
Why We Keep Playing the Lottery - baoyu
http://nautil.us/issue/17/big-bangs/why-we-keep-playing-the-lottery-2
======
jtheory
I'm finding this a depressing read.

Hooray, we're figuring out all of the tricks to push people into "thinking
myopically" and buying what we want them to buy.

Here are the triggers; here's how people make mistakes in buying decisions,
and how to exploit that. Here's how to frame your sell (Get them to focus on
loss! Remind them of their poverty!), here's how to get them to buy more
tickets instead of just one.

Lottery tickets aren't too bad; they're harmless for most people buying them,
there's a fun little kick of "what if...?", but (as the article points out) as
revenue for the state, they are a regressive tax; poor people pay a much
larger percentage of their income into lottery schemes than people who are
better off, and of course some of them pay enough to really harm themselves,
going for the "Hail Mary" solution to their money woes but just bleeding
themselves slowly instead.

Winning isn't actually a positive result, either -- the article _doesn 't_ get
into stats on attempted suicide, etc. for lottery winners, but they're not
good.

Is there anyone out there using this kind of research to actually help people?
Or to let people who're just playing a fun game, play it; but still protect
the people who are grabbing at a false life preserver?

~~~
stevesearer
I wonder if the government could use some of the same marketing for income
taxes to feel like they are fun and interesting rather than being such a
negative experience. Something like 100 people each year never have to pay
taxes again.

~~~
prostoalex
Has been tried in somewhat different context:

[http://www.kornferryinstitute.com/briefings-
magazine/summer-...](http://www.kornferryinstitute.com/briefings-
magazine/summer-2013/gamification-everything)

"Swedish National Society for Road Safety created a “speed camera lottery” in
Stockholm. At select traffic spots, drivers would see a digital display of
their speed, as measured by radar, and a camera would snap a picture of their
license plate. If they were over the speed limit, they got a ticket in the
mail. However, drivers who were at or under the limit were automatically
entered into a lottery to win money at the end of each month. The amount of
money depended on the speeders – their fines went into the prize fund. The
results were impressive. Over three days (24,857 cars photographed), the
average car’s drive-by speed went down from 32 kilometers an hour to 25 – a 22
percent reduction."

------
gyardley
This is the article's key insight:

 _“It’s not an investment. It’s entertainment. For a very small amount of
money you might change your life. For $2 you can spend the day dreaming about
what you would do with half a billion dollars—half a billion dollars!”_

You're not making a bet with negative expected value, you're purchasing an
entertaining daydream to help you through your miserable day.

~~~
lmm
Why pay for it though? I can daydream that a billionaire will randomly decide
to give me half his fortune, for free!

~~~
gyardley
Because although you _can_ , you _won 't_ \- probably because there's not
'news' every week about a billionaire randomly giving a person half his
fortune. The lottery win happens to _somebody_ , while the billionaire
scenario doesn't.

If someone established a reality TV version of something like The Millionaire
[[http://en.wikipedia.org/wiki/The_Millionaire_(TV_series)](http://en.wikipedia.org/wiki/The_Millionaire_\(TV_series\))]
then I bet people _would_ start having that sort of daydream. Perhaps such a
show would even lead to a decline in lottery ticket purchases, since the get-
rich daydream would be available from another source.

~~~
mlrtime
I think an important piece missing is the active vs passive decision making.
When you purchase a ticket your are actively triggering the thought process.

In your scenario there would be a passive trigger that would dull the
entertainment affect.

I wouldn't discount the little piece of paper with numbers on it.

------
Strilanc
When someone tells me they play the lottery for entertainment, I lose a
serious amount of respect for them. There's being irrational, and then there's
_understanding exactly how your irrationality is being exploited_ and just
going along with it!

The negative expected value in dollars is enough by itself, but the "how happy
will I be?" calculations are even more depressingly bad. The utility of money
is usually measured on a log scale, because your first thousand dollars does a
_lot_ more for your happiness than your first ten thousand. By that measure
going from ten thousand dollars in the bank to ten million wouldn't make you a
thousand times happier, it would make you twice as happy. At least until you
get used to it (see: Hedonic treadmill [1]). There's a surprising number of
bankruptcies caused by lottery winniners, too [1]. Also the whole stressed
friendship thing.

So... yeah, playing the lottery gets you negative respect from me and I think
that's justified.

1:
[http://en.wikipedia.org/wiki/Hedonic_treadmill](http://en.wikipedia.org/wiki/Hedonic_treadmill)
2:
[http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1324845##](http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1324845##)

~~~
tfederman
When someone gets entertainment value from playing the lottery, is it really
about the chance of winning multiplied by the amount of happiness the money
would bring? Or does it have more to do with the excitement that comes with
each drawing? (Similar to how I can enjoy watching a football season even if
my team doesn't win the Super Bowl.)

