By some estimates, two-thirds of lottery winners are broke within seven years.
https://nationalpost.com/news/canada/lottery-curse-claims-an...
Nearly One-Third of U.S. Lottery Winners Declare Bankruptcy
https://wolfstreet.com/2018/04/17/nearly-one-third-of-u-s-lo...
So it's not so much the winning that make people go crazy. It's just what happens when people who don't understand money get lots of it.
However, I will suggest that many poor people think coming into money would solve all their problems because money is very often the most obvious sticking point in their own life. In reality, they trade poor people problems for rich people problems and it doesn't come with some built-in education on how to handle rich people problems. (I mean a la The Matrix: "Download this to my brain." A lot of the advice they get falls on deaf ears and they are ill-equipped to sort good advice from bad.)
In fact, many poor people are incredibly dismissive of the idea that rich people have any problems. They often mock the problems that rich people have. So no surprise they aren't psychologically prepared to deal with the reality of sudden wealth in cases where they think "rich people don't have real problems."
I think this group has similar characteristics to the lottery winners. They become rich suddenly, after having beaten long odds.
You can make the same sorts of arguments about the rationality of professional athletes too. Most people who aspire to become professional athletes don't make it. Continuing to pursue the dream is largely an irrational decision.
Similarly, it is possible to play sports because you love it, not because you see it as a get rich scheme.
Participating doesn't have to be crazy behavior in either case.
That only makes it more likely that this person is losing money by playing. "Crazy" is too strong, I agree, but it's certainly not the shrewdest investment.
Some people enjoy gambling. If it pays off, yay! If it doesn't, it was only a couple of bucks that they felt they could spare.
I'm aware there are very poor people who play the lottery in hopes of it fixing their lives, even homeless people. And I don't think that's a great idea. But there are people who can spare a few bucks who just like playing.
One person I know used to call it "Contributing to my nephew's scholarship fund" because the lottery covers education expenses in that state.
I have only rarely played the lottery. It's not really my thing. But not everything in life needs to be decided with a slide rule for someone to be fundamentally healthy. In fact, I have seen studies that suggest that people who do a little gambling are typically healthier than average.
It's not supposed to be an investment, it's something you do for the fun of the "what if".
There. Just saved you n dollars where n is the number of times you want to play that game.
Humans also want a tiny possibility of it happening to make their "what if" worth, and are willing to pay to get that.
Just like they are more engaged when there are props and sets and costumes when they see a play. A play requires suspension of disbelief, so they could have also made believe that they see the set and costumes over a naked stage, but we don't want that, we prefer to have them as aids.
However, that's where the similarities end. Athletes become successful from years of hard work and sacrificing present enjoyment for future rewards. Lottery winners are chosen randomly from people who literally demonstrate how poorly they handle money buy buying lottery tickets.
I buy a megabucks ticket about once every year. Sometimes twice. I buy it for a little bit of fantasy. It's totally worth the dollar. In reality I'd hate to win a big lottery because the evidence is pretty overwhelming that it would ruin my life (not the financial aspect, I could handle that bit, it's the social consequences that would make me wish I had never won).
When you win the lottey, you get seed money. This money is "worth" 200 times less than you think it's worth, because you can only spend it once. If you put e.g. 10 million in an investment, you get an allowance of less than 50k/month to spend without eroding the original capital. That's the true "value" of this lottery ticket.
[1] Where I amassed orders of magnitude less capital than you’re asking about
https://www.reddit.com/r/AskReddit/comments/24vzgl/you_just_...
Though I guess that post doesn't apply to smaller winners.
You'd be surprised. People of all kinds play lottery.
The real reason is far more likely to be that people who are not rich already are not prepared for sudden wealth, and do not know how to handle their finances. Plus all kinds of other people (relatives, advisors, etc) will prey on them.
I know why you might think that, the articles talking about lottery spending by poor people and socioeconomic "failures". But they are not capable of the lottery spending necessary to reach jackpots numbers we see multiple times a week. Because all classes of society play the lottery at an even distribution.
The % of their income or net worth is negligible once you get to the middle class and higher. It is negligible and inconsequential and sometimes you win.
Your supposition is flawed, and also many more people are fine winning the lottery and you never hear about them. They buy the condo in South Beach and send their children to Ivy League schools and make up stories about their successful business, the end.
https://www.vox.com/identities/2016/1/13/10763268/lottery-po...
https://money.cnn.com/2018/01/18/pf/lack-of-savings-cover-un...
It's completely fake. I, for instance, would also not answer 'from savings' -- probably preferring to reduce expenses, since I try to avoid touching my savings.
More than that, "money is positively associated with happiness/life satisfaction" is common sense. Anyone who has ever struggled with money knows that it's incredibly stressful. "Money doesn't make you any happier" is the counter-intuitive research finding that needs ironclad evidence.
It's also important not to confuse either of these claims with "anyone who has money is happy", which is obviously false. It's still true that money can't buy happiness. But lack of money is a major (but not guaranteed) cause of unhappiness.