Is Playing the Lottery Worth the Risk?

[Academic]

The point of a lottery ticket is to make money. And who says people arnt judged for wasting money in other areas of their life? Americans could seriously use a dose of fiscal responsibility and the lottery is one part of that. (and yes I do think that buying, or more specifically financing, a new car is a tax on the stupid.)

Regardless, the OP wanted opinions on if its worth it, and to me the answer is clearly no. The amount of time, money and emotional investment put into games of chance is not worth the potential gain. My philosophy is to always bet when the odds are in my favor, and never bet when they are not in my favor.

 

[Office_Shredder]

The point of a lottery ticket is to make money

No, the point of a lottery ticket is not to make money. The point of a lottery ticket is to have a chance to make a ton of money. You're probably one of those people who would base whether to take the banker's offer on Deal or No Deal based solely on whether it's better than the average amount of money you expect to make if you reject it, thinking you're being scientific about the decision even though it's a bad one

 

[leroyjenkens]

My philosophy is to always bet when the odds are in my favor, and never bet when they are not in my favor

If you had a 50/50 chance of winning the lottery, you wouldn't play it because the odds aren't in your favor?

 

[BobG]

On the other end of the spectrum was a woman who wasn't a friend, but a friendly acquaintance. (Okay... she was nuts, but so am I so it worked out alright.) She had a huge problem with gambling. One day, she ran through her available cash on the machine and approached me for help. I lent her $1,100 out of my own pocket and it was gone in less than 15 minutes. (Before anyone yells "sucker" at me, she paid it back in full within 2 weeks, as I knew that she would.) What gritted my gears was knowing that she had 2 kids sitting at home hungry because mom fired the grocery money into a machine. The irony (disgust? disillusionment? whatever) came from the fact that the provincial government which owns and profits from the VLT's is the same one which was paying her the Social Assistance (Welfare to Yanks) money that she was gambling away.

She was in a bar!

Is it worse for her to spend her kids' grocery money on lottery tickets or on alcohol? At least the money she plugs into the VLTs winds up going to support her and her family. Who gets the money she could have been spending getting drunk?

The fact that this woman has severe problems is more relevant than which particular problem she has.

That said, I do have a hard time understanding how anyone gets enough enjoyment from gambling that they'd spend their entire evening doing it.

Playing poker at a friend's house is fun, especially towards the end of the evening when people start getting bored with the game and start doing the silly things like stick one of the cards to your forehead so everyone but you knows what your hand is. In other words, I play for the laughter, not the winning or losing.

I don't know how a person could spend an evening playing poker in a casino, though.

 

[Academic]

If you had a 50/50 chance of winning the lottery, you wouldn't play it because the odds aren't in your favor?

No, then the odds would be in my favor. The chance gets weighted by the jackpot, so if the cost of the ticket is a dollar and the jackpot is more than a dollar then with 50/50 chance the odds are in my favor.

 

[Academic]

You're probably one of those people who would base whether to take the banker's offer on Deal or No Deal based solely on whether it's better than the average amount of money you expect to make if you reject it, thinking you're being scientific about the decision even though it's a bad one

I have no idea what that is. What would I do now?

 

[DaveC426913]

I don't buy it. You are rounding down a small loss to zero loss in order to skew the cost/benefit ratio to something that justifies gambling.

What? I did not round it down to zero. It's called an acceptable loss.

Over the period of your life you are faced with a great many of such stochastic processes, statistics do come into play - its not just one data point. If you live your life by constantly rounding down small losses in your head to conveniently justify taking part in bad odds, then you will end up losing pretty big over the course of your life.

I said nothing about generalizing to "living one's life". Just like with statistics, you can't use a generalization to say anything about a specific case.

Look at the merits of this case.

$2 per week is an almost completely absorbable loss. It is smaller than granular degree to which I normally budget money - it is below the signal-to-noise ratio. This is why I am also able to give some coins to a beggar and leave lights on in my house.
These last few are acceptable habots (by many people), yet they have zero potential for benefit.

