
Why do we splurge on games of chance and rack up credit bills? A neuroeconomist explains. - robg
http://www.sciam.com/article.cfm?id=dangers-irrational-brain&print=true
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hugh
When I gamble, I do it because the pleasure I get from winning five dollars
("hah, take that, casino!") is slightly larger than the pain I get from losing
five dollars ("oh well, who cares?").

I guess that truly rich people who gamble do it for similar reasons (though
with numbers larger than five dollars). But poor people gamble because they
(audaciously) hope to win enough money to change their lives. So I guess this
explains why rich people play games with a high chance of getting a small
payoff (blackjack, roulette) and poor people play games with a small chance of
getting a huge payoff (slots, lotteries).

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mynameishere
_audaciously_

The odds of winning the lottery may be 1 in 500 million, but for some people
the odds of becoming rich by any other means is zero. If you define your goal
as "becoming rich", and meet the above characteristic, then the lottery is no
longer audacious or irrational.

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briancooley
_inally, a third option would be for financial institutions to issue
investment instruments that have lottery-like qualities (for example, offered
in small amounts, available at many convenient points of purchase, provide a
small chance of a large upside) but offer a positive rate of return, providing
the pleasure of playing the lottery without the steep cost. In many other
countries “prize bonds” or other savings instruments are available that pay
lottery winnings in place of, or in addition to, regular interest. Regulations
in the United States have stymied the development of such offerings._

This sounds like a really good idea. I can imagine such a program creating
savings for people who wouldn't otherwise save.

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helveticaman
I have a better theory.

In many societies, the alpha usually dominates the gene pool of the next
generation. In some animal and human societies, only the alpha reproduces.

If you're poor, your kids are going to be even poorer, and their kids will be
even poorer, eventually leading to a genetic dead end. None of your genes will
become a permanent part of posterity unless you are an alpha. In this way, it
makes sense to gamble 5% of your income, which would not make a transcendental
difference anyway, for a chance of attaining alpha status. From that point of
view, it makes perfect sense.

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Chocobean
interesting. But I thought traditionally there are way more poor people than
there are rich people, and that poor people have way more kids than rich
people. In fact it's a little depressing that the poor will always be with us
instead of being evolutionary losers and be a problem that will'take care of
itself'.

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helveticaman
Poor people having more babies than rich people seemed weird to me, but in
reality, throughout history, poor people (or people with little status) make
babies that don't really make it to adulthood at the rate of high status
people (see Gregg Clark). Overall, in Malthusian societies, there's not enough
food to go around, and the poor are the last to be fed.

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cellis
I need to make up a cool title for what I do. How does neuro-user-experience-
engineer sound?

~~~
zvikara
How about neuro-user-interface-architect?

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pmjordan
Interesting. I always thought the reason for playing the lottery was lack of
education. (which correlates with income) Evidently not!

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nostrademons
I always (well, recently) thought it was because of discrete marginal utility
functions.

For most people, the material difference between making $600/month or
$570/month isn't much. You're still poor. You might get to splurge on one more
restaurant meal a month, but that won't make you feel any richer.

The difference between having $0 in the bank and $60M in the bank is enormous,
however. You've gone from poor to rich, and can do whatever you want with your
life.

So for most people, the tradeoff is between certain poverty or a very small
chance of escaping poverty. Squares with the article, too: by making people
"feel poor", they were highlighting the contrast between their present life
and the life they would have if they won the lottery.

~~~
qqq
$30/month is a big deal when you're that poor. it means, say, getting a mac
instead of a PC.

~~~
mrtron
Poor people tend to make bad decisions on things like that because of their
perspective. $1/day doesn't feel like a lot of money even when you are only
making $600/month. Especially when you have some fixed costs like gas that
take so much out of your income.

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fallentimes
Because people are dumb, ignorant and/or don't understand risk.

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qqq
> Why do we splurge on games of chance and rack up credit bills?

I don't.

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helveticaman
Yeah...I went to a casino the other day, and for the life of me I couldn't
understand why there was anybody playing the tables. The atmosphere was nice;
it was a good place to get a drink; but I couldn't see why anybody played.

~~~
wayne
It's the cost of entertainment. As opposed to slots, you get to interact with
a live person (the dealer) who's there to keep you entertained, and you get to
hang out with your friends. There's a little at stake, which keeps things
interesting; blackjack and poker are pretty lame when nothing's at stake. And
if you go to a low stakes table, you'll probably spend $15-20/hour for fun,
and they'll comp you some free drinks too. Not much more expensive than seeing
a movie.

~~~
helveticaman
Sounds reasonable.

