Who Wants to Be a Thousandaire? (2011)

Back when the mafia used to have their own lottery (aka "the numbers"), there were two ways to pick the winning number (usually between 1 and 100).

Option 1:

Use the last two digits of some commonly available public number that was, essentially, random or at least unpredictable and not controllable. A good example today would be the cents portion of the SP500 index.

Options 2:

Tally up which of the numbers had the least amount of money bet on it and then make that the number.

You can guess which of the two options the more nefarious organizations used.

Interesting related note: back in the first half of the 20th century, there used to be a game in the newspapers where you were presented with a grid of faces, each one being numbered. The goal was to pick the face that you though OTHER people would pick most often. In other words, if you picked the most popular face, you would win. This led to lots of "well which face do I think other people will think is most popular etc"

John Maynard Keynes used the game above as a proxy for the stock market with stocks being the faces e.g. you were trying to pick the stock you thought that everyone else would buy.

In a past life I worked at a marketing agency. When we'd run random drawings, I'd (properly) randomly select and provide a winner.

It happened more than once that the marketing side would come back and ask for a new winner because of a situation like us doing a drawing for a prize from an ISP, and the winner's email being "@competitorisp.net".

As far as I know (and I've got a reasonable basis for this), the clients never requested this or anything. It was purely our marketing guys not liking the optics of telling the client that a competitor's customer won.

And yeah, for some giveaways and stuff they'd take a list of people and trawl through their social media accounts to figure out who'd have the most impact.

Again, don't think the clients had requested this, it just made the job we're doing look better to show the client "Yeah this person won and look at all the social media buzz it created!" rather than "Yeah we gave it to someone that looks like a troll, has no media presence, and the only people that will probably hear about this are a few people in an IRC chatroom."

If it's not regulated (or small enough that the regulators won't notice), I'd assume any contest/etc like this is probably rigged. Marketing is, generally, an industry full of lies. The contests are no different.

That's pretty much how I figured most small contests are done.

I worked next desk to a bunch of social media marketers, and then dealt with some individual social media marketers later on. My entire experience makes me immediately distrust anything such a person says. The only thing you can trust is that they'll do the thing that creates most engagement.

Closely related to this is the now accepted business practice of creating fake product offers to simultaneously gauge interest and collect e-mail addresses - where the actual product doesn't exist and only, maybe, will be developed if the scam generates good enough result.

Bonus points for using this to generate evidence for VCs you're courting.

I don't know enough about this particular contest -- and since it happened in 1984, I'm not going to attempt to find more information on the internet -- but typically the goal isn't to have an unwinnable contest, just to have it drag on long enough while drawing more and more people into listening.

At the start of the contest, you might have 0.1% of the people in your listening area tuning in for the reading of the serial number, and by the end, 1-5%, before dropping down to, say, 0.2-0.5% after the contest is over. Early on, there's a 1 in a 1000 chance of someone listening having the bill, more or less, so the contest won't end too early, but by the end, you are up to a 1-in-20 chance, so once it gets popular enough, it will end fast enough that people don't get too much into grumbling that your contest is rigged.

Meanwhile, the radio station probably didn't actually put up the $30,000 -- it was probably an advertiser who paid the radio station $40,000 out of their advertising budget to run the contest, or should I say, the Wonder Widget's daily drawing, brought to you by Wonder Widgets, your wonderful source of wonderful widgets. You repeat the advertiser's slogan three or four times as people are tuning in to the station to listen for the day's serial number, and three or four more times throughout the day reminding people to tune in at X o'clock.

There's no need for the contest to be rigged or unwinnable -- it's a bargain for everyone at half the price. The advertiser knows people are listening to their ads, the radio station is getting paid outright as well as getting a boost in their listeners (which gets them more money from other advertisers). And actually paying out the money, eventually, lets you go back to that same gold mine again and again.

Yes, radio, charity, and other raffles are regulated. I encourage you to search for [your state] raffle statute. Or [your city/county] raffle statute.

That searching is quite expensive, considering the odds (only one chance per day). Besides, there was also significant additional downside, which became obvious in this case: The risk of having a pile of cash in your house which could be stolen

Back when this contest was running bank savings accounts paid enough interest that there was a real loss of having all your money withdrawn. I'm not sure what year this was, so I can't look up the interest rate, but a couple thousand lost per month isn't an unreasonable estimate.

The only downside is someone could break into your house and steal all the cash, but of course that would never happen.

Both loss of interest and loss of deposit insurance. You can lose the money to theft or fire.

That would let you check instantly if you had that dollar, but you'd then have difficulty physically finding it.

That would take so much more time than sorting each batch of 1000 notes, and sorted notes let you do your daily check in less than a minute.

Back then, I'm assuming the contest was late 80's/early 90's the tech wasn't around for that.

How long would it take you to OCR each bill?

Then, once you know you have the winner, how long is it going to take you to find it?

Yeah, you're right. A good way to compare the relative increases is to go to 'Edit Graph' and set a log scale in the 'Format' tab. That makes it clear the relative change in 2020 was huge.

I'm still not sure it will cause inflation though, since COVID has had a big deflationary impact and the Fed can always unwind if needed.

Yeah, we're seeing inflation in "financial assets". Just not yet in a basket of groceries.

Neutral money is the spherical cow of economics, and it isn't correct. You need to take into effect the Cantillion effect. The only way we would getting meaningful CPI inflation is if the new money was going to people who would increase their demand of CPI items if they got it. This year the FED has bought bonds, and so that is who that money was given to people with those bonds. Those people can then spend that money, but as we've seen with the stock market, that money was just pumped into the stock market. So all we will see is that the velocity of money will drop further, the prices of items tracked by the CPI won't move, and wealth inequality just got a little worse.

> This is the basis for inflation.

Hum... Sure, it's the basis of some kind of inflation. But you'll get no useful kind that only depends on the amount of paper money in existence.

There is much more to inflation than the amount of paper money on the economy, and even than the amount of money the government creates.

Thanks for chiming in to this internet digression from your actual statement. :)

Absolutely.

(I felt safe assuming that without even looking it up - if that wasn't precisely the case, it would be part of his mythos)