Lotteries are a voluntary tax on stupidity.
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aphorism #16 comments to aphorism #1 |
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aphorism #1Lotteries are a voluntary tax on stupidity. 6 comments to aphorism #1 |
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Agreed. However, there are times when the Powerball jackpot grows so big that there is a +EV (positive expected value–basically, a statistically favorable bet). Some famous economist also theorized that any time the jackpot grows so big that it would completely change your life forever (e.g., a $100 million jackpot might not be +EV, but you’d never have to work another day in your life) that it makes sense to play. I believe that this has resulted in me playing about 3 times since I turned 18.
How does the Powerball jackpot get to be +EV? In’t the payout directly proportional to the number of people playing?
Also, wouldn’t just one million dollars completely change your life forever?
Correct, the jackpot is related to the number of players, and thus changes depending on how many people play. (The Powerball jackpot builds, too–if it is not won by anyone, the jackpot continues to carry over until it is.)
The chances of winning, according to the billboard that I drove by the other day, are 1 in 161 million. So when the jackpot is at least $161 million, it makes sense to play.
(Of course, if you took the lump sum payout instead of the annuitized payment, you’d probably get about half. Then you’d pay half of that in taxes.)
And no, I don’t think that $1 million would change your life forever… that barely buys a nice house in the DC area.
My understanding has always been that “chances of winning are 1 in 161 million” reflects a rough approximation of the chances at the time the statement is made, or the billboard is erected, but that as more people continue to buy tickets all the time, after a day or two the chances might be 1 in 161.72 million or something like that, and they just stick with “1 in 161 million” because it would be a pain in the ass to decrease the official chances of winning every single time someone buys a ticket.
And every single time someone buys a ticket, while the chances of winning decrease, the jackpot increases by the same proportion – right? Wouldn’t this make it never wise to buy a ticket (unless you could somehow convince a lot of people not to buy in)?
By the way, living in places that have billboards has really made me appreciate my almost billboard-free childhood in Montgomery County. I think I would be way more anti-lottery if I’d had to see lottery billboards all the time.
And not only do I think that a million dollars would change my life forever, but that far smaller amounts of money would, too. With $100,000 I could do all of the following: pay off all my debts, get a car, live without roommates, finish my BA and start an MA. And I’d still have a lot left over to impress women.
No, your chances of winning a lottery are not based on the number of entrants, only the payout is. The chances of winning are based on the statistics of probability involved with the game that you’re paying. My chances of guessing five numbers in any order plus one specific number are what they are and will never change. You’re thinking about a pari-mutuel system, like what they use at a race track.
Ahh, right, of course.
Did you see this, by the way?
http://www.nytimes.com/2008/08/22/nyregion/22super.html
For a complete idiot, that guy seems instinctively to be grasping at the concepts of investment and interest, so I wonder if he could be convinced to put that money into extremely high risk stocks or something like that.