PowerBall and other Lottery Related issues

[marshwiggle]

Let me be clear: I don't think government should be in the lottery business. It's an example of bad public policy. I cannot stop it, however, and occasionally play for the reasons stated above.

As with marijuana and other drugs, tax and regulate, regulate and tax. Just legalize gambling! Competition will keep profit margins low. Government can still collect tax revenue without operating the vice dens. Otherwise the Mafia will do it for us.

ETA: The last bit.

The problem is the cost to the families of the people with addictions. As far as I know, no government who allows (or especially profits from) gambling, drugs, etc. takes any responsibility for the families of the addicts who get destroyed by it.
For the government, that's an incredibly irresponsible and hypocritical stance. Basically they don't want to admit the real costs, and want to show all of the "profit" as easy money.

[clean]

The reason that lotteries are a 'tax on the poor' is not because it is the entertainment that poor can afford... It is the HOPE that it is their way out of poverty. 

How many times have you heard "The only way I can retire is if I win the lottery"?  That is not a mindset that is unique.

Even my own lottery pool (with 3 other professors that we play each semester calls the tickets 'the retirement portfolio'. ) In our case, though, it is more a matter that IF we win big we retire immediately, rather than several years. 

for many poor people it is their only hope to escape their situation.  I spent $30 in tickets for the last draw (and another $30 on Saturday's draw), but that was split with my PhD school office mate who lives in Canada and can not play.  It is a small portion of my income, and an even smaller portion of my wealth.  Some will play many times their income or wealth on this state sanctioned 'investment'.

Shouldnt the state be sponsoring and sanctioning ACTUAL ways to let people escape poverty like universities?  (What is the portion of state funding going to YOUR university?  In the last 50 years has it gone up or down?)

Ages ago, when Florida was discussing the Lottery, the 'promise' was that All of the money would go to fund education.  And they kept that promise, but even then, as a high school student, I could see through the lie!  Yes, ALL Of the money went to Education, BUT the money that HAD been going to Education in the budget was now free to go elsewhere !  The legislature made sure that they did not tie their hands by committing to licking in a certain portion of funding so that the lottery money was a BONUS to education! 

At the time I thought that GA did a better job in that the money went to fund the Hope Scholarship program (at least I think that was it).  But that soon became viewed as an entitlement, and a leverage against faculty.  "You have to give me a B or I will lose my scholarship"  (that it was the instructor's duty to inflate grades to keep the money rolling in, and again, there was no reason to lock in the state's portion of college funding, when it was replaced with lottery tuition money, meaning that the administration also had some pressure to make sure that the students got Bs).
Worse, the model was then set that poor people's lottery playing funded upper and middle class families' children's college bills.

So, I agree that the state has perverse incentives structures in the lottery, and that they prey upon the poor.  However, I voted against them, and I would vote to end them, if that (never gonna happen) came on the ballot, but as they are here I will play in my pools.
Similarly, I dont drink often, but as it is legal, I do have a cabinet filled with liqueur in case I feel the urge to make an adult beverage. 


The bottom line is that the lottery has all sorts of flaws, but not playing wont fix the flaws! 

[clean]

I got my tickets for tonight's big draw! 

After this week at work, I was tempted to buy more!

(inter thread alert) 
Dont retire FROM something, Retire TO something.   But retiring to dealing with hundreds of millions of dollars and the problems obscene wealth can bring, would, I guess be a good enough of a TO .

[clean]

Another Roll Over! 

Will you play this time?

Yes, the odds of being struck by lightning are better, BUT we know that this Lightning will strike next Saturday night!

[Anon1787]

Shouldnt the state be sponsoring and sanctioning ACTUAL ways to let people escape poverty like universities?  (What is the portion of state funding going to YOUR university?  In the last 50 years has it gone up or down?)

People fond of gambling seem to have higher discount rates, so why you would expect them to be willing to endure years more of schooling before possibly getting a better paying job?

[clean]

People fond of gambling seem to have higher discount rates, so why you would expect them to be willing to endure years more of schooling before possibly getting a better paying job?

Lottery players are not necessarily 'gamblers'.  Many in poverty see it as the only escape.  It is not 'fun' that they play, it is the hope that they will be rescued from their situation. 


Long ago, when I was dissatisfied with my employer, I could tell how the week went by how many resumes were sent.  Getting a full time, tenure track position is sort of like winning a lottery in some ways.  Now as I am trapped in my current job for another 18 months until I qualify for health care in retirement starting the day I retire, I am trapped here.  I still sort of look to see how bad the week was by seeing IF I play an extra ticket or two.  By winning, I would either not have to wait even 18 months as I could self fund all health care, or I would guarantee that I had enough to be ABLE to fund retirement. 

[dismalist]

Let me repeat, gambling is not a problem for the multitudes. The pain of the cost is tiny; the pleasure of the winnings is immense. It's about expected pain and pleasure, not expected dollar value.

People who don't like any tradeoff don't gamble. People who do, do, and at different rates. It is important for everybody to realize that people differ, and that deviants in general are neither dangerous to others nor immoral, impeding their entry into heaven.

Gambling is fun, like alcohol is fun, like weed is fun, like heroin is fun, like sex is fun. Are we going to drive or keep all these underground?  Cure is worse than the disease.

