And before you evoke any comparisons with the probabilities of getting struck by lightning or hit by meteors, none of those will ever pay you a nice chunk of cash.
Investing the same amount of money in a financial device with higher assurances of returns is not a comparable experience, neither psychologically nor practically, even if we callously suppose that such instruments are in fact widely available across all cross-sections of society. Holding back the price of 1 ticket per drawing period from safer investments to gain a shot at a high-payout lottery is simply diversifying your investment portfolio.
This isn't how it works, because the expected value, in monetary terms, is negative once you factor in the cost of the tickets. Statistically, it is a quantifiable unimprovement.
That said, lots of activities have negative expected monetary value, like going to the movies, or going bowling. And it is theoretically possible that you will find an envelope in the bowling alley parking lot containing a million dollars, but let's not pretend that both bowling and playing the lottery are anything other than entertainment products at the end of the day.
I once heard a statistics professor explaining he played the lottery. His reason? It was fun. Period. He said one may spend $10 on a movie ticket and be entertained for a few hours, but one would end up $10 poorer with 100% certainty. On the other hand when he spent $10 on a lottery ticket he was entertained for days just thinking of the possibility of winning, and he might end up a lot richer, but it was not a necessary condition for him to enjoy the fun it provides.
With a slightly better imagination he could save the $10 and daydream for days about a close relative/friend winning the lottery and gifting him a substantial chunk of the money.
Likewise, anyone could fantasize about getting a windfall of mountains of money from far likelier events, like an unknown relative willing their fortune to you. Sure, it’s unlikely, but it’s more likely than winning the lottery. You don’t need to play the lottery to do that.
Using this model, it's difficult to explain where new smokers come from.
In general, you're not on firm ground when someone says "I enjoy X" and you say "no, I can tell what you enjoy better than you can".
What's the probability that someone on SSI will be a millionaire before they die?
What's the probability that someone will become a millionaire by playing the lottery?
Which is a larger probability? It's possible that many people aren't as dumb as we think.
Probability being on SSI makes you a millionaire: 0%
Probability playing the lottery makes you a millionaire: Very close to 0%.
Probability being on SSI makes you poorer: 0%
Probability playing the lottery makes you poorer: Very close to 100%.
I'm not saying don't buy a lottery ticket here and there if you truly get some enjoyment out of it, but the lottery system as it is now seems to encourage borderline gambling addiction behaviors in people who are the least likely to be able to resist them.
The lottery though is not hurting a middle class programmer who buys a ticket for fun, it is hurting the poor who possibly don't realize how unlikely it for them to win and _time_ and money spend on the lottery might be better used for something else.
It is not unlike the liquor stores and payday loans popping up in more poorer areas of town. From a cold rational point of view one can say "ok, if they rely on the lottery to give them hope, they are just as likely to spend that money on drugs or alcohol" and indeed they might however it doesn't mean the states should encourage that and act in a predatory manner towards them.
https://seekingalpha.com/instablog/957061-chris-demuth-jr/25...
It's a reasonably sized negative number.
I hear this a lot, but I think people know what a longshot is.
Is this so much more stupid than throwing your money away on useless consumer junk?
This concept that the poor should only ever work, eat, and sleep, and any attempt to look after their mental health is wasting money, is outright dangerous.
There's a demographic of lottery players that really only are spending $1 a week (or even $1 every few months or whatever), but there is also a large demographic that is regularly buying multiple $20 scratch tickets on a regular basis, which tends to be more of what people are thinking of when they evoke the stereotype of someone who "can't afford" to play the lottery.
I'm not saying that only the rich should be allowed to enjoy myself, but if a friend asked me to get their finances in order and was spending multiple percent of their salary on lottery tickets (which is a real phenomenon), cutting back would be my first suggestion.
I'm not for humanity dedicating more resource to social service. But we have to get socially vigilant and strict. Otherwise more people will be susceptible to this vulnerability. Part of that vigilance means shaming people for drugs, gambling, & alcohol, etc.
The issue is that there is fuck-all support for people to overcome their faults - we've become a society in which if you can't get out of your situation on your own, you also can't get help getting out of your situation - because we don't believe that anybody can possibly be in that position. Individualism at its worst. The faults are usually a result of the shitty environment you're in, of course - nobody becomes an alcoholic because they're happy with how their life is going or feel they can do much to change it.
