Stories
Slash Boxes
Comments

SoylentNews is people

posted by janrinok on Thursday February 12 2015, @11:58PM   Printer-friendly
from the if-it-feels-good... dept.

Neil Irwin writes at the NYT that financially literate people like to complain that buying lottery tickets is among the silliest decisions a person could make but there are a couple of dimensions that these tut-tutted warnings miss, perhaps fueled by a class divide between those who commonly buy lottery tickets and those who choose to throw away money on other things like expensive wine or mansions. According to Irwin, as long as you think about the purchase of lottery tickets the right way — purely a consumption good, not an investment — it can be a completely rational decision. "Fantasizing about what you would do if you suddenly encountered great wealth is fun, and it is more fun if there some chance, however minuscule, that it could happen," says Irwin. "The $2 price for a ticket is a relatively small one to pay for the enjoyment of thinking through how you might organize your life differently if you had all those millions."

Right now the Multi-State Lottery Association estimates the chances of winning the grand prize at about 1 in 175 million, and the cash value of the prize at $337.8 million. The simplest math points to that $2 ticket having an expected value of about $1.93 so while you are still throwing away money when buying a lottery ticket, you are throwing away less in strictly economic terms when you buy into an unusually large Powerball jackpot. "I am the type of financial decision-maker who tracks bond and currency markets and builds elaborate spreadsheets to simulate outcomes of various retirement savings strategies," says Irwin. "I can easily afford to spend a few dollars on a Powerball ticket. Time to head to the convenience store and do just that."

 
This discussion has been archived. No new comments can be posted.
Display Options Threshold/Breakthrough Mark All as Read Mark All as Unread
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
  • (Score: 3, Insightful) by arashi no garou on Friday February 13 2015, @02:24AM

    by arashi no garou (2796) on Friday February 13 2015, @02:24AM (#144454)

    Bullshit. A tax is compulsory, the lottery is not. If it were a tax, I would be forced to buy a ticket on a schedule set by the state, and if I didn't buy a ticket I would be subject to sanctions. The lottery, on the other hand, is a voluntary donation that provides funding above and beyond tax money to support (in my state at least) education and environmental efforts.

    Starting Score:    1  point
    Moderation   +1  
       Insightful=1, Total=1
    Extra 'Insightful' Modifier   0  
    Karma-Bonus Modifier   +1  

    Total Score:   3  
  • (Score: 2) by aristarchus on Friday February 13 2015, @07:39AM

    by aristarchus (2645) on Friday February 13 2015, @07:39AM (#144515) Journal

    Bullshit. A tax is compulsory, the lottery is not. If it were a tax, I would be forced to buy a ticket on a schedule set by the state, and if I didn't buy a ticket I would be subject to sanctions.

    This is why you fail. It is a tax, a stupid tax. Sort of like a "sin tax" that is levied on things like alcohol. Don't want to pay the tax? Don't drink! Problem solved. Stupid tax, don't want to pay the tax? Don't buy lottery tickets! Problem solved, except that since you are stupid, you cannot help but buy the lottery ticket, you must buy the lottery ticket, because you are too stupid not to! Now isn't this great! We do not need any sanction, we just take advantage of stupid people, the ones really bad with math and particularly probability calculations, and they not only do not need the threat of sanctions, they flock to the scam and then vote for Republican policies of tax cuts for the wealthy because they are just waiting for their number to come up. Stupidity is coercion, of the most insidious kind.

    One interesting aside to this, is the the lumpenproletariat tend to be in favor of what the 1% call "tort reform", limiting the damages that can be awarded to individual citizens who are victims of Corporate malfeasance. We could talk about "Hot Coffee", but that would only make the point. So when I come across one of these Fox News watching, Republican-voting Einsteins, and they start telling me how outrageous some court settlement was, I just say: "Good for them, that citizen just won the lottery! They are fixed for life!" And suddenly all resistant to the high-money settlements vanishes into a total lack of understanding of numbers, justice, or humanity.

    • (Score: 1, Flamebait) by hemocyanin on Friday February 13 2015, @09:36AM

      by hemocyanin (186) on Friday February 13 2015, @09:36AM (#144544) Journal

      Did you read the part where it's noted that the EV was $1.93 on a $2 ticket? Seriously, at a 7 cent loss I'd hardly call it a "stupid" tax -- that's just you being smug. I've had enough money fall out of my pockets without me noticing that at a 7c loss, I could buy loads and loads of tickets. Just dropping a quarter is almost 4 tickets. Hell, I've dropped dimes, _noticed_ that I dropped them, and didn't even bother to pick them up. Worse, I've spent many thousands of dollars on total crap in aggregate over my life -- you know, you buy something you think will good or cool and it breaks just after the warranty ends, or it never works at all and you totally forget to return it. Then of course there is the totally frivolous stuff I've bought -- my boat gets 1.75 mpg -- add that up at the $4.50/gal price over the last few years. Talk about burning money ... approx 90c per minute.

