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.
> Putting down money and expecting to get less money back is irrational, unless you're rationally pursuing some higher goal
Actually, economists assume that most people are not pursuing to maximize money, but to maximize their utility function instead. Granted, they also assume that most people are risk-averse as opposed to risk-loving, i.e. most would not risk 1 for a 50% chance of winning 2.0001. On the other hand, the economics of the lottery are such that the amount you pay (even if you play every day for your whole life) is quite negligible compared to all the money you will earn during your life; if you win, you will practically maximize the utility of a few very important things in life (earning more, and working less). I think it's rational to play the lottery.
From everything I see, money does not scale all that well with happiness. Thus, those dollars you spend now are almost certainly going to be more valuable to you (buck for buck) then the dollars you have when you are rich. So its not just the chance that is low, but the payoff is even lower.
My grandparents consider going to a casino entertainment, and expect to lose the money they go in with. It's fun, and sometimes they fund their next few trips there with the winnings.
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!
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.
The message isn't for people like you or me(I play too when the jackpot is some crazy value). It's for the poor & uneducated who think that by spending half of their month's salary on 350 lottery tickets gives them a better chance at winning.
I think you need to learn whether lottery is a vice in of itself, or a substitute for other vices. I know that in NYC, the lottery basically put the corner numbers rackets (and associated street crime) out of business.
I'm curious if the stereotypical old person wasn't spending a day a month at the casino, would they be drinking more? Sitting around not talking to anyone? Abusing drugs?
We also need to consider the reality of the situation... Is the lotto makin s material impact. People have vices... Sports betting is illegal in most places in the United States, but sports betting is pervasive.
I totally agree.
A more evident case is with the insurances: We also know that the expected value of buying insurance is negative for us; but we pay for reducing the variance of the money we lose.
In lottery, we pay to increase the variance of the money we win.
In fact, as mentioned, why not just keep an eye out for winning lottery tickets on the ground? Because you have an ~epsilon chance of getting a winning lottery ticket, and you also have an ~epsilon chance of finding a winning lottery ticket on the ground.
When the expected value is so definitively against you I guess it's implied that you're playing for variance. Maybe you also feel that you're playing for the entertainment value, which isn't subject to the same mathematical rationality.
I get that. When I play poker for 5 hours and come out even at the end of the night or slightly behind, I consider it worthwhile because I had fun for 5 hours.
If the utility function of money was superlinear (has a steeper slope the more you have) this would make sense.
But since you're a human being, I'm fairly confident that your utility function is sublinear (has a shallower slope the more you have). Playing for variance doesn't make sense in this case.
I'd say that utility of money is a sublinear functions only for small amounts of money. When you get into the range of "never having to work again" or "can build my own rocket company", then the utility of money can quickly become superlinear (c.f. the productivity of the team is more than the sum of productivity of individuals).
So...maybe I'm being nitpicky here, but I mention it b/c maybe I just don't understand...
They state in the article:
You will have to plunk down your $2 at least 86 million times. Williams...could have simply said the odds of winning ... were 1 in 175 million
It might cost you > $172MM, but aren't the odds 1 in 86 million? Or am I being obtuse?
There's a catch to that that not many consider: the likely number of winners, which divides the jackpot and reduces the expected value per-play. The number of likely winners increases with the number of tickets sold, which increases (dramatically) with the jackpot beyond a certain threshold.
It's exactly the same as going to the cinema and enjoying the cost of the movie tickets and popcorn there. Why would anyone go to the cinema?
Pro-tip: When a telemarketer calls saying "We've got a great offer to save you money on your snarfleblarg bills!" just tell them you enjoy you enjoy spending as much money as possible on your snarfleblarg. It goes so far off their script that i've never had one of them provide a decent response to it. At which point you hang up.
That's a funny way to put it. Exchanging money for entertainment has been a common and accepted practice for a very long time. Technically, when you buy something you lose the money, but it's weird to highlight the losing part over the buying part.
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