Economist Fran Lebowitz
That word has probably never been associated with her name. But, via brainyquotes, she has a wise appraisal of the lottery:
"I've done the calculation and your chances of winning the lottery are identical whether you play or not."
Once of my favorite little thought experiments is to imagine what would happen if lottery earnings were used exclusively to fund math education and if all public funding of math education came from exclusively from lottery earnings.
Shawn at August 26, 2008 4:05 AM
Even when your odds are 4 quadrillion to one against, you've still got a chance.
Which explains why men keep dating.
brian at August 26, 2008 5:13 AM
CT Lottery used to have a catch phrase: "You can't win if you don't play." My catch phrase:
"You can't lose if you don't play." o_O
Flynne at August 26, 2008 5:15 AM
At least the lotto's voluntary (taxes are not) and I'm all for them on that basis. I play all the time, mostly scratch tickets, and fully expect to lose (slim hope for early retirement) but I'm not crazy like some of them get with the lotto.
I must spend like $5 a month normally. On a crazy month, $10; on a really crazy month when shit's going bad at work or something and I feel like I've had it with working for a living (somewhere deep down I know I haven't), I may go as high as a whopping $20 but that's like maybe once a year and I never spend it without knowing I can afford to donate it to the State. It's not like the money I spend is gonna make one iota of difference in my bank account. In fact, if I don't spend it on a scratcher, it's probably going on a soda or a candy bar.
However, when people spend $100's weekly, that's just nuts. But it's their money and their biz and at least, technically anyway, offsets higher taxes -- or so they claim -- not sure I believe it either.
What's far more insane to me is the casinos and I'm especially amused by people who won't spend a buck on lotto (I can respect that, once again their money) but will spend gas money or bus/train/plane fare just getting there, hotel accommodations and then don't feel like they've entertained themselves if they don't spend at least $1,000 gambling. Then come back from their trip, talk about they won $800 and broke "even" and feel they came out ahead breaking "even" because they enjoyed the trip.
Now that's bad math! So bad it's funny as hell. But, once again, it's their money.
What pisses me off is the people who spend like their last dime. When I was living in Denver, one of those happened to luck out and win the jackpot. She bragged on the news how she had to choose between buying the ticket and washing her clothes. Everyone was like wasn't she smart to buy the ticket. I was like, uh, no. She got lucky but if you ever have to make that choice, please don't count on lightning striking twice.
T's Grammy at August 26, 2008 6:00 AM
I'm with George F. Will on this one. In one of his columns he expressed the opinon that the government should not exploit the weaknesses of its citizens.
Axman at August 26, 2008 6:33 AM
My dentist (who is not otherwise an idiot) recently sent me a thank you card and four lottery tickets for referring a client. I was like, HUH? I won $2 (the tickets cost him $4) and I don't even know where to go to cash it in. And, frankly, I'm not making a separate trip for two lousy dollars. I think I'll ask him to simply send $4 in cash next time!
MonicaM at August 26, 2008 9:28 AM
I rebelled against you all and went and spent $5 on scratch tickets at lunch. Won $20. You (and possibly that black cat that crossed my path this am*) brought me a bit of luck. ;)
Seriously. Don't want to waste your money on them, don't; why would you want to deprive me?
And, Ax, how is it a weakness any more than anything else we spend our entertainment money on? Unless you're a gambling addict but correct me if I'm wrong but you're not for prohibition of other addictions (i.e, cigarettes, booze, etc.), are you?
I just don't get why you should care. It may or may not cause less taxes as claimed but it definitely makes a profit so is self-supporting and your taxes aren't paying for it and no one's forcing you to buy. So why should you care?
*Neighbor's black cat periodically winds up crossing my path going home as I go to the bus stops morning. And I lived with one of my own for 18 1/2 years. May or may not explain a lot. (Yes, for God's sake, this comment is tongue in cheek.)
T's Grammy at August 26, 2008 10:16 AM
I tend to buy lottery tickets when the jack-pot gets over $100,000,000. Otherwise it does not seem worth it.
However, I have had a question that no one has seemed able to answer. Many critics of the lottery say that it is irrational to pay 1 dollar to win 10 Million, if the odds of winning are 1 in 80 Million. That makes sense, just given the odds.
But, if the odds of winning are 1 in 80 Million, and the jackpot gets to 120 Million, wouldn't it be just as irrational NOT to buy a ticket? (leaving out the annuity/lump sum option, taxes, etc.)
-Jut
Jut Gory at August 26, 2008 11:35 AM
Jut, you've stepped right into one of the saddest facts of life: Americans cannot estimate probabilities. This is complicated in the lottery by the fact that most Americans also do not understand what "money" is.
But, one thing at a time.
