fundamental probability of lotteries, but most people are happy to pay $1 for a remote chance of winning $300,000 (and you can even let people opt out if they don't want to participate). It preserves the entertainment aspect (broadcast the pulls and make a weekly event out of it), creates a shared cultural touchstone (maybe dectuple the pot for the week of Christmas or something), while also eliminating the weird perversity of our current state-run lotteries that prey on gambling addicts. EDIT: Can I ask the downvoters to elaborate?

nerdponx 4y ago
I'm curious why this was downvoted myself, I actually like the idea.
djbusby 4y ago
Seems not-downvoted to me. I like the idea of more winners rather than more money for fewer winners. I don't like the national aspect. Nobody should be obligated to play.
- kibwen 4y ago
  As I mention in the comment, it's fine to let people opt out. And you don't need to tell anybody that you opted out, so you can still participate in the spectacle even if your chance of winning is now literally 0% (as opposed to "vanishingly close to 0%").
cercatrova 4y ago
Interesting proposal. However, will it stop the compulsive gamblers? Maybe they'll just find somewhere else to gamble. This already happens in countries where gambling is illegal like China. This reminds me of the No-Lose Lottery concept by Freakonomics as well: https://freakonomics.com/podcast/is-america-ready-for-a-no-lose-lottery/ https://freakonomics.com/podcast/is-america-ready-for-a-no-l...

MisterBastahrd 4y ago

Some people forget what it's like to be resource-limited. Not so much that a lottery ticket will make or break you, but enough that you can't afford to do the "nice" things like... go on a decent vacation, where 4 bucks a week isn't going to amount to anything. Now, if you go into the lottery with the idea that you're gonna win, you don't understand math. But if you buy a ticket every time the jackpot is above $100M, then you're usually taking a short mental vacation by dreaming about what you'd be doing with the money. You could go on the internet and look at the vacation places you'd be going to, or the homes you'd like to live in, etc. It gives people with limited means a sense of freedom from the dull lives they've been living. I'm not going to argue that the lottery isn't predatory or that it's a bad investment. I'm just saying that these stories usually result in comments where people with assets show their whole asses with disdain for people who aren't well off. It's not completely about the money or the math and it never has been... and for a generation that cringes every time boomers claim that Starbucks ate your savings, you've got some nerve complaining about people show spend $4 a week on a fantasy.

rootusrootus 4y ago
> But if you buy a ticket every time the jackpot is above $100M That's the only way I'll play. Once in a while I'll drop two bucks on a seriously large jackpot. If I think rationally, I'm pretty sure winning would ruin my life. But it's fun to fantasize about what that kind of money would enable. Two bucks buys me a day or so of that, once or twice a year. I don't get the appeal of scratch-its or regular casino gambling, though. Even if you win the jackpot, it's a pittance. I assume that kind of gambling is a different mindset, more focused on playing than winning.
Karellen 4y ago
I did see someone once say that lotteries aren't a tax on the stupid, or on innumeracy; they're a tax on hope. It's made me think about why a lot of people play in a different light ever since.
- nerdponx 4y ago
  It also doesn't make the lottery any less predatory.

nicgrev103 4y ago

People pay for a lottery ticket to dream about what their life could be like if they won (similar to people who never launch that buiness idea). Many people derive a lot of happiness from this, moreover (in the uk) a large proportion of the takings goes to good causes and people generally accept it is extremely unlikely they will win but instead of just donating to charity they at least have a slim chance of a massive gain.

Majromax 4y ago
> People pay for a lottery ticket to dream about what their life could be like if they won (similar to people who never launch that buiness idea). That might describe the median player, but I doubt it describes the median ticket. It only takes one ticket per draw to dream of winning, but many players purchase multiples. That suggests that they are motivated by something other than the entertainment of fantasy.
- deleted 4y ago
  [deleted]
- ballenf 4y ago
  But buying 10 tickets means your odds are 10x higher! /s 10 times a number approximating zero is still a number approximating zero. The thinking that changed me is that my odds of winning are approximately the same whether I buy a ticket or not.
  - colinmhayes 4y ago
    eh, I wouldn't consider possible and not possible approximately the same no matter how close they are.
- acuozzo 4y ago
  > That suggests that they are motivated by something other than the entertainment of fantasy. My father purchases multiple tickets, but he has no system and is clearly doing it for the high of hope.

giantg2 4y ago

If we get rid of the lottery, what am I going to daydream about while at the job I hate? Hope, even when it's an illusion, can be a powerful thing. I wonder if there's some other way to adapt this trait or side effect to other, less destructive, practices.

