Is the Lottery for fools?

[espritch]

Of course you have to play a huge number of games for the theory to become reality, and I'm ignoring lots of other subtle factors, but in general if you only bet when the expected return is higher than the outlay then you're not actually being stupid.

The analysis seems incomplete. In particular, you also need to consider what the money might have achieved if you had invested in an alternative. In spending it on the lottery, you are also forfeiting less glamorous but more certain returns that could be made by investing it in bonds, stocks, etc. (yes, I know - stocks and bonds aren't guaranteed either).

Basically, if you are playing it just for fun and not spending a large percentage of your income on it, I guess it is OK, though generally not a good bet. If, on the other hand, you spent your college tuition on lottery tickets, you are a dumba$$ (there was actually a report about someone doing this a few years ago - they lost of course).

 

[EGarrett]

I don't like the "it's okay if you enjoy it" explanation. It doesn't specifically justify the lottery. There might be people who enjoy throwing their money into the fireplace. You can do anything with your money that might provide you with some type of enjoyment, that doesn't add value to playing the lottery over anything else.

Likewise, exactly why might you enjoy playing? Because you think you might win or you enjoy fantasizing about what you'd do if you did win. Either way, you must have some expectation of winning if you actually put your money out there. And you can fantasize about finding a fist-sized diamond on the street...which is also incredibly unlikely but doesn't cost money.

I really have yet to see a good reason that the lottery isn't foolish.

 

[clarsct]

First off, on our 'lucky fool'. If I actually WON anything, the first thing I would do is contact a lawyer and a financial planner of some sort.

Secondly, I admit to playing the lotto from time to time. It's a guilty pleasure. There is absolutely, positively no reason to smoke, either. Or drink. I, personally, do not smoke, but I have been known to partake socially of alcohol. I have been known to drink Morgan and Coke by the pitcher. Particularly at my bachelor party this last Oct. But I do not do so all the time. I drink a case of beer a year, or so.

Is it intelligent? Probably not, but I enjoy it. Is playing the lotto intelligent? Probably not. But I enjoy it.

If it doesn't seem pleasurable to you, then don't do it. The risk of loss is small, and relatively painless. Kinda like having a pint of Guiness in the comfort of your own home.

(Don't drink and drive, folks. Dad ran a towing business. You REALLY don't want to drink and drive. Trust me on this one.)

On the other hand, taking any of the above activities to extremes can be very negative, indeed. As can anything. Excessive handwashing can be a problem, if you're compulsive about it.

 

[Beerina]

::nod:: Playing the lotto with everything you have is a get-poor-quick sheme.

Unless you have the time and money to "box out" the lottery.

If you can win $75 million on a lottery with a 1 in 46 million chance, by buying every possible combo (a mere $46 million) why not do it?

This has been attempted, though lottery officials frown on it, claiming it's a "chance" game.

 

[Just thinking]

Unless you have the time and money to "box out" the lottery.

If you can win $75 million on a lottery with a 1 in 46 million chance, by buying every possible combo (a mere $46 million) why not do it?

You're kidding, right?

What happens when others (and with $75 million at stake there will be others) show up with duplicate winning tickets? Now you must share in the prize -- even just one other winner now makes you a loser, of millions.

Plus, if you want your prize all at once you will no doubt have to accept a smaller cash outlay -- less than $46 million? Maybe not, but after taxes it surely will be.

Plus, what of the value of $46 million put as an investment? You can get a healthy return (guaranteed) with that much to invest.

I'm sure there're other reasons (financial ones, not statistical ones) for not jumping in with that much dough.

Let's face it, the purpose for a lottery is for raising money, not for you to make money.

 

[Rasmus]

First off, on our 'lucky fool'. If I actually WON anything, the first thing I would do is contact a lawyer and a financial planner of some sort.

Who here would know how to handle some 5 million bucks or so? I certainly wouldn't. I think there is a good chance that I would not be totally ruined after a year or two, but without help that would be pretty much al I could hope for. (That, and one of those huge LCD TV sets ...)

Rasmus.

 

[tsg]

More so than you might expect.

I've more than once come across discussions describing at some length how many (I'm not sure of the percentage, but it's not trivial) big lotterly winners become financially destroyed within a few years of the big win. There are even seminars and guides to help those winners from going that route. Now, is that just a big scam for some to get a percentage of that winfall? Me thinks not entirely. Since the majority of those playing are usually not of the financial savy, it would not surprise me to find their money matters wisdom still lacking substancially afterwords. Not to mention the increased visits from formerly unkown relatives and friends that will seem to perpetually keep coming out of the woodwork and plumbing.

Not just lottery winners, either. The music industry is full of people who became big stars, made tons of money, and are now broke. MC Hammer is bankrupt and Vanilla Ice is selling bicycles. They spend it like it's going to keep coming forever.

Give me Hammer's earnings for one year when he was hot and I'll never have to work again.

 

[Just thinking]

Give me Hammer's earnings for one year when he was hot and I'll never have to work again.

We here on the forum have to keep in mind that we do not represent the general population, not only in beliefs, but in behavior as well. We are in no way a representative or statistical sample. What we see happening around us many times boggles our minds, to the point of utter disbelief -- what seems so obvious and intuitive to us completely escapes the masses, and all we do is knock our heads against the wall and cry "If only that could happen to me ... "

 

[pgwenthold]

Give me Hammer's earnings for one year when he was hot and I'll never have to work again.

