6 ms·

> 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

by 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.
    - cookie_monsta 4y ago
      > Do you panic a little bit every time you step outside? Or get into the water? I wouldn't say panic, but I am aware of those things and do my best to prevent them from happening to me. If they were guaranteed to happen to somebody each Saturday at 8pm I would be a little more nervous around that time. > The difference between 0 and 0.000000003 is insignificant. Surely this depends on the unit of measurement? If I told you the train station was only 0.000000003 parsecs away would you be happy to walk? My point is that the original statement is only true if nobody ever wins the lottery. But line up all the people who have won. What do they have in common? They bought a ticket. Line up all the people who have never bought a ticket. What do they have in common? They've never won. Nobody's saying the odds are good or that the lottery is a sound investment strategy. But zero in infinite chances seems measurably less than 1 in 292 million.
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.

by bena 4y ago

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.
  - cookie_monsta 4y ago
    > Do you panic a little bit every time you step outside? Or get into the water? I wouldn't say panic, but I am aware of those things and do my best to prevent them from happening to me. If they were guaranteed to happen to somebody each Saturday at 8pm I would be a little more nervous around that time. > The difference between 0 and 0.000000003 is insignificant. Surely this depends on the unit of measurement? If I told you the train station was only 0.000000003 parsecs away would you be happy to walk? My point is that the original statement is only true if nobody ever wins the lottery. But line up all the people who have won. What do they have in common? They bought a ticket. Line up all the people who have never bought a ticket. What do they have in common? They've never won. Nobody's saying the odds are good or that the lottery is a sound investment strategy. But zero in infinite chances seems measurably less than 1 in 292 million.

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.