Normally I don’t seek out news, but sometimes just being on the internet you can’t help but become aware of some trendy current event that has the country in a buzz of excitement. This week the Powerball lottery jackpot grew to1.3 billion dollars, yes billion with a ‘B’.
Now happy philosophers do NOT play the lottery under any circumstance. It is a tax on people prone to magical thinking, addiction and poor math skills. If you currently play the lottery, stop now.
No, I’m not kidding.
When the jackpot gets this high, people that ordinarily would not play the lottery throw their hat into the ring. Fuzzy math and daydreams trump logic.
Once the expected payout approaches or surpasses the odds of winning, the math tax argument starts to fade a little, but it’s still a raw deal that usually makes no sense.
The odds of winning the Powerball are about 1 in 300 million. After taxes and devaluation for a lump sum payout (the 1.3 billion is an annuity, not a big 4 foot long check that someone brings to your door with a cameraman to catch your ecstatic reaction to put on a television commercial) you are left with about 1/3 or a little over 400 million.
What this means is that IF you bought every combination of numbers (2$ per ticket = $600 million), and IF no one else wins (if this happens you have to split it) you would be 200 million dollars underwater. In fact the jackpot has to get to about 1.8 billion to break even and that still doesn’t factor in the multiple winner issues. We are probably talking $2.3-2.5 billion range to get to some sort of mathematical parity. We are not there yet folks, move along, nothing to see here.
There is almost NEVER a mathematically sound reason to ‘invest’ in a lottery ticket.
But math and expected payouts are not the heart of the matter here. There are better reasons not to play.
It is dangerous. That’s right.
As Justin over at Root of Good points out:
Let me drop some Math on you. The odds of winning the Powerball jackpot are 1 in 292 million. Given the national average fatality rate of 1 death per 100 million miles driven, a four mile round trip to the gas station equates to a 1 in 25 million risk of dying in an auto accident. For a freaking lottery ticket. The odds are stacked against you. You are 12 times more likely to die in a car crash while getting the ticket as you are to pick all six Powerball numbers.
By the way, your odds of being struck by lightning this year are 1 in 700,000. You are 417 times more likely to get struck by lightning than to win the Powerball.
You are not going to win. Someone is, but it’s not going to be you!
Well, I’m at the store anyways and I just want to play. I don’t care about your fancy philosopher math. What’s the harm?
Good question. Glad you asked. As always I’m here with the answer!
Every dollar you waste on something unproductive is a lost opportunity to use that dollar for something productive. There is opportunity cost to every transaction. Money is your life energy that you trade your time for and should be used only for things that bring you joy or fulfill your fundamental needs. A few dollars here, a few dollars there; pretty soon we are talking about real money. It’s insidious.
Don’t confuse pleasure for joy. That little dopamine burst you get from the anticipation of holding the winning ticket is not healthy. It’s a little seed of gambling addiction. Most will be fine, but a few will go down that dark path. The biochemical response to gambling is the same as with any addictive drug.
The lottery is state sponsored heroin
Yeah, put that one on a billboard. If any lottery want to use that in their advertising campaign go for it.
- States with lotteries had higher levels of income inequality than states without a lottery.
- Lottery players tend to be disproportionately poor.
- Lottery playing is associated with alcohol and drug abuse.
Interpret these statements however you want. Causation, correlation, whatever. This is not a demographic I want to be emulating.
But let’s get to the heart of the matter.
1.3 billion dollars won’t make me happier than I am now, and in fact I think it may make me less happy. Do a google search on lottery winners and happiness and you will find poor correlation. There was a famous study comparing the happiness level of lottery winners to new paraplegics and found no difference in long-term happiness. In fact, they found the lottery winners experienced significantly less pleasure from mundane events. Yeah, once you win the lottery that perfectly average cup of coffee from your cheap garage sale Mr Coffee maker won’t taste as good. Peaceful walk around the neighborhood? Birds chirping? They will all suck compared to pre-lottery mental state. I’m not making this up…it’s science!
I know what you are thinking…you are unique and things will be different. Science applies to other people, you are a special snowflake.
I would roll my eyes but I am too kind for that, and will instead show a look of concern and shake my head like a caring friend.
Just remember, our brains are terrible at predicting how happy future situations will make us.
A lottery windfall brings new problems you may not appreciate while basking in the fantasy of swimming around in pools of money like Scrooge McDuck. You may feel subtle twinges of guilt by winning the lottery. You will be under public scrutiny as lottery winners are public information. Your friends and family will view you differently. They may expect favors. They may resent you. Sudden unearned financial freedom may make your work less fulfilling. How are your kids going to deal with this sudden change? Will their friends treat them differently?
Alright, I’ve got an idea. I’ll just keep enough to live comfortably and give the rest away to charity.
Now we are getting somewhere, but this is still an unwanted burden that most people can do without. To be honest I really don’t want the responsibility and stress of trying to figure out how to allocate a billion dollars to charity. Winning this money would complicate my life – I value simplicity. I would have to hire accountants, tax attorneys etc.
If simplicity and financial freedom are what I value (and I suspect you value these things too) there are much healthier and mathematically sound ways to get there.
Take whatever money you are gambling right now and put it into a retirement account, or invest it back into yourself by upgrading your skills and value. Unlike a lottery ticket the payout expectancy is positive. I know it’s not as sexy as a lottery ticket but I’m not here to tell you what you want to hear. I’m telling you what you need to hear, the truth.
PS: If the future winner happens to read this blog can you please write me a check for 1 million. That’s all I need. I will share some of that burden for you. After all, I am a special snowflake and I can handle it!