I think it's more likely the latter, though I don't personally see the
entertainment value of playing the lottery. I wouldn't lose respect for
someone for having a hobby I don't share or understand, though.

------
Tomte
I don't play for expected value, I play for variance.

And I'm tired of people telling me that it's irrational to play the lottery,
it isn't.

~~~
fennecfoxen
Putting down money and expecting to get less money back _is_ irrational,
unless you're rationally pursuing some higher goal (in the case of lotteries'
education funds, more efficiently obtained by writing checks to the
appropriate agencies as donations.)

Of course, there are worse things in life than being irrational, and a variety
of human beings' irrational instincts form incredibly useful heuristics for
long-term value maximization (on both individual and societal levels) which
might otherwise be difficult to attain, given the limitations of the rational
brain: love, patriotism, et cetera.

It sounds like the unpredictability of the results is something you value,
perhaps because it's exciting. That's a pretty irrational thing to value, but
not intrinsically harmful in small doses; people put down money for plenty of
ridiculous forms of entertainment.

But you could own up to it. :b

~~~
LordKano
I play sparingly and it's irrational if you expect to win more than you spend
on the tickets.

It's not irrational if you're playing for fun.

The $10 that I spent on PowerBall tickets provided me with much more enjoyment
than the $10 that I spent to see The Blair Witch Project.

~~~
barkingcat
Irrationality by definition is a big part of fun by the way.

It can be irrational if you're playing for fun!

I think there's some kind of a mistaken association between irrationality and
"goodness" \- like anything irrational is not good. That is what you are
trying to argue against!

~~~
LordKano
I think that you're misunderstanding the motives of some players.

I fully concede that some people play because they think they're going to win.
They had a dream or some charlatan has convinced them that this is their lucky
day to play. That kind of thinking is not rational.

People like me, exchange money for entertainment. It's no different than
paying to see a movie or to listen to a streaming music service.

It's entertainment, not investment and it's not irrational.

------
ewzimm
Most of this makes sense, but I have a problem with the often-repeated
assertion that humans can't handle large numbers. We might not have an
intuitive sense of astronomical odds, but that's why we developed mathematics.
We have the ability to compensate for our lack of numeracy by thinking through
problems with structured languages. We can do much stranger things than
calculate whether we should play the lottery. With math, we can calculate what
it would be like to navigate in four-dimensional space.

When I hear that people act irrationally when it comes to probability, I feel
like it should be replaced with the assertion that people tend to act
irrationally when they have not been trained to think methodically in a
particular situation or because of circumstances rely on primitive
approximations. The first assertion sounds like an immutable property of human
nature, when it is more of a cultural and educational issue.

~~~
corysama
> The first assertion sounds like an immutable property of human nature

If you are not reading a formal thesis, you should not interpret statements
formally. Doing so will only lead to a lifetime of frustration. The author
probably agrees with you. The vast majority of the audience probably
understands that the author is simply being brief and does not have the
"audience attention span" budget to more formally describe the assertion that
you take issue with.

My interpretation of the author's intent with the statement "humans can't
handle large numbers" is "Large numbers of humans have been presented with
large numbers of problems involving large numbers. In practice, the vast
majority of them fail. Thus, humanity at large does not handle large numbers
well." I.e. "humans" refers to the current mass of humanity, not the
theoretical possibilities of an individual.

~~~
ewzimm
You might be right, but I have seen this trend before without mention that
people tend to handle these things badly because of the environments they live
in. Most people seem to have pretty poor training when it comes to
probability, but the reason for this is presented as an evolutionary trait.
I'm sure evolution plays a part, but I think it's mostly in terms of initial,
untrained states. When people talk about how people do things because they
evolved to do them that way, it sounds like something insurmountable. Humans
have been bad at probability for hundreds of thousands of years, so of course
they are now. But people are constantly the victim of marketers trying to
confuse them with numbers. The lottery is just one of many ways this happens.
It's no wonder that people are bad with numbers when there's so much obvious
manipulation to try to get people to make irrational purchases. This isn't
avoided by the article, but I feel like any mention of a trait people have
inherited by evolution needs to be accompanied by an analysis of just how
immutable it is. For example, desire for sex or food are pretty difficult to
train out of, though not impossible. Poor aptitude with probability is pretty
easily remedied. The fact is, not many organizations are motivated to fix it,
and lots are more than willing to exploit it.

------
hyperliner
"It’s a game where reason and logic are rendered obsolete, and hope and dreams
are on sale."

