What We’ve Lost Playing the Lottery
newyorker.com
newyorker.com
Obviously this doesn't change the fundamental probability of lotteries, but most people are happy to pay $1 for a remote chance of winning $300,000 (and you can even let people opt out if they don't want to participate). It preserves the entertainment aspect (broadcast the pulls and make a weekly event out of it), creates a shared cultural touchstone (maybe dectuple the pot for the week of Christmas or something), while also eliminating the weird perversity of our current state-run lotteries that prey on gambling addicts.
EDIT: Can I ask the downvoters to elaborate?
I like the idea of more winners rather than more money for fewer winners.
I don't like the national aspect. Nobody should be obligated to play.
This reminds me of the No-Lose Lottery concept by Freakonomics as well: https://freakonomics.com/podcast/is-america-ready-for-a-no-l...
As someone who worked in a very popular convenience store north of the University of Texas campus for four years during college, I watched them gamble obscene amounts while obviously living in poverty. I believe the compulsive gamblers will still be driven to gamble away as much of their available cash as they possibly can.
(I didn't downvote you)
For example, the old Numbers[0] games often used public, hard to influence sources.
https://en.wikipedia.org/wiki/Lottery#Early_United_States_16...
>Lotteries in colonial America played a significant part in the financing of both private and public ventures. It has been recorded that more than 200 lotteries were sanctioned between 1744 and 1776, and played a major role in financing roads, libraries, churches, colleges, canals, bridges, etc.[5] In the 1740s, the foundation of Princeton and Columbia Universities was financed by lotteries, as was the University of Pennsylvania by the Academy Lottery in 1755.
In BC, they still are.
“B.C. disbanded RCMP unit after report warned possible crime figure bought stake in casino”
https://globalnews.ca/news/6403415/organized-crime-bc-casino...
“BC Lottery Corp. didn’t block mysterious casino cash due to ‘hundreds of millions’ in estimated losses: inquiry”
https://globalnews.ca/news/7607782/bc-lottery-corporation-my...
“Lottery corporation was aware of suspicious cash at B.C. casinos, former VP says”
https://www.cbc.ca/news/canada/british-columbia/ex-lottery-v...
“B.C. lottery CEO 'blown away' by organized crime threat”
https://bc.ctvnews.ca/b-c-lottery-ceo-blown-away-by-organize...
Our previous government was literally criminal. An excellent investigative journalist wrote a book about it. Well worth becoming aware of what went on.
https://www.goodreads.com/book/show/57427971-wilful-blindnes...
If there were legal means to gamble, people would choose that - so the theory goes. Harm reduction of sorts was the major selling point in my state when I was a kid.
I don't play the lottery, feel it's stupid and just a tax on impossibly optimistic people (or those good at math), and would be quite annoyed at having to play this lottery and pay money for it.
To narrow the gap luck currently plays in life outcomes.
Currently, you are either born lucky, trust funds and generational real estate, or not.
More chances to be "lucky" would enable more opportunities for more people. And the OP suggests a negligible cost to make that happen.
If you take luck to be bad, this is not an improvement.
If you disagree, Why don't we just increase the number of people born with trust funds and generational wealth, at the cost to the rest of society.
This would have much the same effect as instituting the lottery.
Being lucky and winning a lottery is just as "unfair" as being lucky and being born to the right household.
More chances to be lucky can reduce a gap that today is mostly determined by the wealth you’re born into.
Bezos could have 10x or 10% of what he has now and it wouldn't change my life at all.
Every week, thousands of people will have their neighbors and friends suddenly complaining about having to pay $100K in taxes and planning to move out of the neighborhood.
Which society has less equality? one with one randomly 1 rich and 99 poor, or one with 10 randomly 10 rich and 90 even poorer.
You're taking a bit from the poorest, responsible non-gamblers, and enriching just a few who will mostly irresponsibly spend it into smithereens.
Also, in your scheme participating in the nation lottery is compulsory? That doesn’t sit well with me
The wealthy class is of course happy to pay a small amount in lotto lobbying to ward off larger proportional tax increases to fund infrastructure. Hence we are stuck with lotto 4 times a week.
I would have expected the lottery to pay for its own pushing.
Why should I be compelled by the state to give my money to something that isn't clearly helpful to society?
https://www.fec.gov/introduction-campaign-finance/understand...
Sine those scruples don't really hurt anyone else, forcing them to violate those scruples is just mean.
