The Chip Board
Custom Search
   


The Chip Board Archive 24

Why the power ball hurts those who can least

afford the loss buying tickets.

state game had boosted its flagging sales by changing the odds of a big win to 1 in 259 million from 1 in 176 million, with the same idea of increasing successive jackpots. They took their lesson from the big jackpot year of 2011-2012 California's biggest Mega Millions haul was $720 million in sales in 2011-2012, the year of a $656-million jackpot--the largest ever until the current Powerball game. The following year, sales slumped 48%.

The lottery organizers base their work on a well-understood facet of human nature: people don't understand odds. They pay less attention to the probability of a given event than the consequences if it takes place. The odds of a terrorist incident on a plane come to 1 per 16.6 million departures, statistics guru Nate Silver calculated in 2009, but people tend to focus on the outcome -- hundreds of passengers perishing at once -- than on the probabilities.

lInteractive

Here's $100. Can you win $1.5 billion at Powerball?

Here's $100. Can you win $1.5 billion at Powerball?

The same phenomenon is at work with Powerball: Customers focus their attention less on that incomprehensibly tiny 1-in-292-million probability, and more on what they'll do with the billion-dollar prize when they win it.

It's also well-understood that in economic terms, the people who are exploited by this mismatch of expectations tend to be disproportionately low-income and less educated.

Yes, lotteries are effectively a tax on the poor. In 1999, researchers at Duke University reported that American households spent an average of $162 per year on lottery tickets, but low-income households spent $289 and those with less than $10,000 in income spent $597. Higher lottery purchases also were associated with lower educational attainment and ethnic minorities.

Experts aren't entirely sure why "those who can least afford it play the most," as German sociologists asked in a 2013 paper. The pessimistic, and perhaps condescending, view is that the poor and less-educated don't have the intellectual gifts to appraise the odds, but middle-class and rich people play the lottery too.

The sociological answer is that lower-income people have a greater need to relieve tension in their daily lives, gambling is a socially acceptable way to do so, and only the lottery offers the lure of a potentially life-changing payoff. Another attraction, the German researchers conjectured, is that lotteries are egalitarian -- every buyer of a ticket has the same chance of success. That may be more appealing to those in lower socioeconomic strata, for whom equal opportunity may seem like a rare break, than to the more affluent, who may look at an equal-opportunity situation as one working to their disadvantage.

As for the idea that lottery revenues are used to fund education, it's little more than window-dressing. In California, $1.39 billion in lottery funds went to education last year, but that's less than 2% of a state education budget of more than $76 billion. If the schools and higher education systems were properly funded by taxes, there'd be no need to provide the dribble of funding out of the paychecks of working-class Californians. (Richard Auxier of the Urban Institute provided some nationwide perspective on this feature of the scam in 2014.)

What's the lesson? As with any game of chance, keep your eye on the ball. And despite the incessant haranguing coming from lottery officials and the media, don't expect to win.

Messages In This Thread

Why the power ball hurts those who can least
Fred, this can be said about casinos
Re: Whats crazy to me is....
Ricky The Lottery takes nothing....
I'd blow it so fast, it ain't funny.
Re: I'd blow it so fast, it ain't funny.
Re: I'd blow it so fast, it ain't funny.
Re: Ricky The Lottery takes nothing....
New Jersey does too!...
Re: New Jersey does too!...
Nevada is one of ~~~
Re: Ricky is right. It's a ripoff.
Re: Whats crazy to me is....
EVERYTHING hits the poor hardest

Copyright 2022 David Spragg