The real world is not rigidly defined by math; the real world is messy with priorities and subjective value judgments and these must be factored in.

 

[Danger]

She was in a bar!

Is it worse for her to spend her kids' grocery money on lottery tickets or on alcohol? At least the money she plugs into the VLTs winds up going to support her and her family. Who gets the money she could have been spending getting drunk?

The fact that this woman has severe problems is more relevant than which particular problem she has.

I agree that she had (maybe still has) deeper problems. Alcohol was (is) not one of them. She didn't drink anything other than coffee that I know of. I certainly never served her anything else. She was dead sober any time that I've seen her, including at her home. (And I know about her home only because her roommate was a friend who I gave a ride to once. The woman was very attractive, and actually offered herself to me a couple of times, but I knew that it was tantamount to prostitution because she would have hit me up for more money—so I avoided the situation.) The last time that I saw her was while renting her a U-Haul trailer and rewiring her car to accept their incredibly stupid proprietary connections, in preparation for her move to BC. She's a nice enough person, but... good riddance.

 

[DaveC426913]

No, then the odds would be in my favor. The chance gets weighted by the jackpot, so if the cost of the ticket is a dollar and the jackpot is more than a dollar then with 50/50 chance the odds are in my favor.

And just where would you encounter such a situation?

 

[Academic]

Well, every time I don't play the lottery is one example. Others include non-gambling random processes. For example I rarely buy extended warranties based on the math, but I once did for a TV because I wagered that I would have a high chance of breaking it because of the unique way I was going to use it, so I did buy the warranty on it gambling that it would break.

There are lots of random processes we encounter in life where the odds are in our favor and we do take them, usually they go unnoticed because we are so used to taking those odds.

Anyway, it was an answer to the hypothetical that was posed to me, if I had a 50/50 on a standard lottery ticket of course I would take it - the odds would be in my favor.

 

[Danger]

I wagered that I would have a high chance of breaking it because of the unique way I was going to use it

Apprenticing for "Mythbusters"...?

 

[DaveC426913]

What I mean is, the chance of winning is basically the same, whether you buy a ticket or not. That people get sucked into thinking "But it could be me this week!" is a sad sign that most people really, really don't understand statistics.

No, it is a sign that people do understand statistics.

This

the chance of winning is basically the same, whether you buy a ticket or not.

is a sign of someone who is bad at math.

...thinking that almost zero is basically zero.

 

[Academic]

The chance of winning is closer to zero than the cost of losing is.

 

[Academic]

Apprenticing for "Mythbusters"...?

Heh, not quite. I did end up breaking the TV by the way, just months before the warranty expired. I got a check for more than I paid for the TV and turned my Tube into an LCD. I really won out on that one.

 

[DaveC426913]

To all you folks who think that "almost zero" might as well be "zero":

I guess in addition to not buying lottery tickets, you also don't wear a helmet when cycling. Or take a life preserver in a boat. Or install smoke alarms.

Hm. I wonder if there is an acceptable cost to (ensure/avoid) a circumstance - even though, for the majority of us, it will never come to pass in our lifetime. But we pay the cost anyway because the (benefit/detriment) is so great that we decide the cost is worth it...

 

[Academic]

Ha, dude - your the one who is claiming that the cost of a lottery ticket is effectively zero. It goes both ways. ;)

 

[bp_psy]

The chance of winning is closer to zero than the cost of losing is.

What exactly is the relevance of this comparison?

 

[Academic]

To decide whether to play the lottery or not, of course. Its the same kind of analysis we do throughout our lives in a variety of settings.

 

[bp_psy]

To decide whether to play the lottery or not, of course. Its the same kind of analysis we do throughout our lives in a variety of settings.