The $52/year tax is forcing people to participate.
2) Your math doesn't account for the administration costs of such a system.
3) Not to get us into a libertarian "taxes are theft" debate, but if we can agree on the necessity of government services and the funding thereof, then I don't see why it should be controversial to try and find optional alternatives to taxation whenever possible. Lotteries might have their drawbacks, and we can debate whether lotteries are a good way to go about getting funding, but at least they are an opt-in / voluntary way to raise funding for those services. No one has gone to jail or had their assets seized for failing to buy a lottery ticket.
As I've typed four times so far, my comment mentions that there's no problem letting people opt out.
Sure, as a novelty. Not hundreds of times every few years.
That said, the idea of adding an optional poll tax lottery seems dopey.
I’ve worked at companies that run various sweepstakes, and there is a huge legal concern around not accidentally turning into an illegal lottery.
You think just by not charging people to enter you avoid it? Oh no - the laws are setup where basically if you are running any kind of contest, you are an illegal lottery by default unless you meet certain criteria.
A “contest” must be a game of skill. A “sweepstakes” may have winners randomly chosen, but you must have (free) alternative method of entry. Etc
States are very clear: they are the only lottery games in town!
Now, if you go into the lottery with the idea that you're gonna win, you don't understand math. But if you buy a ticket every time the jackpot is above $100M, then you're usually taking a short mental vacation by dreaming about what you'd be doing with the money. You could go on the internet and look at the vacation places you'd be going to, or the homes you'd like to live in, etc. It gives people with limited means a sense of freedom from the dull lives they've been living.
I'm not going to argue that the lottery isn't predatory or that it's a bad investment. I'm just saying that these stories usually result in comments where people with assets show their whole asses with disdain for people who aren't well off. It's not completely about the money or the math and it never has been... and for a generation that cringes every time boomers claim that Starbucks ate your savings, you've got some nerve complaining about people show spend $4 a week on a fantasy.
That's the only way I'll play. Once in a while I'll drop two bucks on a seriously large jackpot. If I think rationally, I'm pretty sure winning would ruin my life. But it's fun to fantasize about what that kind of money would enable. Two bucks buys me a day or so of that, once or twice a year.
I don't get the appeal of scratch-its or regular casino gambling, though. Even if you win the jackpot, it's a pittance. I assume that kind of gambling is a different mindset, more focused on playing than winning.
"""
No One's Crazy
...
But every financial decision a person makes, makes sense to them in that moment and checks the boxes they need to check. They tell themselves a story about what they’re doing and why they’re doing it, and that story has been shaped by their own unique experiences.
Take a simple example: lottery tickets. Americans spend more on them than movies, video games, music, sporting events, and books combined.
And who buys them? Mostly poor people. The lowest-income households in the U.S. on average spend $412 a year on lotto tickets, four times the amount of those in the highest income groups. Forty percent of Americans cannot come up with $400 in an emergency. Which is to say: Those buying $400 in lottery tickets are by and large the same people who say they couldn’t come up with $400 in an emergency. They are blowing their safety nets on something with a one-in-millions chance of hitting it big.
That seems crazy to me. It probably seems crazy to you, too. But I’m not in the lowest income group. You’re likely not, either. So it’s hard for many of us to intuitively grasp the subconscious reasoning of low-income lottery ticket buyers.
But strain a little, and you can imagine it going something like this:
> We live paycheck-to-paycheck and saving seems out of reach. Our prospects for much higher wages seem out of reach. We can’t afford nice vacations, new cars, health insurance, or homes in safe neighborhoods. We can’t put our kids through college without crippling debt. Much of the stuff you people who read finance books either have now, or have a good chance of getting, we don’t. Buying a lottery ticket is the only time in our lives we can hold a tangible dream of getting the good stuff that you already have and take for granted. We are paying for a dream, and you may not understand that because you are already living a dream. That’s why we buy more tickets than you do.
You don’t have to agree with this reasoning. Buying lotto tickets when you’re broke is still a bad idea. But I can kind of understand why lotto ticket sales persist.
And that idea—“What you’re doing seems crazy but I kind of understand why you’re doing it.”—uncovers the root of many of our financial decisions.
Few people make financial decisions purely with a spreadsheet. They make them at the dinner table, or in a company meeting. Places where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together into a narrative that works for you.
"""
[1]https://www.latimes.com/opinion/op-ed/la-oe-singh-food-deser...
