A tax on hope?
An excellent long piece about lotteries, from the online magazine Nautilus. There are many viewpoints presented, including one from the president of the Tennessee lottery corporation
Hargrove has an intuitive understanding of what drives her customers to play the game. She has a preternatural sense of where their psychological buttons are located and how to push them. She responded in a flash to my comment about the logical futility of playing the lottery. “If you made a logical investment choice, you’d play a different game,” she said, leaning forward for emphasis. “It’s not an investment. It’s entertainment. For a very small amount of money you might change your life. For $2 you can spend the day dreaming about what you would do with half a billion dollars—half a billion dollars!”
When both payoffs and odds that are beyond any conceptual understanding you could do a simple expected-value calculation and label government lotteries as a tax on stupidity, but that framing assumes lottery players are calculating the expected payoff and just getting it wrong. Empirically, it seems to be more complicated than that.
Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. He also blogs at Biased and Inefficient See all posts by Thomas Lumley »