EForEndeavour 4y ago
> I wonder if there's some other way to adapt this trait or side effect to other, less destructive, practices. Enrolling in (but never finishing) online courses, subscribing to (but never watching) educational YouTube channels, downloading (but never reading) free or pirated textbooks, and bookmarking (but never returning to) tech blogs that all seem like they'd prepare you for a job you'd like.
- giantg2 4y ago
  I mean how do we leverage hope, or the illusion of hope, for positive things. How do we make it so you read that book, or learn that thing? The prospect of a good job is tempting and can give you hope, but there are so many other issues that it seems almost as unlikely as winning the lottery. I got good grades, got a masters, got experience, etc. I'm still making under $100k per year with almost nothing to look forward to career-wise. How do I start tricking myself into having hope?
troyvit 4y ago
Yeah and that's exactly what I pay for when I buy a lottery ticket. I'm not paying for a chance to win, I'm paying to put a stake in my daydreams, and it's joyful. Doesn't mean people need to plug hundreds of dollars a month into it I guess.
colinmhayes 4y ago
Right, the lottery can actually be an impressively cheap form of entertainment if used correctly.

leoedin 4y ago

I found it incredible that players "making less than $30,000 spend 13%" of their income on the lottery. That's completely absurd, given the odds of winning. I found sitting and spending a million dollars on an online lottery simulator stopped any hope of winning the lottery quite quickly. Even as an engineer it can be hard to get a feel for tiny odds until you sit there and repeatedly spend $1000 with nothing in return.

Maxburn 4y ago
I view lotteries as taxes on those that don't understand probability and money investing. That fits with those making that low of a salary. It's predatory, just like payday and title loans.
- CamelCaseName 4y ago
  This is often repeated, but perhaps players understand all that very well. Perhaps it is the condescending observer[0] who says "lotteries are a tax on stupidity" who does not understand the player's utility function. [0] (not OP specifically, but in general)
- acuozzo 4y ago
  > I view lotteries as taxes on those that don't understand probability and money investing. I did too until I realized what the purchasers of losing lottery tickets receive in exchange for their money: hope. They're purchasing the high of hoping for a better future; an escape into the dreams of riches.
  - Maxburn 4y ago
    I don't know if false hope is helping anyone.
- Retric 4y ago
  The fantasy of winning has non zero utility to players. Spending 2$ on a 400+ Million dollar prize can be fun up until the moment know you actually lost. I enjoy the experience enough to delay checking the numbers and thus savor the experience for significantly longer. Similarly I don’t particularly feel the need to regularly play as the occasional ticket is enough to keep the near zero possibility of a future win alive. Never playing on the other hand kills the fantasy. So in terms of what value I personally get from ~8$/year, lottery tickets are awesome.

karaterobot 4y ago

> “Americans spend more on lottery tickets every year than on cigarettes, coffee, or smartphones,” Cohen writes, “and they spend more on lottery tickets annually than on video streaming services, concert tickets, books, and movie tickets combined.” That's amazing if true, though it sounds unbelievable to me. Given the other statistic that "[o]ne in two American adults buys a lottery ticket at least once a year, one in four buys one at least once a month" the avid players at the edge must be spending a heck of a lot for that to add up... I don't gamble at all, but I tend to think of lottery tickets as pretty harmless. I've never seen anybody show up to a gas station and buy more than a few dollars worth of tickets, though I'm sure there are outliers who would. It's just hard for me to credit this given my back of the envelope math and personal experience. Hopefully the actual book has citations and I can check on it.

nerdponx 4y ago
Some people spend $10-20 on them. And that adds up quickly if you do it multiple times a week.
lottoooo1 4y ago
In 2020 it was $26.692393b. From https://www.taxpolicycenter.org/statistics/lottery-revenue https://www.taxpolicycenter.org/statistics/lottery-revenue In 2020 Apple iPhone sales were $73.3b in the Americas, which includes South America. From https://www.businessofapps.com/data/apple-statistics/ https://www.businessofapps.com/data/apple-statistics/ Sounds dubious. But lotto sales were really, really high. $26.7b could have gone to something worthy. The reason lottos are bad, and which is really poorly articulated in this article about empathetic personal stories, is that they compete in the $1-3 category, where cultural products thrive. Unlike an income tax increase, which competes in the $1,000+ category (typically). But nonetheless similar to a sales tax (increase may be $0.10-$1.00 per purchase). It really is as simple as, "pay for this app it costs one coffee." We are all worse off competing against this bullshit. That said, Apple and Google could ban virtual slot machines, DraftKings, etc. and little of value would be lost, and its other developers would gain a lot, but nah, they don't do that, because they are greedy.
- 4y ago

nitwit005 4y ago

What we lost was having the mafia run the lotteries instead.