This isn't as clear as you would like to make it. That level of success always comes as a surprise, so it's not like you could say from the beggining, "Ok, with this $10 million, I am going to do X, Y, and Z." It starts in a couple hundred thousand, with the promise of more from the record company.

But the bigger problem is where it stops. Not only do you not know it is going to be a given amount from the beginning, you don't know that it is going to stop. No, you don't necessarily expect the big payoff again, but you might expect enough to sustain a given level. For some, it will continue for a couple of years as followup products continue successfully. Others might continue to be huge. Others will fall off the face of the earth.

My guess is that the usual belief is that a celebrity who plans to fall off the face of the earth is going to.

If you can know that you are going to be a big celebrity for at least a short period of time, then you can certainly use that to create a secure life and be done with it. However, it's not that simple, because most people who are big celebrity aren't satisfied with the short period of time, and want to continue being celebrity, and therefore do those things that need to be done to try to maintain their status. Those activities take money.

 

[tsg]

We here on the forum have to keep in mind that we do not represent the general population, not only in beliefs, but in behavior as well. We are in no way a representative or statistical sample. What we see happening around us many times boggles our minds, to the point of utter disbelief -- what seems so obvious and intuitive to us completely escapes the masses, and all we do is knock our heads against the wall and cry "If only that could happen to me ... "

Which was sort of the point behind my comment: I'm better than them.

 

[DrMatt]

Playing the lottery is an easy way of contributing to charity. The charity in this case is the state education fund, and it's not tax-deductable.

For most people, though, the lottery is a tax on innumeracy. Calculated risk? You think people who play the lottery calculate the risk?

???

 

[pgwenthold]

Playing the lottery is an easy way of contributing to charity. The charity in this case is the state education fund, and it's not tax-deductable.

Which is why I figure I should just donate directly. I get a better return on my money in the tax deduction.

 

[tsg]

This isn't as clear as you would like to make it. That level of success always comes as a surprise, so it's not like you could say from the beggining, "Ok, with this $10 million, I am going to do X, Y, and Z." It starts in a couple hundred thousand, with the promise of more from the record company.

But the bigger problem is where it stops. Not only do you not know it is going to be a given amount from the beginning, you don't know that it is going to stop. No, you don't necessarily expect the big payoff again, but you might expect enough to sustain a given level. For some, it will continue for a couple of years as followup products continue successfully. Others might continue to be huge. Others will fall off the face of the earth.

My guess is that the usual belief is that a celebrity who plans to fall off the face of the earth is going to.

If you can know that you are going to be a big celebrity for at least a short period of time, then you can certainly use that to create a secure life and be done with it. However, it's not that simple, because most people who are big celebrity aren't satisfied with the short period of time, and want to continue being celebrity, and therefore do those things that need to be done to try to maintain their status. Those activities take money.

I don't necessarily disagree with any of this, but considering how fast Hammer burned through $33 million (from what little research I could be bothered to do), it's pretty clear that no level of income would be enough to sustain his lifestyle.

And it applies even less to lottery winners who have to know there isn't any more coming.

 

[clarsct]

Who here would know how to handle some 5 million bucks or so? I certainly wouldn't. I think there is a good chance that I would not be totally ruined after a year or two, but without help that would be pretty much al I could hope for. (That, and one of those huge LCD TV sets ...)

Rasmus.

Which is WHY I would be on the phone! Some folks do just that and lead fairly ok lives afterwards. Others blow it on stupid stuff and wind up miserable.

Me? I'd be planning for the future. I'd take about 1/4(depending on the jockpot) the winnings and play. Get it out of my system, so to speak.

But after that you'd have to have a PLAN and stick to it!

But, It'd be improbable for me to win. But it IS fun to think about.

 

[Starthinker]

I know the one person who won the lottery in Rockford, IL just vanished, he quit his job suddenly and didn't tell anyone what was going on. We didn't see him for days. Then his mailbox disappears. He shows up a few weeks later and explains to us that he won and the first thing he did was get a lawyer who suggested he hide his street address and live elsewhere temporarily, hence the mailbox disappearing. He was advised to spend a certain percentage right away to get it out of his system. I'm not sure what percentage that was but after a new car and some other stuff he hadn't reached it yet. He gave me $500 for mowing his lawn, so he was doing some frivolous things with it. I didn't get to talk to him much after that but it was all broken down by percentages on what to do with it so it would last past the twenty year annuities. It was just under $30mil, by the way, which, even after taxes, would set me up for a long time.

On a woo note, and I hesitate to add this piece of information (although I may have mentioned this before) but here goes. He married a woman from Panama that consulted a psychic before marrying him. The psychic advised that she should marry him because he would be rich someday and take very good care of her. She told us this at least a year before he won. On another note, this guy was a third shift factory worker and very down-to-earth, honest, and it really couldn't happen to a more deserving person.

I hope he doesn't end up like the financially wrecked people I always hear about.

Edited to add: I don't believe in psychics, just to be clear on that. I only mentioned it because everytime one gets a major hit it just scores points for their side. I'm sure this woman consults psychics even more now.