I never understood the admonishment not to play the lottery at all.
I waste lots of money doing things that are fun experiences, or buying unnecessary foods or drinks, or gadgets or toys, etc.
I can understand recommending not to get addicted to playing, or not to spend money that should be going elsewhere, right? But when that admonishment is not qualified, then it is a little silly. Might as well say, never buy extra dip for your french fries or something.
It's true that I haven't bought lottery tickets in years, but spending a few hundred cents on some longshot jackpot can be its own kind of fun.
What is the value in buying a lottery ticket? The expected value of the ticket itself is negative, relative to its purchase price. So the buyer gets additional value from the "little thrill" of the purchase and observing the results.
With extra dip sauce, you clearly value the sauce more than the money in your pocket. The dip tastes good, has calories, and maybe some bad health side effects.
Lotteries lack fundamental value, and the "little thrill" often turns into a bad health side effect.
That said, adults should be free to spend their money how they like. Those giving advice are worried that vulnerable people will get sucked into a "trap", like a gambling addiction.
I don't really agree with this reasoning, since to make it a fair comparison wouldn't you have to ignore any pleasure you get from the dip? A lottery ticket gets you a "little thrill" of the possibility of winning, and the dip gets you a "little thrill" of having your sense of taste stimulated. As you said, the other effects may be negative just as easily as they can be positive.
The framing of dip as having fundamental value because it tastes good only seems to make sense if you already like dip and don't like gambling. Possibly reinforced by some perception that feelings are bad and ought to be ignored, while hard facts like calorie counts and chemical reactions are real and admissible as evidence (this is not meant as a personal attack, it's just something that our society often reinforces).
What if we start on the opposite side of the issue than you did? You get
"What is the value in buying dip? The expected value of the dip itself is negative, relative to its purchase price (the expected value is zero, if you acknowledge that extra calories are not inherently good or bad). So the buyer gets additional value from the 'little thrill' of the eating and tasting of the dip.
"With a lottery ticket, you clearly value the experience of having the ticket more than the money in your pocket. Gambling feels good, creates the possibility of financial gain, and maybe has some bad side effects.
"Junk foods lack fundamental value, and the 'little thrill' often turns into a bad side effect (eating disorders)."
Of course, it's possible for dip to have a much higher expected value if you need those calories, but I don't think that's what we're talking about here. So what makes the sensation of enjoying how something tastes have 'fundamental value' and the sensation of enjoying the possibility of financial gain not?
Mathematically, selling used, losing tickets at a sufficient discount would have a higher expected value (also negative). Everyone not selling those would consider these to not be fun at all. So there is some value in "live" lotto tickets.
Personally, I view the odds of finding a winning ticket to be only slightly less than buying the winning one, so that's how I play.
I only play the lottery as a form of insurance. If my work colleagues are starting a pool, I'll get in because on the extremely unlikely chance that they win big I don't want to be the guy who has to come in to work the next day.
Gambling is like alcohol you get a high and then a hangover. The effects of gambling however last longer. What is lost is lost forever, it doesn't increase your odds of winning in the future.
If you find the act of playing itself fun, all the more power to you. That said, personally, I don't think the act of buying a lottery ticket would give me anywhere near the same amount of pleasure as... a dip for french fries, for example.
If you look at it purely monetarily, it's not rational to play the lottery because you're expected to lose money.
> I don't think the act of buying a lottery ticket would give me anywhere near the same amount of pleasure as...
...my once-a-year flutter on the Grand National. Having skin in the game multiplies the excitement of this horse-race, which is already one of the most exciting races there is.
Making selections on a lottery ticket, or rubbing stuff off a scratch-card somehow doesn't have the same appeal; and doesn't give you nearly nearly 10 minutes of fun.
Last time I picked a winner was about 20 years ago. Last time I got a place was at least 6 years ago. I know my money's going down the sewer.
/me not a betting man; apart from the GN, I don't bet on sports; I don't gamble on cards, and I've only once been in a casino. I'm not much of an investor.
If you like at the lives of the winners and the destruction that a jackpot often brings, you could say that you are financing the winner's destruction.
The key to getting rich and staying rich is figuring out how to risk other people's money. If you want to buy millions of lottery tickets, or launch a startup, or start a poker career, or anything really, it's far better to do it without risking your own security. Let other people invest in your venture for a reasonable return if you succeed, but also make sure you some non-trivial amount of equity for yourself so you make a killing if it's wildly successful.
This is how most VC backed unicorns have worked. The early investors made a lot, but the founders who mostly only risked their time, energy, and opportunity-costed salary made far, far, far better returns.
My reading is different, it’s more "together with the kelly criterion or a weaker version of it, you can say it doesn’t matter if you do". This is still "eh maybe I’ll be lucky" and not "it’s mathematically sensible" because
> What it means is that you would have to play the game for thousands of years with the jackpot being greater than 117 million each time in order to realize a positive expected return.
Are you sure? That article ignores the chance of a split pot, and a positive EV lottery jackpot increases the odds of a split pot by motivating buyers.
Remember reading in some book on probability and statistics that one will be better off betting insignificant amounts of money rather than not playing at all.
You might be thinking about the Kelly criterion [0]. It does go the other way around: even if the expected value of a lottery were positive, you should only bet insignificant amounts.
If I have a lottery, and you have a 1 in a billion chance to gain 10 billion utility, tickets cost 1 utility. How much of your current utility wealth should you put in?
Classical expected value reasoning would pour in everything, even though you are almost guaranteed bankrupt at the end of that transaction.
The Kelly criterion recommends an exact (small) percentage for this style of lotteries, and is therefore probably more sensible than decision making based on expected values.
Notable: Kelly only works if you're playing a multi-round game.
Also careful; I believe money-to-utility is already logarithmic for most people. We don't have a good intuition for what "billions of utility vs 1 utility" represents.
Kelly criterion assumes you will increase your bet when you win, to increase overall final value, and the EV is positive. It doesn't work when you expect to only win at most once.
