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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."

 
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  • (Score: 1, Insightful) by Anonymous Coward on Friday February 13 2015, @08:32AM

    by Anonymous Coward on Friday February 13 2015, @08:32AM (#144527)
    Yeah, why would some minimum wage burger flipper prefer a fantasy where he has 100 million bucks vs real life.

    Real great insight and rational thinking there by you ;).
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  • (Score: 0) by Anonymous Coward on Friday February 13 2015, @03:30PM

    by Anonymous Coward on Friday February 13 2015, @03:30PM (#144627)

    When that $2 is worth about 15 minutes of work time?
    $2 can get you: 12 eggs, two loafs of bread, a box of cereal, 13 bananas, three cans of corn, or three pounds of potatoes. I am lucky enough to have done well enough in the genetic lottery for intelligence that I can realize this. I know others are not as fortunate and I feel bad for them.

    • (Score: 2) by Freeman on Friday February 13 2015, @05:14PM

      by Freeman (732) on Friday February 13 2015, @05:14PM (#144675) Journal

      If you catch a sale, you can get 6 pounds of Potatoes or more, but that's usually a seasonal thing.

      --
      Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
      • (Score: 1) by Anonymous Coward on Friday February 13 2015, @07:38PM

        by Anonymous Coward on Friday February 13 2015, @07:38PM (#144716)

        Also, discount vegetables and fruit that are about to expire. I didn't mention those or sales because the poor often do not reliably have the luxury of waiting to take advantage of those offers. Bus fares also add up if you try to get things at different stores.

    • (Score: 1) by calzone on Tuesday February 17 2015, @05:14AM

      by calzone (2181) on Tuesday February 17 2015, @05:14AM (#146007) Journal

      Where are you finding any loaf of bread for $2? Let alone 2 of them? Let alone bread actually worth eating that won't destroy your health?

      --

      Time to leave Soylent News [soylentnews.org]