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Poor people or people that don't mind taking a risk for the chance of a reward? I know fairly wealthy people that still dabble on the lottery. They well aware

Poor people or people that don't mind taking a risk for the chance of a reward? I know fairly wealthy people that still dabble on the lottery. They well aware that the odds are stacked against them and many of them can quote the statistical probability of their making (or not making) a profit on their play, but they still gamble because a). it's amusing and b). because just maybe they'll get lucky and will get a bazillion percent return on their investment - plus, the amount they spend on the lottery is totally meaningless to them. Eventually you get to a point where the $5 (or whatever it costs) is so trivial it makes zero difference in your life, so why not, right? It's not really that much unlike Venture Capitalists. 95% of startups fail, yet they still get VCs clamoring to invest in them every year because 5% of them may pay off a windfall return. VCs are no slouches in finances; they're sharp, quick witted, ruthless hustlers, yet still they play this lottery. I would say that the lottery is less a tax on the poor than it is a tax on those that are either ignorant to the math, aren't risk averse or are well off enough that the cost of playing the lottery is much less meaningful to their bottom line than the potential win would be. After all, at least 1 person wins it most weeks, and every play has an equal chance of being a winner - why not you? I'll spend my $5 on ice cream, because I'd rather do something that will definitely make me feel good now than spend $5 buying a piece of paper that will most probably be garbage in a few hours and make me feel like I wasted the money - in the hope that just perhaps I'll get rich and never have to worry about anything again, supposedly; though, I guess it's no different than people supporting the Leafs, hoping every week that their team will win, only to get crushed when they lose...again. Given they're (allegedly, according to their fans) the richest team in the NHL despite consistently sucking, it would appear that hope is a trillion dollar industry, find a way to sell hope to everyone and you'll make your own windfall.

ncallaway 11y ago
The entire point of being a VC is that the Expected Value should be greater than the investment. If a VC generates the same return as investments in the lottery, that VC would quickly cease operations.
- balabaster 11y ago
  Yes, but every VC knows that it's still a gamble that may not, and probably won't pay off. They spread their risk across many startups in order to minimize losses that are covered by huge windfalls the come from the big winners. At the end of the day though, it's still a gamble. They could end up losing it all.
  - mcv 11y ago
    Yes, but their investment still has a positive ROI (if they do their homework and the economy doesn't collapse, that is). The ROI on a lottery ticket is negative (unless you're at MIT and figure out a loophole like this).
    - balabaster 11y ago
      The fact you needed to include a proviso proves my point.
learnstats2 11y ago
>I know fairly wealthy people that still dabble on the lottery. This might be obvious to everyone, but gambling expenditure is higher (as a percentage) in low-income households, and still doesn't exceed 1% of disposable income in any income group in the UK. Ref: http://www.ons.gov.uk/ons/rel/family-spending/family-spending/2014-edition/rft-3-2-final-2013.xls http://www.ons.gov.uk/ons/rel/family-spending/family-spendin... People with more economic power can participate in forms of gambling with a lower rake: we might call those investments.
- balabaster 11y ago
  > This might be obvious to everyone, but gambling expenditure is higher (as a percentage) in low-income households As is everything. Your household grocery bill is higher (as a percentage) in low-income households. Everything is a higher percentage because the cost of stuff doesn't go down when you have little money. Gambling, alcoholism and drugs, medical bills, life don't cost less when you're broke, you just have to pick and choose what you buy to make ends meet. Hope and escape are the biggest sellers on the market. When everything around you is geared towards selling "bigger is better", "newer is better", "richer is better" and you have no means to participate in that "Xer is better" society. Beauty companies sell us on "just use our makeup and it will cover all your flaws and make you look beautiful", fitness companies sell us on "just use our product and it will make you look beautiful", clothing companies "just buy our clothes, they will make you look beautiful"... The media constantly brainwash people to act that way. Is it any wonder that people will spend out on anything that will let them hope (even if just for an hour or two) that perhaps, no matter how small the odds, they just might have a shot of "belonging" and joining those that have made it... or purchase some means of escaping from that whole system - if just for the hour or two it takes the drugs to wear off. That's human nature. We live emotionally. We will die emotionally. No amount of math or education is going to change that. As long as the media keeps drumming its ever present beat that you need money to belong, you need stuff to belong, you need to be someone to belong, people will keep spending money on the hope of belonging... or spending money on a means of escaping from that pressure.
  - learnstats2 11y ago
mcv 11y ago
> Poor people or people that don't mind taking a risk for the chance of a reward? People who don't mind paying for the feeling that they have a chance to win. Their actual chance to win is far too small of course (unless you're at MIT), but the thrill they feel is real. That's what you pay for. Just like a roller coaster ride or something.
- jeremysmyth 11y ago
  This is exactly the point. Playing the lottery is a relatively cheap and accessible licence to dream, regardless of the actual odds of fulfilling that dream. The journey is the fun part, even if you never reach the destination.
jules 11y ago
There is a crucial difference between the lottery and startup investments. Presumably the latter have positive expected payout, whereas the lottery has negative expected payout. If the $5 makes zero difference to your life then the expected payout of $3 makes even less than zero difference to you life, so it's still not rational to play the lottery. Certainly there are contrived circumstances when it's rational to play the lottery, such as you have $5 in your bank account but you need $500,000 for a medical operation otherwise you die, but for most people that does not apply.