One fascinating point that can be raised, Clean, when you say:  Many in poverty see it as the only escape.  It is not 'fun' that they play, it is the hope that they will be rescued from their situation. I don't know that that's the motivation and it doesn't matter. They feel like doing it. That's all we need to know. [Needn't take offense at the shorthand word "fun", therefore.] The fascinating part is how governments choose to help some  poor, in the form  of lotteries to obtain "affordable" housing. This amounts to exposing the poor to increased risk, or encouraging them to participate in a lottery. I wish the poor could insure against this kind of help!

[Hibush]

Let me repeat, gambling is not a problem for the multitudes. The pain of the cost is tiny; the pleasure of the winnings is immense. It's about expected pain and pleasure, not expected dollar value.

Too many people calculate the expected value of a lottery ticket and show that it is a bad deal. But as you say, that is not the relevant calculation. For many people the likelihood of becoming a millionaire is zero if they don't buy a ticket and is non-zero if they do. That's the relevant calculation.  What is that called in the econ biz?

[Hibush]

Gambling is fun, like alcohol is fun, like weed is fun, like heroin is fun, like sex is fun. Are we going to drive or keep all these underground?  Cure is worse than the disease.

There is a difference between legal and regulated gambling and the state actively promoting it to those who are most likely to be harmed. So the analogy holds. As entertaining as it would be to have a state official handing out reefers to my least attentive students, I don't see that becoming policy any time soon.

[dismalist]

Let me repeat, gambling is not a problem for the multitudes. The pain of the cost is tiny; the pleasure of the winnings is immense. It's about expected pain and pleasure, not expected dollar value.

Too many people calculate the expected value of a lottery ticket and show that it is a bad deal. But as you say, that is not the relevant calculation. For many people the likelihood of becoming a millionaire is zero if they don't buy a ticket and is non-zero if they do. That's the relevant calculation.  What is that called in the econ biz?

People differently decide participating in lotteries depending on the expected value of their utility to themselves, not the expected value of wealth. [This was invented by Johnny von Neumann in about five minutes, when he had nothing better to do.] Thus, the price of the lottery ticket results in a perhaps tiny loss in utility. The utility gain is whatever it is for you. It can be extremely large!

Not buying a ticket is the decision when the utility gain from winning is small, smaller than the utility loss from paying for the ticket. Such people are called risk averse at their current level of wealth. The limiting case is risk neutrality, where one doesn't care whether to purchase the ticket or not purchase the ticket.

I just used pleasure and pain to avoid the technical term utility.  Depends on the idea that people have preferences, not that we're all utilitarians by religion. All is intended to mean the same thing.

[Hibush]

Let me repeat, gambling is not a problem for the multitudes. The pain of the cost is tiny; the pleasure of the winnings is immense. It's about expected pain and pleasure, not expected dollar value.

Too many people calculate the expected value of a lottery ticket and show that it is a bad deal. But as you say, that is not the relevant calculation. For many people the likelihood of becoming a millionaire is zero if they don't buy a ticket and is non-zero if they do. That's the relevant calculation.  What is that called in the econ biz?

Thanks for the good background on the situation.
People differently decide participating in lotteries depending on the expected value of their utility to themselves, not the expected value of wealth. [This was invented by Johnny von Neumann in about five minutes, when he had nothing better to do.] Thus, the price of the lottery ticket results in a perhaps tiny loss in utility. The utility gain is whatever it is for you. It can be extremely large!

Not buying a ticket is the decision when the utility gain from winning is small, smaller than the utility loss from paying for the ticket. Such people are called risk averse at their current level of wealth. The limiting case is risk neutrality, where one doesn't care whether to purchase the ticket or not purchase the ticket.

I just used pleasure and pain to avoid the technical term utility.  Depends on the idea that people have preferences, not that we're all utilitarians by religion. All is intended to mean the same thing.

[hmaria1609]

The winning numbers have been announced after a delay:
https://wtop.com/national/2022/11/powerball-announces-delay-to-record-breaking-1-9b-drawing/
Scroll past ad breaks to read full article. Posted on WTOP 11/8/22

[hmaria1609]

Update: there was a winner in CA! Joe's Service Store, which sold the winning ticket, will get a $1 million bonus. And bragging rights.

[clean]

I know that for the most part, this topic is like asking vegans if they prefer their steak tar tar rare or well done, but another lottery has broached the Billion Dollar Advertised Level!

I played 7 yesterday (for a total loss) and picked up 5 more tickets for the next drawing. 

Anyone else going to play?  I know that the probability of winning is not much different if you dont buy a ticket, but neither is the mental exercise of planning how many lives you will ruin with your new wealth!

(Like the provost that thinks that summer pay should be a flat rate of like $2000 per 100 students, and that summer school loses money even at that 'generous' rate!.... so you could offer to let them 'save money' on the faculty salaries by offering each one $3000 NOT to teach any classes and join you on a 'research jaunt somewhere that you could discuss current events with the extra $1000 stipend.   This would introduce the provost to the 'revenue side' of the budget... if summer school is losing money, then you will save them ALL of the faculty salary expenses that go with it!  (of course if there are no teachers, there can be no students, and no tuition revenue... but the budget should be easy to balance and faculty would get a extra source of income and some recreation!... A win for everyone).   And a small drop drop in the winner's financial windfall!


Anyway, I am in! Chime in if you get any tickets!  We can all dream together!