The odds do not change for you, per ticket, whether the jackpot is 1$ or a billion dollars.
Say that out loud.
Undisciplined people use the fallacy, "appeal to consequences" frequently, just as you have, to excuse their participation in something that interests them. "Gee, if I don't play, I can't win, and somebody's gotta win!"
That those are true statements doesn't change your odds. Neither does the fact that the lottery is never truly random (it's always a set of defined numbers). See how little, probably, you knew? {Not predictable} does NOT equal {random}.
Okay, so the odds don't change for me, per ticket. What happens when the jackpot goes up?
The lure of the win changes the consequences of the win. Where you might have been a solo winner of a smaller jackpot, the millions of people playing larger jackpots, engaging in the same fallacy, reduce the odds that you'll be paid handsomely.
And some practices mean truly sorry paydays. Playing "lucky sevens"? Be prepared to split your winnings with tens of thousands of people. In such a case, where you get all 6 numbers and the jackpot is $100 million, prepare to take home a few hundred dollars. Likewise, all the numbers under 32 raise the probability that you will split the ticket with people who bet on birthdays.
If you want to play, fine, but be aware that your dollar is really paying for a few days of pleasant daydreams.
Depending on how you arrange the event theater (the least obvious, but most important qualification of any assessment of odds), you are more likely to be hit by a car, catch an STD, be shot in a robbery, be hit by lightning, get prostate or ovarian cancer or be arrested for a felony than win Powerball, for instance. Keep that in mind.
The only thing you might do that returns a less probable result is pray for any amputee to grow a limb back. We know that people win lotteries...
-----
Now talk about cash. Take a look around, and you'll find it highly unpleasant to be one of "the rich". The first thing that happens is that you winnings are taxed - and the bigger the win, the bigger the % held back. Remember: the well-to-do in this country pay the most taxes. To avoid continuing to do this, you have to buy savvy tax help immediately.
If you pick the annuity or the lump sum, there's something else you'll notice. In the case of annuitized prizes, the States hold the bulk of the money for decades.
Now: can you stash that big win under your bed, carry it with you, etc.? No.
The plain fact is that people who don't know how to earn money generally don't keep any when it is handed to them. They don't know how, or even how to learn how to keep their money.
It might be fun, and it might be work. You can't give huge sums to friends without triggering the IRS to look for them; you'll grow relatives from every rock and crevice, and your friends will measure how much you're a friend by how much you spend on them.
And you have zero respect to start with. You were just lucky, not really worth a damn, especially to people who have earned their living.
This all tends to show that a modest win is superior to a huge one. Both can be fun, but the bigger the prize, the heavier the load.
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By the way - as a citizen, no, you don't get to avoid playing the lottery. Just as states with scholarship programs like Georgia's Hope Scholarship have seen a rise in tuition costs exactly offsetting scholarship awards, states like SC, participating in Powerball, have simply cut "normal" taxation to depend on lottery proceeds. That this is a scam should be obvious. In SC, it's called "The South Carolina Education Lottery" so as to hide the fact that it's just plain gambling.
Radwaste at August 26, 2008 6:57 PM
As unreal as it may seem given the length of my last post, I forgot to mention something.
Please note that the odds against are so large in most big lotteries that several plays, not just one, are necessary to win the prize.
I call this "an uncover", after the chess strategy of recognizing that new situations will be revealed after each move.
Here's a simple example: ask a group of friends what the odds are that two of you in the group have the same birthday. They'll start thinking in some obvious ways ("Let's see, there's five of us, there's 365 days in the year, dang, there's a leap year...").
But the real question to be asked is, "What are the odds that no two of you have the same birthday?"
Think about this a minute longer, and you'll see some more things. Not only can all five have the same birthday, but two can have one and the other three have another day, etc.
The easiest way to see this is to raise the number of people in the group to 366.
But the principle applies if there are only two of you there!
-----
So, when looking at lotteries, don't forget to notice that all tickets are valid for only one day, the prize goes unclaimed for weeks, some people buy ten tix per drawing, others just buy one...
And since it's totally legal to buy non-winning tickets with the same numbers, it is possible to sell one billion non-winning Powerball tickets when the odds are ~146 million to one!
Radwaste at August 26, 2008 7:11 PM
Depending on how you arrange the event theater (the least obvious, but most important qualification of any assessment of odds), you are more likely to be hit by a car, catch an STD, be shot in a robbery, be hit by lightning, get prostate or ovarian cancer or be arrested for a felony than win Powerball, for instance. Keep that in mind.
