a_unique_person
Director of Hatcheries and Conditioning
Just about every video by this guy is a winner.
Economics for Idiots
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Just about every video by this guy is a winner.
The Great Zaganza
Maledictorian
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It's not as unreasonable as one might think from the player's point of view: if you reduce chance to win by 70%, but double the prize money and keep the ticket price the same, the expected payoff has increased.
It's still miniscule, and you should only do it with money you won't notice and for lotteries that benefit causes you support.
It's still miniscule, and you should only do it with money you won't notice and for lotteries that benefit causes you support.
Brainster
Penultimate Amazing
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In general the lottery is a bad bet, but it is worst when it was just recently won by somebody. Arizona's lottery, The Pick, is a pretty good example. The minimum grand prize is $1,000,000, but the odds against winning it (six numbers from 1-44) are around 7,000,000-1. So if we ignore for the moment the smaller payouts your Expected Value is -86 cents for every $1.00 spent. However, if nobody wins for a few weeks, the prize pool starts to grow and once it gets over $7,000,000 the expected value of a lottery ticket is more than a dollar (well, ignoring taxes and the fact that you'll probably only get about half of that if you take the all cash versus annuity option).
Now I can hear the objections already--yeah, but once it gets that high a lot more people start buying tickets and the odds are you'll have to split that $7,000,000. Obviously it can happen, but in August of last year The Pick was over $7,000,000 for four consecutive weeks before it was finally won--by one ticket holder.
Now I can hear the objections already--yeah, but once it gets that high a lot more people start buying tickets and the odds are you'll have to split that $7,000,000. Obviously it can happen, but in August of last year The Pick was over $7,000,000 for four consecutive weeks before it was finally won--by one ticket holder.
a_unique_person
Director of Hatcheries and Conditioning
Black Friday. Time to grab a bargain.
Puppycow
Penultimate Amazing
It's absolutely true and it's something I realized some time back when I starting noticing that the jackpots were getting bigger and bigger than they had been in the past. People notice the size of the jackpot and they don't think about the odds when buying a lottery ticket. They know that the odds are very slim, but "a million to one" and 100 million to one" don't feel all that different, especially is math isn't your strong suit. If you made it say 2 million to one and the prize is $1 million, then you could have 100 winners instead of just one winner, and it would actually make more sense to play because even just $1 million is enough to change your life if you don't spend it foolishly.
ETA: Also, it perversely becomes a news story when the jackpot gets really large, especially if it's a new record high, which is free advertising for the lottery.
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Brainster
Penultimate Amazing
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Lotteries almost always offer better odds when the jackpot has rolled a few times and the odds get better when the jackpot is at its highest. That does not make them a good bet, in fact they are usually terrible bets. But they are indisputably better when the prize has increased from the minimum. This is basic mathematics.
Puppycow
Penultimate Amazing
I understand that. This of course assumes that the jackpot accumulates if nobody wins it, and a lot of lotteries are set up that way. You wouldn't necessarily have to set it up that way if you were designing it from scratch. I'm trying to point out that there are ways that you could design it that would result in more winners of smaller jackpots instead of just a single winner of a huge jackpot, and that that might spread more happiness around, although I also understand that spreading happiness to more people isn't really a priority for them.
Mojo
Mostly harmless
Interesting Ian claimed that you would make a profit on the UK lottery if you could only play it for long enough.
Jack by the hedge
Safely Ignored
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The argument about the lottery being a better bet when the prize pot has rolled over to some even more absurd amount seems like an "if you could play it for enough millions of years..." thing. People don't buy lottery tickets because they think they'll win. What they pay for is a little shot of adrenalin for the few seconds when they could still win and before they find out they didn't.
That makes no sense to me. The lottery company is skimming money out of the fund to pay themselves and 'good causes' (in the UK, at least), so the total payout has to be less than the amount staked. That doesn't change over a long period of time.
eta: Sorry, I meant to reply to Mojo with this.
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a_unique_person
Director of Hatcheries and Conditioning
So the trick is get people to lose more.
Jack by the hedge
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Oh, I agree that just by playing the lottery for a bazillion years you can't expect a single player to end up ahead. I expect you could improve your (extremely) long-term result if you only buy a ticket when the prize is a rollover. But really all such calculations are moot because for all intents and purposes you're not going to win the lottery, so you're paying for the entertainment value you get from losing, which amounts to the momentary thrill before you're disappointed.
dudalb
Penultimate Amazing
A word of warning: a lot people who pose a ecoomic experts on the internet do not know what the hell they are talking about.
And that is the problme of not having a basix grounding in a topic: You can easily fall victim to a snake oil salesmen.
And that is the problme of not having a basix grounding in a topic: You can easily fall victim to a snake oil salesmen.
dudalb
Penultimate Amazing
I don't play lottereis. I prefer to do my gambling at the Poker or zBLack Jack table, where you can you skills to improve your chances.
Hlafordlaes
Disorder of Kilopi
It's not the EV, it's the purchase of another week of being able to say "As bleak as things are, some day!" This is what is purchased, and it has intangible value. May be accompanied by the occasional giddy daydreaming with a friend or partner to pass the time, to conjure imagined realities of shared happiness. EV is rational analysis, but buyer motive is related to the human psyche, betting being irrational yet having genuine value.
