1,2,3,4,5,6 in the lottery

[Ladewig]

5.5% of lottery jackpot winners go bankrupt.

If you want to get rich you need to learn to manage your money and invest in yourself. get an education, develop your work skills and advance your career. A small investment made early in life comperable to buying a lottery ticket every week will grow exponentially into a significant life style change that also gives you the skills needed to avoid the bankruptcy trap when your boat does come in.

I am middle aged, closing in on elderly. Looking back on how I was raised, I think the most important lesson my parents taught me was to live within my means. In America, I realize that I am a minority because I believe being in debt because of overspending is far more embarrassing than driving a 10-year-old car with a dent and a scratch.

 

[CapelDodger]

What is true, however, is that any set of 6 numbers with a simple pattern is less likely to occur than one of the sets of 6 numbers with no obvious pattern.

Indeed, but they occur just as often as expected. The House always wins.

Obvious might not be the best adjective ...

It works for me, but obvious can vary - in some cultures, for instance, the digit 8 is especially lucky while in others 7 is favoured.

 

[CapelDodger]

I am middle aged, closing in on elderly. Looking back on how I was raised, I think the most important lesson my parents taught me was to live within my means.

With reference to gambling, I was taught only to gamble in games where you might have an edge (roulette and lotteries do not qualify), and to gamble with slightly more than you can afford. Not your rent, not enough to be left taking out a PayDay Loan, certainly not money you're transporting from point A to Big Vinnie (who's expecting you), but enough to get a flame from the significant other and a dull couple of months.

It was a teacher who taught me that, as it happens, not my family . My family were dead set against gambling, but doing the Football Pools somehow didn't count.

Debt (other than a home mortgage well within your means) was an absolute no-no. Up there with Divorce .

 

[Southwind17]

If the chances of turning a 34-cent ticket into a $7600 payout consisted of a one in fifty billion chance, then would it suck?
ETA: if such a lottery offered that payout for those odds would it be, in your opinion, a suckers' game designed to separate rubes from their money?

The words 'pulling' and 'teeth' come to mind! In answer to your questions: yes, of course, because you're weighing up the situation before the event. Standing at the teller paying in a cheque for $7,600 on the back of a $0.34c bet after the event far from sucks. Get it?!

It's a fool's game for anyone that plays.
However, in the U.S. we make them into even bigger fools by taking back at least 30% of the jackpot winnings through taxes.

And gambling is for fools, anyway

I'd question whether the majority of lottery winners would agree!

If you want to get rich you need to learn to manage your money and invest in yourself. get an education, develop your work skills and advance your career.

I'd hazard that not many people get rich following this philosophy compared to those that do and don't. In my humble opinion, except for the fortunate few who inherit wealth, those who get rich take massive risks - not continuously - but at significant points in their lives.

A small investment made early in life comperable to buying a lottery ticket every week will grow exponentially into a significant life style change that also gives you the skills needed to avoid the bankruptcy trap when your boat does come in.

Not necessarily true. What sort of 'investment' are you alluding to, and what do you mean by 'small'!?

I am middle aged, closing in on elderly. Looking back on how I was raised, I think the most important lesson my parents taught me was to live within my means. In America, I realize that I am a minority because I believe being in debt because of overspending is far more embarrassing than driving a 10-year-old car with a dent and a scratch.

I think you're right that embarrassment from debt isn't an issue for most, bred by lack of responsibility founded in a seeming lack of ramification.

With reference to gambling, I was taught only to gamble in games where you might have an edge (roulette and lotteries do not qualify) ...

What does, then?

... and to gamble with slightly more than you can afford. Not your rent, not enough to be left taking out a PayDay Loan, certainly not money you're transporting from point A to Big Vinnie (who's expecting you), but enough to get a flame from the significant other and a dull couple of months.

It was a teacher who taught me that, as it happens, not my family . My family were dead set against gambling, but doing the Football Pools somehow didn't count.

Probably because they could afford it, just like they could afford the occasional meal out?!

 

[Roboramma]

Standing at the teller paying in a cheque for $7,600 on the back of a $0.34c bet after the event far from sucks. Get it?!

So your point is that it doesn't suck to win the lottery? Well... okay, yeah, that's true.

It doesn't tell us anything about whether or not it's worthwhile to play however.

 

[Fast Eddie B]

I was involved with a compulsive gambler.

She believed in her heart of hearts that 1,2,3,4,5,6 was a stupid bet* because of the unlikelihood that those numbers could ever come up.