[2]https://www.diabetes.co.uk/news/2022/sep/wider-socioeconomic...
Sweet, sweet index funds. One can dream.
Hope, even when it's an illusion, can be a powerful thing. I wonder if there's some other way to adapt this trait or side effect to other, less destructive, practices.
Enrolling in (but never finishing) online courses, subscribing to (but never watching) educational YouTube channels, downloading (but never reading) free or pirated textbooks, and bookmarking (but never returning to) tech blogs that all seem like they'd prepare you for a job you'd like.
The prospect of a good job is tempting and can give you hope, but there are so many other issues that it seems almost as unlikely as winning the lottery. I got good grades, got a masters, got experience, etc. I'm still making under $100k per year with almost nothing to look forward to career-wise. How do I start tricking myself into having hope?
That's amazing if true, though it sounds unbelievable to me. Given the other statistic that "[o]ne in two American adults buys a lottery ticket at least once a year, one in four buys one at least once a month" the avid players at the edge must be spending a heck of a lot for that to add up...
I don't gamble at all, but I tend to think of lottery tickets as pretty harmless. I've never seen anybody show up to a gas station and buy more than a few dollars worth of tickets, though I'm sure there are outliers who would. It's just hard for me to credit this given my back of the envelope math and personal experience. Hopefully the actual book has citations and I can check on it.
In 2020 Apple iPhone sales were $73.3b in the Americas, which includes South America. From https://www.businessofapps.com/data/apple-statistics/
Sounds dubious. But lotto sales were really, really high. $26.7b could have gone to something worthy.
The reason lottos are bad, and which is really poorly articulated in this article about empathetic personal stories, is that they compete in the $1-3 category, where cultural products thrive. Unlike an income tax increase, which competes in the $1,000+ category (typically). But nonetheless similar to a sales tax (increase may be $0.10-$1.00 per purchase).
It really is as simple as, "pay for this app it costs one coffee." We are all worse off competing against this bullshit. That said, Apple and Google could ban virtual slot machines, DraftKings, etc. and little of value would be lost, and its other developers would gain a lot, but nah, they don't do that, because they are greedy.
It's a very inefficient and uneven redistribution of wealth.
There's a whole-ass industry built on exploiting them. How many of them have you personally heard of vs non-whales?
It's easy to wonder how it could all add up, if it's $1 now and then to enter Power Ball whenever it gets big, which I'm guessing is what you're imagining.
"personas" I've seen with regards to scratch tickets where it adds up quick-
1) Asks the clerk to throw in a $5 or $10 ticket every time they're at the store buying cigarettes
2) Starts with a single ticket now and then, and uses proceeds from every win to keep buying an increasing amount of tickets until it's gone or mostly gone.
3) Group of friends who go in on spending a few thousand on a whole roll of scratch tickets to get a lot of shots at a jackpot, and on average the tickets return something like 80% (i.e. 20% loss) so it probably won't be a total loss
That's completely absurd, given the odds of winning. I found sitting and spending a million dollars on an online lottery simulator stopped any hope of winning the lottery quite quickly. Even as an engineer it can be hard to get a feel for tiny odds until you sit there and repeatedly spend $1000 with nothing in return.
Perhaps it is the condescending observer[0] who says "lotteries are a tax on stupidity" who does not understand the player's utility function.
[0] (not OP specifically, but in general)
I did too until I realized what the purchasers of losing lottery tickets receive in exchange for their money: hope.
They're purchasing the high of hoping for a better future; an escape into the dreams of riches.
I enjoy the experience enough to delay checking the numbers and thus savor the experience for significantly longer. Similarly I don’t particularly feel the need to regularly play as the occasional ticket is enough to keep the near zero possibility of a future win alive.
Never playing on the other hand kills the fantasy. So in terms of what value I personally get from ~8$/year, lottery tickets are awesome.
That might describe the median player, but I doubt it describes the median ticket. It only takes one ticket per draw to dream of winning, but many players purchase multiples. That suggests that they are motivated by something other than the entertainment of fantasy.
10 times a number approximating zero is still a number approximating zero.
The thinking that changed me is that my odds of winning are approximately the same whether I buy a ticket or not.
My father purchases multiple tickets, but he has no system and is clearly doing it for the high of hope.
That doesn't change that the primary value is in the bonding and fantasy; we're not doing it because it's a rational/+EV investment.
We have charity lottery things in the US too but those aren't the tickets you buy if you're trying to win.