For a second there I thought the article was about one of the below:

\- Starbucks

\- BMW

\- A diamond ring

\- iPhone

------
gwbas1c
I like lotteries that are basically just fundraisers. At least I know most of
my money goes to a cause that I support.

~~~
fennecfoxen
Most lottery games these days are state-owned lotteries, fundraisers for the
government which also spend a lot of money on their own logistics and
advertising.

------
mstefff
Most lotteries are not 1 in 175 million.. using the hardest-to-win lottery
skews this article a bit..

I don't really understand the point of this article. Is he trying to expose
the "morons" who play the lottery for being just that? Maybe the $2 or so
bucks means nothing to people playing. Maybe the excitement of the lead-up to
the drawing and the checking of the numbers is more fun than $2 in my pocket.
You can barely even buy a soda with $2 now.

If those jackpots swell over $200M, betting $1 to win against 1:175M odds is a
good bet. If I could bet $1 to win $15 and I had a 1 in 10 chance of winning,
I'd do it every time.

In the end, the lottery funds go towards the city/state, and usually
education. It's a fun form of charity.

------
ggambetta
> To get your chance of winning down to a coin toss [...] You will have to
> plunk down your $2 at least 86 million times.

What am I missing here? $2x86 million gives me a 50% chance of getting $590
million? 172 < 295!

~~~
roberthahn
You're not missing anything. It is technically possible to design and build a
business focused solely on buying lottery tickets for profit (i.e.: buy enough
to ensure good enough odds to win) But there are a number of risks. The list
below isn't exhaustive:

    
    
      * sharing the winning number with someone else
      * do you buy every single ticket or enough to "virtually guarantee" a win? (and the fewer tickets you buy, the more risky it becomes)
      * the logistics of purchasing that many tickets
    

I have even read stories of people trying this before - but haven't been able
to find the link. The story I remember best is one man hiring a bunch of
people to buy lottery tickets on his behalf.

Anyway. I'd love to see someone make a go of doing this "professionally", but
when you have 172 million or more, the incentive isn't really there anymore.

~~~
mquan
You also have to pay tax on your winning.

~~~
bryanlarsen
If you bought tickets systematically with a reasonable expectation of making a
profit, then the tickets should be tax-deductible as an expense.

Normally lottery tickets aren't tax deductible because of the 'reasonable
expectation' test.

~~~
prostoalex
But this assumes consistent buying in the past, while the original poster's
statement assumed one-time buying binge once the jackpot hits the level to
make it worthwhile.

------
pelario
Why we keep paying for insurance, when the expected value is negative ? To
reduce the variance of the money we lose.

With lottery is the same, I pay to increase the variance of the money we win.

~~~
cpwright
However, with many forms of insurance the expected value is very nearly 1.
Term life, for example, pays out 90%+ of premiums as death benefits. You are
unlikely to get any of that money, as most policies do not pay out; but the
low probability of a payout multiplied by a comparably high death benefit
results in E(X) not to far from 1.

Another reason we keep paying for insurance even with bad expected values
(e.g., title insurance) is because we have no choice about the matter. If I
want a mortgage, I need title insurance, even though only a small fraction of
the premiums are actually paid out as claims.

------
sosuke
This was/is key to why I play: "For many poor people, he adds, there is “no
scenario they can come up with in which they are suddenly going to get very
rich.” To them, the lottery may be a low probability event—but so is getting a
job that pays six figures."

Even in the case of you making six figures a year, 100,000 dollars, a $2
million dollar win is still 20 years of your life earnings all at once.

------
mrweasel
Of cause people don't react to the statistics that proclaim that they won't
win, because someone won the last time.

It doesn't matter that the chances are 1 to 175 million, because someone did
win, that's all that counts. The only guaranteed result is not to play, that
will ensure that you do not win 100% of the time.

~~~
DougWebb
_The only guaranteed result is not to play, that will ensure that you do not
win 100% of the time._

Not quite true; every time you don't play you win $1. If you don't play often
enough, that can really add up.

~~~
giarc
Given that every week you put that $1 aside.

------
larrydag
Best definition I've heard on the lottery and I wish it came from me.

"The lottery is a tax on the innumerate"

------
mercnet
I enjoy playing Virginia's New Year's Millionaire Raffle lottery which sells a
finite number of tickets. They cost a decent amount (I think $20) but it
brings me excitement on the day they release the numbers.

------
cpwright
The "postcode" lottery is interesting. I'm glad that it doesn't exist in the
US, because I expect it would get even more people who can't actually afford
it to play.

------
ivanche
Being professionally involved in somewhat similar industry, this is definitely
one of best articles I've read about lottery. Well done!

~~~
3rd3
The stock market?

------
viach
Anyway it's cheaper than bootstrapping a startup and has similar odds to
succeed.

// pessimistic mode off

------
sizzzzlerz
Its nothing more than state sanctified crack cocaine. Yeah, somebody is going
to win eventually. Just not you.

~~~
protonfish
That's not a good metaphor. If I buy crack I can get high right now,
guaranteed. It's a much wiser purchase.

~~~
kazagistar
Selling crack to pay for schools; our next great social program.