I don't think you understood my post. I mean we, as a society, need to help vulnerable people in our society - we need to invest resources into helping them. We can do that ourselves, we can do that through charity, we can do that through mutual aid, and we can do that through Government policy and services. Broadly speaking, as a society, we choose not to.
The problem is that poor people aren't just dropping 1 dollar per week. They're spending much more. Some people have a very poor grasp of how bad the odds are and mention that playing the lottery is their way to retirement.
Taking a convenient top link from a Google search (admittedly it references a study from 2008), they mention households earning 13k annually spending 645 (9% of income) on the lottery.
www.aol.com/amp/2010/05/31/poor-people-spend-9-of-income-on-lottery-tickets-heres-why/
Also, that article may be very wrong - at least one other news article which would appear to reference the same study received an update to suggest the total is 2-3%, rather than the 9% originally stated, and I can't find the 9% referenced in the study itself, while the 2-3% does show up.
That's a pretty tall claim to make. Do you have any sources to back it up? Especially because if these people were putting money into savings instead with proper education it could make a significant path to getting out of poverty.
If they put it into savings, their mental health would generally go down the drain, which would screw heavily with their ability to turn up for work, which would put them in even worse of a place. I've seen this happen. Note that studies show that the poorer you are, the more likely you are to be depressed - many attempt to escape from that feeling of pointlessness and having no future with alcohol, drugs, gambling, television, and so on and so forth.
The overuse of scratch cards is just one possible manifestation of an underlying problem - that these people usually don't have the support they need to get out of their situation. That they're living paycheque-to-paycheque with no end in sight, whether they were to save $20 a week or not. And it turns out giving them the support they need is rather expensive.
Also, proper education is incredibly expensive and inaccessible to many (night classes or long-distance learning need serious dedication and motivation with no guarantee of a job at the end of it - a well-known recipe for something that poor people are generally just not good at), and on top of that, many people just don't have the skills they'd need to succeed in further education.
My opinion? The actual issue is that there's little career progression or practical training available to get an employee from e.g. retail shift worker to somewhere else in the company with a near-guaranteed job at the end of it and full pay the entire time. And there's no reason for businesses to create those pathways so long as they have no responsibility to their employees.
Does this not come back to education, though? Putting money away in savings, hopefully to secure a more stable future, should bring some measure of confidence/happiness.
This sort of basic financial sense does not require an expensive education. At least I don't think it does, maybe I am being naive.
I do take your last point. I think society in general sees retail and the like as stop-gap work or jobs for teens. The reality is very different and opportunities to improve become more and more limited with age and a lack of education.
Only if you actually believe that saving money secures a more stable future. In practice, it really doesn't - you're still working at the same shitty job with no prospects, just with nothing to distract you from the reality of what that means, and maybe if you manage to save enough over half a year you can survive a couple of weeks between jobs. Woop.
It doesn't actually provide stability in the sense that makes people feel happy - a job in which it's unlikely you'll get fired without warning in the first place does that. Hopping jobs, hopping rented accommodation, hopping shitty transport that you can't really depend on but you need to depend on for a living... that's the stressor. Many people with professional jobs, stable housing, and health insurance, but no savings to speak of are quite happy.
You're never going to save enough to actually do anything with it within five years on a low-income job, no matter how much you cut back - doubly so if you have any debt at all - and there's studies that show that planning for the future where that future is not guaranteed is not a strength of many people on low incomes.
> ... poor households, with annual take-home incomes under $13,000, on average, spend $645 a year on lottery tickets, which comes to about 9% of their yearly income..
$ echo 13000*.09|bc
1170.00
Try:
$ echo "(93250.1)+(13000-9325)0.15"|bc
gives tax payments on 13k USD to IRS 1483.75
9% of take home pay is
$ echo "(13000-((93250.1)+(13000-9325)0.15))*0.09"|bc 1035
Then there is the additional sales tax at point of sale, which can further reduce buying power.
Yes its 135 than your projection, but that might be food for the week.
It sounds like you're claiming that 645 is 9% of 13,000?
It could be 9% of their after-tax income, if you believed that households earning $13,000 paid 50% of it in taxes.
They're not bringing up the lottery as their way to retirement as an actual financial plan. It's gallows humor.