      Secondly, a ticket is whole dollar, which in today's world just isn't much. The world isn't like Farmer Boy where Alonzo can buy a whole pig for 50c anymore. Even at $7.35/hr, a person is making over 12c per minute -- about 8 minutes to earn a dollar, 16 for two, and in my locale minimum wage is pushing $10/hr -- about $1 every 6 minutes. Most people probably have more than a buck (covered in sticky crap) under their car seats just from it slipping out of their pockets.

      And yes, whenever these lotteries get over $300m, I'll buy a ticket if I remember to. That works out to two or three per year. I have a post-grad degree, qualify for mensa, make 6 figures, and even I enjoy the fantasies of what I'd do with the winnings. I totally expect not to win, but we're talking a few pennies here for some nice entertainment. Oh, and I'm so liberal I think Democrats would make Nixon blush.

      I guess my point is that people get their joy in all kinds of different ways. Things I've bought, you'd think they were stupid. There are things you bought that I probably wouldn't take if I was paid to have them. And you know what? So what. Live and let live. Belittling people because they buy stuff you don't understand -- that's what's stupid here.

      • (Score: 2) by aristarchus on Friday February 13 2015, @09:59AM

        by aristarchus (2645) on Friday February 13 2015, @09:59AM (#144545) Journal

        Did you read the part where it's noted that the EV was $1.93 on a $2 ticket?

        Ah! Fun with statistics! EV may be 1.93, but the AV is 0, as in total loss. Now if only the winners would share.

      • (Score: 3, Insightful) by mechanicjay on Friday February 13 2015, @07:01PM

        I find the $200,000,000 jackpots to be extraordinarily cheap daydream fodder. More entertaining than the $40 bucks it costs to go to movies these days.

        --
        My VMS box beat up your Windows box.
    • (Score: 2) by arashi no garou on Friday February 13 2015, @12:48PM

      by arashi no garou (2796) on Friday February 13 2015, @12:48PM (#144575)

      So what I'm getting from your rambling, nearly incoherent comment is "Duh I say it's a tax so it's a tax and you're a doodoohead!"

      Sorry bud, you're going to have to elaborate, and my that I mean leave the neocon conspiracy stuff behind and tell me again how I'll go to jail and pay fines for not buying that lottery ticket.

      • (Score: 2) by aristarchus on Friday February 13 2015, @06:53PM

        by aristarchus (2645) on Friday February 13 2015, @06:53PM (#144704) Journal

        OK, I will use smaller words to help you understand. You see, you don't have to buy lottery tickets. Why is that? Because you are smart enough to understand the odds, and if you do buy them, it is the mindless entertainment the FA says it is. My point is that if you were more stupid than you are, it might not be a choice, since you would not even be aware of what you really were doing. I have known people who's financial plan was "when I win the lottery". There are enough other comments making this point here already. Remember, it is not just about you.

        • (Score: 2) by arashi no garou on Friday February 13 2015, @07:29PM

          by arashi no garou (2796) on Friday February 13 2015, @07:29PM (#144712)

          You see, you don't have to buy lottery tickets.

          Thank you, you just made my point. You don't have to buy tickets (it's not compulsory), therefore it's not a tax. So you agree with me.

          • (Score: 2) by aristarchus on Friday February 13 2015, @09:07PM

            by aristarchus (2645) on Friday February 13 2015, @09:07PM (#144739) Journal

            Your point is missing my point. It is not a tax on _you_, but it is a tax on stupid people. Lets say a tax on alcohol is not compulsory, you can always just not purchase alcohol. If you are an alcoholic, however, this is not an option, so the tax is compulsory. See the analogy? But lets not start blaming the victims of these selective taxes, we should criticize the nation that deploys them.

            • (Score: 2) by arashi no garou on Friday February 13 2015, @11:53PM

              by arashi no garou (2796) on Friday February 13 2015, @11:53PM (#144798)

              It's only a "tax" in your mind because you are calling it a tax. Just because you wish something to be true so you can prove a point, doesn't make it true. If you call up the state tax assessor's office to discuss the lottery tax, they will explain to you that no such thing exists, and possibly call your mental hospital and remind them of your phone call limit for the month.

              Grab a dictionary or wikipedia and look up the definitions of "tax" and "lottery". Here, I'll save you the trouble, first hit on Google:

              tax /taks/

              noun

              a compulsory contribution to state revenue, levied by the government on workers' income and business profits or added to the cost of some goods, services, and transactions.

              lot·ter·y /ˈlädərē/

              noun

              a means of raising money by selling numbered tickets and giving prizes to the holders of numbers drawn at random

              If you don't like the lottery that's fine, don't play it, vote against it. But making up baseless facts to support a nonexistent argument is folly on your part. But hey, don't let me stop you making a fool of yourself.

              • (Score: 2) by aristarchus on Saturday February 14 2015, @12:15AM

                by aristarchus (2645) on Saturday February 14 2015, @12:15AM (#144806) Journal

                But hey, don't let me stop you making a fool of yourself.

                Thank you, your concern is warmly received!