'K, Raddy, let's see;
1) hit by a car, check
2) catch an STD, check
3) shot in a robbery, check
4) hit by lightning, nope
5) prostate or ovarian cancer, nope
6) arrested for a felony, nope
that's 3 out of 6, my odds have been cut in half, I'm buyin' a lottery ticket! o_O
Flynne at August 27, 2008 5:40 AM
Flynne -
None of the events that you mention are one-shot deals.
I've been hit by several cars.
brian at August 27, 2008 6:04 AM
Radwaste: Did you actually answer my question?
because I understand that the odds do not change regardless of the size of the jackpot. However, the risk-benefit does.
Taking a coin flip, the chance of guessing it right, is 50%. So, it would be foolish to pay two dollars to win one dollar on a coin flip. But, if that is foolish, if someone said you could pay one dollar to win five on a coin flip, would it be foolish not to?
That was my only point. If statistics can be used to dissuade you from participating, can they also be used to compel you to participate? And, that occurs when the jackpot exceeds the odds of winning.
-Jut
Jut Gory at August 27, 2008 6:06 AM
"If you want to play, fine, but be aware that your dollar is really paying for a few days of pleasant daydreams." I am. I'm also aware I have very few chances of making any real money and, frankly, I would prefer the second place prize to the jackpot for exactly the reasons you state. Mostly because I'm now close enough to retirement to then go ahead and do so. Just have to purchase private health insurance first and work out a budget. Also, I have the balls to look anyone in the fucking eye and say sorry, my money, not yours. That would separate out the real friends from the fake. Also, who's a friend now and who isn't? You know. I'm generous with my money when I have it but I'd have no problems saying take a flying leap to anyone begging. Respect? Don't get any being a poor single mom either so I don't really give two shits about that. Frankly, no college professors aren't going to give me any, etc., but as a consumer I'd be a more valuable customer and be shown more as I'd be spending more.
However, I mostly buy the win for life scratch tickets. I usually spend $5 a shot. In NY, we have $2 win for life wherein you get $1,000 a week for life and a $1 one wherein you give $500 a week for life. After taxes, my income on the latter would probably be about the same and the first would double my current take-home. So either way, I'd go retire. But after I bought the tickets yesterday, my friend was yanking my chain about how the State probably sees to it that you quickly meet with an accident... Gave me pause but so far no winners have.... :)
Jut -- people like you amaze me. I never understand why more people buy tickets when the jackpot hits $100 million than they do for $10 million. Not worth a buck for $10 million? That wouldn't be life changing? Wow. I'm envious of your lifestyle then and wondering why the hell you're playing at all.
T's Grammy at August 27, 2008 7:19 AM
Also, I have the balls to look anyone in the fucking eye and say sorry, my money, not yours. That would separate out the real friends from the fake. Also, who's a friend now and who isn't?
Me, too, T's Grammy! I've already encountered enough false friends that I know who I would help out and who I wouldn't. And exactly what I would say to the ones I wouldn't who would even dare ask. o_O
Flynne at August 27, 2008 8:08 AM
T's Grammy: Always happy to amaze.
But seriously, I look at the odds. 1 dollar for 10 million is great. I would love to win it. But, given the odds, it is like paying 1 dollar to win a penny on a coin flip; or, a better example would be paying a dollar to win a dollar on the roll of a die.
Mathematically, it only makes sense to pay a dollar to win six (or more) on the roll of a die. I mean, if the pay-out on the die was ten bucks, I would be playing alot, because, statistically, I should come out ahead.
And, it is not just me. There is a very good reason that some people play blackjack or craps over other casino games: you have the "fairest" odds of winning money (like 49+% (still a shade in favor of the house though).
So, that is maybe why more people play when the jackpot gets up there; they have an intuitive sense of the underlying statistics. Or not. (But, as Radwaste pointed out, the odds themselves don't change; it is more like my die example, where the pay-out exceeds the odds.)
Having said all of that, when the jackpot gets up high enough, yeah, I will buy more than one ticket. But, the extra money is for the daydreams, as you say.
-Jut
Jut Gory at August 27, 2008 11:36 AM
OK, guys, read my second post. The odds of Powerball are over 146 million to one - but you can buy 146+ million tickets and still lose. If you're OK with that, fine - but don't pretend that you know what "odds" are until you study things a little.
Imagine, for a moment, that you already had your millions - that you were a billionaire. Could you buy enough tickets to make it pay? Would it make sense for you to invest heavy money in lottery tickets? No.
Why not? Because you can't win consistently, even of your tickets dominate the field. If you buy more tickets than the payout, you lose money. If you buy more tickets than the fraction of the payout yielded to multiple winners, you lose. And don't forget the tax cut: If you pay more for tickets than is left after taxes, you lose.
Answer the question? I think I've given you everything you need aside from the ability to avoid justifying bad decisions. One would be exceeding the point at which your expenses, if saved, would produce more utility than a win.