Nothing could sway her.

One of her arguments was, "Fine. Just show me one lottery where those numbers have ever come up".

I think it indicates a flaw in how our brains process probability, which is often counterintuitive.


*as other have indicated, it is a stupid bet, but only because if it did hit you'd be sharing the winnings with hundreds or thousands of others.

 

[Belgian thought]

Even the great Tommy Cooper (http://www.mkccc.com/humour/t.htm) had problems with odds.

"Apparently, 1 in 5 people in the world are Chinese. And there are 5 people in my family, so it must be one of them. It’s either my mum or my dad. Or my older brother Colin. Or my younger brother Ho-Cha-Chu. But I think it’s Colin".

 

[Ladewig]

The words 'pulling' and 'teeth' come to mind! In answer to your questions: yes, of course, because you're weighing up the situation before the event. Standing at the teller paying in a cheque for $7,600 on the back of a $0.34c bet after the event far from sucks. Get it?!

Actually, no. I keep trying to use your example. I am up to the point were I have the $7600 check in my hand and I am in line at the bank, but I keep imagining all the people who lost money in line ahead of me.

Putting aside the joking - because humans are so bad at deciding what is a good or bad bet, mathematicians developed "expected value" as a way to compare bets. Unless one plays a 6/42 parimutuel game that has rolled over for 25 consecutive drawing, then one is statistically looking at a terrible, terrible bet.

 

[Dan O.]

What does it cost to play the lottery. Over a lifetime of playing $1 per week for 70 years you would spend about $3600. If that were saved and earned a modest 5% interest per year it would accumulate to over $30,000.

If we condense the lifetime of lottery play into a single draw, 30% gets paid out in minor prizes that would return $9000. So you would be putting up the net of $21,000 for a one chance in 1500 to win a jackpot worth about $9 million. That's like convincing a small town to all give up their cars so that the mayor can live on a small yacht.

 

[Southwind17]

So your point is that it doesn't suck to win the lottery? Well... okay, yeah, that's true.

It doesn't tell us anything about whether or not it's worthwhile to play however.

Again, ask a selection of jackpot winners that question. And don't forget that for most players the emotional hope of winning each week and the anticipation when checking the result is well worth the modest stake.

Actually, no. I keep trying to use your example. I am up to the point were I have the $7600 check in my hand and I am in line at the bank, but I keep imagining all the people who lost money in line ahead of me.

... and you don't have a wry smile on your face?!

What does it cost to play the lottery. Over a lifetime of playing $1 per week for 70 years you would spend about $3600. If that were saved and earned a modest 5% interest per year it would accumulate to over $30,000.

Which would be worth what, exactly, in net present value terms at, say, average 8% p.a. discount?!

 

[Pixel42]

What does it cost to play the lottery. Over a lifetime of playing $1 per week for 70 years you would spend about $3600. If that were saved and earned a modest 5% interest per year it would accumulate to over $30,000.

When the UK lottery first started I picked my six numbers, but I've never bought a ticket. I just used to check the winning numbers in the paper each week, and keep track of how much money I'd saved by not playing the lottery. I got 3 right numbers several times and 4 numbers once, but I was still about £200 up when I finally stopped bothering. I used to buy myself little treats with the money I'd saved.

 

[Southwind17]

When the UK lottery first started I picked my six numbers, but I've never bought a ticket. I just used to check the winning numbers in the paper each week, and keep track of how much money I'd saved by not playing the lottery. I got 3 right numbers several times and 4 numbers once, but I was still about £200 up when I finally stopped bothering. I used to buy myself little treats with the money I'd saved.

So, so sad!

 

[Ladewig]

Again, ask a selection of jackpot winners that question. And don't forget that for most players the emotional hope of winning each week and the anticipation when checking the result is well worth the modest stake.

I occasionally buy a ticket although it is a stupid thing to do. While it is possible to enjoy the anticipation leading up to the drawing, I have found that if one disciplines oneself, it is possible to enjoy all the anticipation without actually buying the ticket. And even if one cannot convince oneself to enjoy that type of anticipation, one could instead buy a ticket for a drawing in the future. That way, the price of a single ticket provides weeks or months of anticipation.

... and you don't have a wry smile on your face?!

While I am the kind of person who does enjoy wry humor, dark humor, and life's little (and big) ironies, I don't know if I would be smiling. I've never stood at the end of a line with tens of thousands of people in it so it might be difficult to manage any kind of smile.


