Lotteries: Not so irrational

Seeing as how I hang out with a bunch of hard-science types, prevailing opinion in my monkeysphere is that lotteries are a bad damn idea.  The less authoritarian opinions usually lean towards annoyed exasperation at the Stupids — “lotteries are a tax on innumeracy”, and quite a regressive one at that — while the other side of the spectrum argues that lotteries are deliberate and malicious fraud against their participants.  All sides agree that the expected value of a lotto ticket is far less than its purchase price, and being snobs we can also agree that the money spent would be better put toward a good book — or at the very least a thought-provoking art-house movie.

Well, the expected dollar value of a lotto ticket is far less than its purchase price.  Cosma Shalizi points out that they aren’t meant as investment vehicles:

The benefit to playing the lottery comes entirely between buying the ticket, and when the winner is revealed. During this interval, someone who has bought the ticket can entertain the idea that they might win, and pleasantly imagine how much better their life could be with the money, what they would do with it, etc. It’s true that in some sense you always could just make yourself think about “what if I had $280 million?”, but many people find it very hard to get their imaginations going on sheer will-power. A plausible and concrete path to the riches, no matter how low the probability, serves as a hook on which to suspend disbelief. In this regard, indeed, lottery tickets are arguably quite cost-effective. If a $1 lottery ticket licenses even one hour of imagining a different life, I don’t see how people who spend $12 for two or three hours of such imagining at a movie theater, or $25 for ten hours at a bookstore, are in any position to talk.

…huh.  De gustibus non disputandum est, and in this case art-house movies and ten-hour books are poor substitutes for people who prefer lotto-winning fantasy.

Incidentally, it’s amusing to think of entertainment in terms of d$/dt.  A three hundred dollar bottle of single-malt scotch, divvied up into twenty-six drinks each savoured over the course of half an hour, starts to look like a bargain when held up to twelve-dollar tickets for a two-hour movie.


5 Responses to “Lotteries: Not so irrational”

  1. January 4, 2011 at 13:01

    Which is why I purchase Scoresby, but will drink Crown when offered.

    I keep going back to Becker’s model, probability of success and size of prize. Have I ever purchased a lottery ticket? Yes. When I get wind of a “mega” jackpot. But the people that I spend most of my time with are actually working toward achieving a version of personal success based upon hard work, a clear business plan and sound management skills. That is to say, I rarely hear about the amount of the jackpot available. It’s not a topic for conversation.

    I fail to see how this “investment” in fantasy is much different than an investment in internet pr0n.

    • January 4, 2011 at 14:39

      The argument that Cosma Shalizi is making is that it’s not an “investment”, but rather the purchase of entertainment, in which case it’s in the same category of things as the purchase of a movie ticket, a [entertainment] book, or even of internet pr0n as you suggested. Obviously there are immoral ways to get entertainment (I assume you brought up internet pr0n because most people would consider it to be immoral), but that’s a separate issue. (Fantasising about being rich doesn’t seem that immoral to me, but perhaps you disagree)

      The point remains that if you think of Lottery tickets as a form on entertainment their d$/dt may be fairly favourable compared with many other forms of entertainment. Of course this isn’t the only measure of the value of entertainment (quality is just as important if not more important than quantity).

      This theory actually sits better with me than the usual “idiot’s trying to buy their way out of poverty” idea. It’s always seemed to me to be common knowledge that they don’t work (though it’s still possible that I’m giving me fellow humans too much credit). One example that might support this theory is that the Instant Scratchies (Scratchcards) here is Australia often aren’t advertised for the “chance of winning” but rather that there is “a little thrill in every one”. They are advertising them as a source of entertainment not of potential winnings. (I’m pretty sure it’s not a legal thing because the GoldLotto advertises as a “how would your life be different with a million dollars”)

    • January 4, 2011 at 20:07

      I fail to see how this “investment” in fantasy is much different than an investment in internet pr0n.

      Well, you can get t3h pr0nz for nothing more than the cost of bandwidth….

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anarchocapitalist agitprop

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