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I always wonder about these calculations. According to http://www.michiganlottery.com/where_the_money_goes http://www.michiganlottery.com/where_the_money_goes
by colomon 14y ago
I always wonder about these calculations. According to http://www.michiganlottery.com/where_the_money_goes http://www.michiganlottery.com/where_the_money_goes out of every $1 players spend on the Michign lottery, $.58 goes to player prizes. Assuming they're actually counting that correctly, doesn't that mean the expected monetary return (to you, of course it's nice that you're donating to the school system) of $1 spent on the lottery has to be $.58?
- philwelch 14y agoThat's over the course of the whole run; accordingly the average expected value of $1 spent on the Michigan lottery would be $.58 if you bought a ticket for every game every week. But you don't do that. Some weeks the jackpot is higher so you buy a ticket, some weeks you don't. When the jackpot is higher, the EV for that week rises, but since the lottery itself plays every week it doesn't matter so much to them.
- colomon 14y agoBut when the jackpot is bigger, more people buy tickets, too, which makes the EV for that week go down. It's not at all clear to me which effect is bigger. (Indeed, I wonder if your best bet is to buy the first week the jackpot rolls over, but not when it has rolled over multiple times.) At any rate, if the expected return over long periods is $.58 for $1, I sure wouldn't expect it to even get close to $1 on the best weeks.