ncallaway 11y ago

The entire point of being a VC is that the Expected Value should be greater than the investment. If a VC generates the same return as investments in the lottery, that VC would quickly cease operations.

balabaster 11y ago
Yes, but every VC knows that it's still a gamble that may not, and probably won't pay off. They spread their risk across many startups in order to minimize losses that are covered by huge windfalls the come from the big winners. At the end of the day though, it's still a gamble. They could end up losing it all.
- mcv 11y ago
  Yes, but their investment still has a positive ROI (if they do their homework and the economy doesn't collapse, that is). The ROI on a lottery ticket is negative (unless you're at MIT and figure out a loophole like this).
  - balabaster 11y ago
    The fact you needed to include a proviso proves my point.

learnstats2 11y ago

>I know fairly wealthy people that still dabble on the lottery. This might be obvious to everyone, but gambling expenditure is higher (as a percentage) in low-income households, and still doesn't exceed 1% of disposable income in any income group in the UK. Ref: http://www.ons.gov.uk/ons/rel/family-spending/family-spending/2014-edition/rft-3-2-final-2013.xls http://www.ons.gov.uk/ons/rel/family-spending/family-spendin... People with more economic power can participate in forms of gambling with a lower rake: we might call those investments.

balabaster 11y ago
> This might be obvious to everyone, but gambling expenditure is higher (as a percentage) in low-income households As is everything. Your household grocery bill is higher (as a percentage) in low-income households. Everything is a higher percentage because the cost of stuff doesn't go down when you have little money. Gambling, alcoholism and drugs, medical bills, life don't cost less when you're broke, you just have to pick and choose what you buy to make ends meet. Hope and escape are the biggest sellers on the market. When everything around you is geared towards selling "bigger is better", "newer is better", "richer is better" and you have no means to participate in that "Xer is better" society. Beauty companies sell us on "just use our makeup and it will cover all your flaws and make you look beautiful", fitness companies sell us on "just use our product and it will make you look beautiful", clothing companies "just buy our clothes, they will make you look beautiful"... The media constantly brainwash people to act that way. Is it any wonder that people will spend out on anything that will let them hope (even if just for an hour or two) that perhaps, no matter how small the odds, they just might have a shot of "belonging" and joining those that have made it... or purchase some means of escaping from that whole system - if just for the hour or two it takes the drugs to wear off. That's human nature. We live emotionally. We will die emotionally. No amount of math or education is going to change that. As long as the media keeps drumming its ever present beat that you need money to belong, you need stuff to belong, you need to be someone to belong, people will keep spending money on the hope of belonging... or spending money on a means of escaping from that pressure.
- learnstats2 11y ago

mcv 11y ago

> Poor people or people that don't mind taking a risk for the chance of a reward? People who don't mind paying for the feeling that they have a chance to win. Their actual chance to win is far too small of course (unless you're at MIT), but the thrill they feel is real. That's what you pay for. Just like a roller coaster ride or something.

jeremysmyth 11y ago
This is exactly the point. Playing the lottery is a relatively cheap and accessible licence to dream, regardless of the actual odds of fulfilling that dream. The journey is the fun part, even if you never reach the destination.

jules 11y ago

There is a crucial difference between the lottery and startup investments. Presumably the latter have positive expected payout, whereas the lottery has negative expected payout. If the $5 makes zero difference to your life then the expected payout of $3 makes even less than zero difference to you life, so it's still not rational to play the lottery. Certainly there are contrived circumstances when it's rational to play the lottery, such as you have $5 in your bank account but you need $500,000 for a medical operation otherwise you die, but for most people that does not apply.