When you are buying a lottery ticket you are buy the very unlikely probability of winning. Once the ticket is in your pocket the transaction is over. You do not actually lose anything since you just bought something. If you do not win nothing the product you payed for was delivered. In the end the decision to play is determined by your desire to buy that product or not. I do not play but I know some people that play every week. Their attitude is along those lines.

 

[Danger]

...thinking that almost zero is basically zero.

Close enough as makes no difference to the vast majority. It's a losing proposition.
I'm going to avoid the lottery situation, because I'm not an expert and there are variables that are up to the consumer.
I do, however, have a limited amount of expertise regarding VLT's. My primary job at two of the bars was maintaining the machines and doing the accounting for them, and the same for the change machines. I'll stick with the last one for now. At that time, the population of my town was around 8,000; it's about double that now. I had 3 VLT's under my control. Two other bars in town have 8 machines each, one has another 3, my previous employer has 6, and I think that Boston Pizza has half a dozen or so as well. The one that I worked at was somewhat remotely located and not tremendously popular. Even at that, I was forwarding well over $100,000 per week to the Alberta Gaming Commission. During that same typical week, I paid out perhaps $5,000 to the "winnners".
Whenever I was down in Vegas to play pool, I spent most of my free time playing nickel slots, and only in the "loose corner" of the Riviera or a couple of similar machines in other establishments such as Barbary Coast. Those are set for a 97% payback rate. I could sit all day with a $2.00 roll of nickels, and get all of the free Scotch, beer, Margueritas, etc. that I could handle (and I have a huge capacity) while doing it. An entire day and night of entertainment for $2.00. (Okay, tack on another $20 for gratuities; I always tipped at least $1.00 for each drink delivery.)
Conversely, the VLT's owned by the Alberta Government offer something on the order of a 73% payback. That statistic, along with other machine perameters, is adjustable at any time through the real-time data link that is maintained between the machines and the Gaming Commission. (And in case anyone with nefarious intent is reading this, I hasten to point out that any interruption of that data link immediately locks the terminals down. No cheating that way.)

 

[leroyjenkens]

No, then the odds would be in my favor. The chance gets weighted by the jackpot, so if the cost of the ticket is a dollar and the jackpot is more than a dollar then with 50/50 chance the odds are in my favor.

So you would say that winning $1.01 would be in your favor to spend a dollar on a 50/50 chance?
Well, what if that $1.01 was turned into 300 million? When would the odds be in your favor to spend a dollar? Well, if 50/50 odds are worth the risk of 1 dollar to win 1.01 dollars, then 1/200,000,000 odds should be worth the risk of a dollar to win 300 million dollars.

 

[Jack21222]

And I don't get that "emotional itch" either. To me, it's like buring money for pleasure...I don't see where the pleasure comes from. Yes I understand some people get entertainment out of it, but I absolutely don't get it. But that's no big surprise to me, I'm out of step with a lot of stuff in mainstream culture.

Human brains (along with many other mammals) can easily be taken advantage of by a variable ratio reward schedule. I'm not a neuroscientist so I don't know the exact mechanism behind it, but we go crazy when something rewards us on a variable ratio schedule.

If you've never felt the emotional pull of the variable ratio reward schedule, consider yourself lucky. There's almost a physical feeling of illness to not "press the lever" (or buy the ticket, in this case, or fight a boss in a MMORPG for another example). Buying that lottery ticket relieves that sick feeling and promotes "what-if" daydreaming.

Of course, I can get addicted to things easily. That's why I've never had a sip of alcohol, I'm afraid of getting addicted. As a teenager, I was addicted to a MMORPG. I also believe I have a gambling addiction of sorts, but I do that in moderation.

Again, I don't think it has anything to do with being bad at math, no more than a heroin user is necessarily "bad at biology."

So you would say that winning $1.01 would be in your favor to spend a dollar on a 50/50 chance?
Well, what if that $1.01 was turned into 300 million? When would the odds be in your favor to spend a dollar? Well, if 50/50 odds are worth the risk of 1 dollar to win 1.01 dollars, then 1/200,000,000 odds should be worth the risk of a dollar to win 300 million dollars.