Maybe with the lottery its easier for people to deceive themselves about the actual odds?
It's not deceiving yourself to recognize that miniscule odds are greater than zero.
The likelihood of winning the Powerball is something like 0.000000005%. Not sure what the odds are of these other unlikely events, but even if they're less likely - you really think someone is able to daydream about a 0.000000005% chance but not a 0.000000000005% chance?
[1] http://www.cnn.com/2017/06/12/us/lost-jackson-pollock-painti... [2] https://en.wikipedia.org/wiki/Howard_Hughes#Near-fatal_crash...
I curled the last 90 days from http://online.wsj.com/mdc/public/page/2_3021-gainnyse-gainer... and if you selected the largest percentage gainer every day for the past 100 days, given you started with $10, you'd have about 828 million after 90 days. (It's worth noting however with 2,800 stocks on the NYSE, that 2800^100 is much longer odds than winning the lottery. Actually, your odds of selected the very highest percentage stock gainer three days in a row are lower than your odds of winning the powerball, assuming such a thing is random).
Unrelated, this has really been a winning quarter for logistics and trucking companies!
This is lottery by very definition.
This is exactly the opposite of the concept of an index fund.
I must be uncreative with my consumption.
Actually, retiring on the winnings is pretty much what I'd do, too. Though I'd want to diversify holdings over more asset classes than just index funds. When you just want to coast on passive income, it's fair to say even index funds are too risky to put everything in.
Just kidding!
No, but so what?
Gambling addiction and various mega-jackpot ticket-purchasing fervors are an indication that many people can't really comprehend the odds. A human can easily visualize 1 (the number of jackpot winners), but less so the scale of the 292,201,337 chances you have to lose (Powerball odds)
If you had a contest where you asked someone to pay $5 to correctly choose a single grain of rice out of 10,000lbs of rice... I doubt you'd get many takers because you're confronted with the physical reality of the odds.
It would be harder than picking a random year between now and when the first dinosaurs existed.
>Is this so much more stupid than throwing your money away on useless consumer junk?
"Junk" in the form of physical goods still holds some level of value. If you bought $1,000 of random physical goods in a year you'd more likely than not have something >$0
In the interest of full disclosure, I probably spent $30 on lotto tickets last year.
It is more than just a little bit suspicious that in plenty of places where gambling is illegal the state owned lottery is legal. It's fine to gamble as long as the beneficiary is the state, never mind that on average only the lottery organizer gets ahead.
Yap, I was kind of hinting at that. What you said is a valid way to look at it.
> It's fine to gamble as long as the beneficiary is the state, never mind that on average only the lottery organizer gets ahead.
It's part of preying on the poor. Same with payday loans, and alcohol sales. Having lived in poor parts of town it's common to see all 3 being marketed and pushed heavily in those areas. They might claim they don't want to regulate payday loans because "free markets" whatnot, but state lotteries directly controlled by the government. The pretense they use is that proceeds pay for "education". Except even if it is true, then what happens is that education funds get reduced and used for something else because there are these "lottery funds" coming in. So somehow kids getting scholarships or teachers better salaries doesn't usually pan out as expected.
That's pretty much what happens, any time you inject funds from a new source into a thing, the other source of fund for said thing tends to get reduced.
https://www.wbez.org/shows/curious-city/why-the-illinois-lot...
Same thing happened, and continues to happen, with tobacco tax dollars.
http://wgntv.com/2017/06/27/powerball-mega-millions-ticket-s...
If anything, it's a tax on intensity of endorphin rushes.
Aside from people who buy them for "fair" reasons, like... the "joke" factor, for example.
> all the people that I know behind me that I hurt
As in sitting directly behind him in the courtroom waiting for sentencing.
About that, this video is worth watching. No that is 100% true, but good enough to start a conversation. https://www.youtube.com/watch?v=9PK-netuhHA
It is interesting to think about who he considers he hurt. The potential winners who relied on lottery winning to secure a future for their families? The lottery workers? He is a criminal surely, but isn't the whole lottery system a tax on lack of education and it just gives false hope to people and encourages gambling. He reduced faith in it somehow being a random lottery so I guess he probably hurt the state income bottom line. At least in some states they claim to use lottery proceeding to improve math education - not sure how truthful that is.