We generally pretend that state lotteries fund schools but then take away normal funding in similar amounts...
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.
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.
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.
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.
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.
The lottery also isn't guaranteed. The lottery goes unwon often. And it doesn't change the odds.
You should be way more afraid of both lightning and sharks if you think buying a lottery ticket gives you much more a chance of winning it than me.
And you know what's crazy? 0.000000003 parsecs is just about 60 thousand miles. On the scale that parsecs are measured, that's nothing. It's a rounding error. It's telling that you have to use cosmic scales to make the difference measurable. That should tell you something.
Line up all the people who have been struck by lightning, what do they have in common? They went outside. So never go outside.
Conversely, line up all the people who bought tickets and never won. There's far more of them. You are more likely to get cancer than win the lottery. So much more likely that buying a lottery ticket at a gas station is irony of the highest order. Due to the number of known carcinogens found at gas stations.
And if either of those things do ever happen, I can guarantee that my last words won't be "but this was statistically improbable!!!"
I agree, it's unlikely. You don't have to wheel out numbers about how unlikely winning the lottery is either. But I know that my chances of getting attacked by a shark in the Costco car park are the same as my chances of winning the lottery without buying a ticket: zero. And if we can't agree that zero is different to one we'll just have to agree to disagree.
Anyone who took a basic combinatorics or discrete math class can explain the mathematical difference, which is obviously nonzero.
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.
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.
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.
You don't need to be particularly good with money if you have more than you can ever spend.
Single parents raising a few kids on minimum wage? That requires some real financial planning
God, I love this site.
To start with, the headline numbers are usually the sum of the annuity payment option, cash value is 50%, federal tax rate is close to 50%, so you only really get 25% of the headline.
Then people spend a bunch of money on extravagent gifts for family and friends and themselves; then it's time to take bad loans and make bad investments. A couple million here, a couple million there, pretty soon you're talking about real money.
Well managed, a much smaller sum would be enough for a nice life with no money stress, but it's demonstrated possible to overspend it to bankruptcy.
This is more or less the concept of the lottery game with the MIT group stories.
Once the accumulated prize pot hit a certain number, the pot would 'roll down' to all winners on that drawing. So, the meta game was to buy as many tickets as possible for a rolldown drawing. And then, to buy as many tickets as possible for a near rolldown drawing to force it into rolldown, perhaps without other buying groups noticing. Of course, this meta game turns this type of drawing into less of an 'everyone can win' thing and more of a those with resources can work the odds and come out ahead; which is contrary to the preferred public image of the lotteries.
On the traditional lotteries, you do see that the large jackpots tend to have more cases of multiple jackpot tickets.
This glib old chestnut falls apart when you ask the "math savvy" what the probability of winning is when a person buys more than 1 ticket. Probabilities are unintuitive here (albeit simple) such that most people are "morons".
How much should I invest, save, or spend?
It's a continuous game with your life savings at stake.
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?
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.
>The whole thing was hugely counterintuitive—the worse the odds of winning became, the more people wanted to play. 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. Recognizing this, lottery commissioners began lifting prize caps and adding more numbers
>The irony, as Cohen notes, is that this obsession with unimaginable wealth, including the dream of hitting a multimillion-dollar lottery jackpot, corresponded to a decline in financial security for most working people. Beginning in the nineteen-seventies and accelerating in the nineteen-eighties, the income gap between the rich and the poor widened, job security and pensions eroded, health-care costs and unemployment rose, and, for children born in those decades, our long-standing national promise—that education and hard work would render them better off than their parents—ceased to be true. Life, as it turned out, imitated the lottery: for most Americans, it was getting harder and harder to win.
a tax on the desperate, ignorants and numerically illiterate. should be banned outside local charity with x prizes to tickets.
> Mr Greenspan admitted that his view of the world had been flawed.
> Self-regulation by Wall Street had failed, he said. "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity – myself especially – are in a state of shocked disbelief."
> And he went on: "I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works."
https://www.independent.co.uk/news/business/news/greenspan-s...
Paradoxically, there's generally a second but equally required counterforce to sustain the hypnosis. A constant drip-drip of content about how money doesn't really cause happiness. Hence, frequent news stories about lottery winners blowing through their winnings or losing friends and family in the subsequent strife. This is to make the status-quo (aka reality) tolerable, it's the soothing balm.
It's really absolutely shameful. 100% agreed, lotteries need to be banned, except for trivialities like school raffles or bingo or what have you.