And you might say, "But a win is so much bigger than my income it's, it's... it's a win!"
There's a reason gambling continues: the house wins more than the payouts. The odds, as I have explained them above, are why taking all of your money and buying lottery tickets is not a career option, be you bum or billionaire.
Radwaste at August 27, 2008 4:25 PM
Okay, Radwaste: Let's take your odds (but let's take out taxes, etc, just to simplify things). If the odds are 146 million to one, I could buy, 146 million tickets and still lose, but I can buy 146 million tickets and win EVERY time (simply by having every single possible combination in play; I know, improbable, but possible). But, spending 146 million only makes sense if the payout is more than that. I would not spend 146 million to win 10 million. However, can you honestly say you would not pay 146 million to win 200 million (after taxes, etc, if you will); you only lose when there is a second winner. That would be like saying, "I will not pay 1 dollar to win 10 on the roll of a die." The odds are in your favor!
Yes, the house always wins. By the time the jackpot get up to 146 million, the house has already taken its cut. That is why the lottery is not completely analogous to the casino. The house in a casino wins by the odds. In a lottery, the house (the government) wins by taking a portion of ticket sales and not adding them to the pot (plus, the taxes, if you win).
So, no, I am not convinced that you even understood my question (thus, reading your second post makes about as much sense as reading your last post).
-Jut
Jut Gory at August 27, 2008 7:45 PM
Well, Jut, given that you didn't understand the idea of the burden of proof when dealing with the thread "God is Imaginary", I'm not surprised.
Apparently, you haven't thought about what "win" means - other than the common idea, that of a lightning strike where you get millions of dollars for your single buck.
It remains that the effects of the marketplace on a lottery are well-known to oddsmakers, and that I have explained a great deal of that against your simple assertion, which boils down to the idea that your return on investment is greater if you only bet on yourself when the pot is large.
Eek.
Radwaste at August 28, 2008 3:25 AM
Radwaste: it was not simply that the return on investment is greater if you only bet when the pot is large.
It was that, if statistics can dissuade you from gambling, can they also compel you to.
And, it is not only to bet when the pot is large; it is to bet when the winnings exceed the odds of losing.
Let me try to make it easy for you, as you did not seem to understand my question about the burden of proof in the earlier thread.
Would you bet 1 dollar on a coin flip where the payoff is 1 million dollars?
My view: a reasonable person, using statistics, would be compelled to make that bet.
Do you get it now?
-Jut
Jut Gory at August 28, 2008 5:04 AM
I get it, Rad. Like I said I expect to lose. Therefore, I don't spend what I can't afford to donate to the State. Hell, I was thrilled to get $20. I don't expect to do other than throw away my money but it's still a cheap thrill to take that slim chance now and then.
You're not confusing me. Jut is! It's like you said, even if the winnings exceeded the odds, you'd lose for all the people playing them. To use Jut's example (which I may be misunderstanding): if you had 146 million and there were only 146 possible combinations so that you play them all and the jackpot reached 200 million, you're bound to hit the jackpot at least once. However, you'd most likely have to split that pot with at least one other person and hence suffer a loss.
No matter what the jackpot, it's stupid to spend more than a couple of bucks or to play for anything other than fun. In other words, I occassionally play -- for the daydream.
Given my choice, I'd have chosen my ex dying over winning the lotto anyway and since he's long since obliged, I figured I got my choice. Of course, the odds were much better of that happening anyway. I kind of predicted his lifestyle would kill him by age 30. Not off by much, he died at 33.
T's Grammy at August 28, 2008 7:45 AM
T's Grammy: Thank you! I think you understood perfectly. And, yes, the example is imperfect (taxes, lumpsum/annuity, and, yes, other players).
My only point was statistics can be used to justify playing, as much as they can be used to criticize it.
So, someone who says it is dumb to play the lottery because the odds are so bad is only half right. You have to look at the odds AND the jackpot.
But, yeah, the daydreams are nice.
-Jut
Jut Gory at August 28, 2008 11:58 AM
Jut, I think that's why I like the Sims so much! Not only do they start life out with 20,000 simoleans but hard work actually pays off and you're told exactly what you need to reach your next promotion. It's a nice fantasy.
Well, that and (mainly this) I love designing and building beautiful houses and have an amusing time designing my Sims too. I get inspired to make a Sim out of the weirdest nonsense. I know I hit pay dirt when I hear some nonsense name or something and I say man, that would be a great name for a Sim and by daughter rolls her eye and says Mom, you are so weird.
But she's as bad as me for checking out the house plans published every Sunday in our local paper.
T's Grammy at August 29, 2008 5:46 AM
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