ETA: Despite my lack of smileys, I do consider these exchanges friendly banter instead of a dramatic argument or condescending oneupsmanship.

 

[Dan O.]

Which would be worth what, exactly, in net present value terms at, say, average 8% p.a. discount?!

Present value is trivial to compute. For an infinite series of fixed payments, the question becomes: what present value would earn sufficient interest in one period to equal the payment. The interest rate was specified for an annual period so this needs to be converted to the periodic rate for 1 week which is the 52nd root of 1.08 minus 1 or about 0.148%. The principle required to earn $1 at this rate is $1 / .00148 = $675.

In my example, the fixed payments ended after 70 years. To adjust for this, we need to subtract the present value of principle 70 years in the future which is -$675 / 1.08^70 = -$3.

The NPV of 70 years of $1 weekly payments with an anuallized rate of 8% is therefore $672.

 

[Ladewig]

What does it cost to play the lottery. Over a lifetime of playing $1 per week for 70 years you would spend about $3600. If that were saved and earned a modest 5% interest per year it would accumulate to over $30,000.

If we condense the lifetime of lottery play into a single draw, 30% gets paid out in minor prizes that would return $9000. So you would be putting up the net of $21,000 for a one chance in 1500 to win a jackpot worth about $9 million.

May I see your calculations? I am ashamed to admit that (at first glance) a ticket that costs $21,000 and yields a one in 1500 chance of $9 million does sound more tempting to me than the one ticket for a one in 5 million chance at $3 million.


ETA: oops, I just ran the numbers on the $21,000 option that they are painful.
But I still want to know where 30% came from.

 

[Dan O.]

May I see your calculations? I am ashamed to admit that (at first glance) a ticket that costs $21,000 and yields a one in 1500 chance of $9 million does sound more tempting to me than the one ticket for a one in 5 million chance at $3 million.


ETA: oops, I just ran the numbers on the $21,000 option that they are painful.
But I still want to know where 30% came from.

For the lottery payments part, I was just using a typical lotto payment schedule of "Prizes equal 50% of sales" and a distribution of 40% of the prize pool to the grand prize. This will of course vary for individual lottery games.

 

[Ladewig]

For the lottery payments part, I was just using a typical lotto payment schedule of "Prizes equal 50% of sales" and a distribution of 40% of the prize pool to the grand prize. This will of course vary for individual lottery games.

But where did the "30% gets paid out in minor prizes " come from?

 

[Southwind17]

I occasionally buy a ticket although it is a stupid thing to do.

Unless it wins you the jackpot, of course. Oh ... hang on ... we've already been there haven't we!

While it is possible to enjoy the anticipation leading up to the drawing, I have found that if one disciplines oneself, it is possible to enjoy all the anticipation without actually buying the ticket.

By 'disciplines oneself' you must surely mean something along the lines of flagellation, right? In which case I can perfectly understand how one might then derive blissful euphoria from watching a lottery draw with absolutely no prospect of winning! Seriously, am I missing something in you psyche here?!

And even if one cannot convince oneself to enjoy that type of anticipation, one could instead buy a ticket for a drawing in the future. That way, the price of a single ticket provides weeks or months of anticipation.

Or alternatively convert to a diet of banana cake, thereby providing weeks or months of constipation!

Present value is trivial to compute ...

The NPV of 70 years of $1 weekly payments with an anuallized rate of 8% is therefore $672.

... and how, I wonder, does that compare to, say, the NPV of what you're likely to spend on completely wasteful trivialities that have absolutely no possible prospect of betterment; indeed more than likely detriment, over the same years? I suppose smoking (and possibly drinking?!) aren't fair comparisons, but I wouldn't mind seeing the figures!

 

[Ladewig]

By 'disciplines oneself' you must surely mean something along the lines of flagellation, right?

No, I am talking about disciplining one's mind. You don't really have to have an actual lottery ticket in your hand to fantasize about winning the lottery. One could spend one's coffee break time surfing the internet looking at exotic destinations and fantasizing what it would be like to travel there without actually making the lottery ticket purchase.

As for watching the drawing, I'd just skip that bit; but if one wants to, one could write down six numbers and when they don't win the big jackpot, one could smile wryly about what a sucker's game the lottery is and how easy it is to not play it.

 

[zooterkin]

But where did the "30% gets paid out in minor prizes " come from?

50% of the income is the prize fund. 40% of the prize fund goes to the major prizes, i.e. 20% of the income. That leaves 60% of the prize fund for the minor prizes, or 30% of the income.