You're not factoring in taxes. The Maryland lottery has a game called Multi-Match whose tickets actually had a positive expected value once the jackpot got above a certain point, but once taxes were factored in, the EV went negative. Yes, I bought a few tickets anyway.

 

[Office_Shredder]

So you would say that winning $1.01 would be in your favor to spend a dollar on a 50/50 chance?
Well, what if that $1.01 was turned into 300 million? When would the odds be in your favor to spend a dollar? Well, if 50/50 odds are worth the risk of 1 dollar to win 1.01 dollars, then 1/200,000,000 odds should be worth the risk of a dollar to win 300 million dollars.

Leroy, when he says the odds are in my favor, he's talking about the expected gain on a ticket vs the cost of the ticket. You're making a mountain out of a molehill that you yourself dug

You're not factoring in taxes. The Maryland lottery has a game called Multi-Match whose tickets actually had a positive expected value once the jackpot got above a certain point, but once taxes were factored in, the EV went negative. Yes, I bought a few tickets anyway.

Clever, but doesn't the state lottery agency have to break even on its own? I thought that was the standard set up.

 

[Jimmy Snyder]

I guess in addition to not buying lottery tickets, you also don't wear a helmet when cycling. Or take a life preserver in a boat. Or install smoke alarms.

Surely there is a difference between increasing risk and reducing risk.

 

[lisab]

Human brains (along with many other mammals) can easily be taken advantage of by a variable ratio reward schedule. I'm not a neuroscientist so I don't know the exact mechanism behind it, but we go crazy when something rewards us on a variable ratio schedule.

If you've never felt the emotional pull of the variable ratio reward schedule, consider yourself lucky. There's almost a physical feeling of illness to not "press the lever" (or buy the ticket, in this case, or fight a boss in a MMORPG for another example). Buying that lottery ticket relieves that sick feeling and promotes "what-if" daydreaming.

Of course, I can get addicted to things easily. That's why I've never had a sip of alcohol, I'm afraid of getting addicted. As a teenager, I was addicted to a MMORPG. I also believe I have a gambling addiction of sorts, but I do that in moderation.

Again, I don't think it has anything to do with being bad at math, no more than a heroin user is necessarily "bad at biology."

Hmm, that brings to mind something I read a long time ago about the 'Pavlov's dog' experiments (conditioned response). You know, the whole ring-a-bell-and-salivate thing. Supposedly, if during the training you ring the bell and occasionally *don't* give the reward, the response is learned quicker than if the reward is given every time. So maybe it's the repeated losing that keeps bringing them back to buy more tickets haha.

I think my strong aversion to any sort of gambling is pretty easily explained...there was a time in my life that I was very poor. I still have my brain somewhat calibrated to that 'value of a dollar' scale, even though my fortunes have changed significantly. So like I said, I can't imagine getting pleasure from playing a game that I'm all but sure to lose.

 

[lisab]

No, it is a sign that people do understand statistics.

This
is a sign of someone who is bad at math.

...thinking that almost zero is basically zero.

OK so when I part with my dollar and get my ticket, my chance of winning is aaaaaalmost zero. Once I look at the numbers, ok then it's exactly zero.

Sounds fun, where can I sign up .

 

[BobG]

To all you folks who think that "almost zero" might as well be "zero":

I guess in addition to not buying lottery tickets, you also don't wear a helmet when cycling. Or take a life preserver in a boat. Or install smoke alarms.

Hm. I wonder if there is an acceptable cost to (ensure/avoid) a circumstance - even though, for the majority of us, it will never come to pass in our lifetime. But we pay the cost anyway because the (benefit/detriment) is so great that we decide the cost is worth it...

Surely there is a difference between increasing risk and reducing risk.

Moneywise, it's the same. In a class I teach, I always get asked why we don't deorbit all satellites after we're done with them. It takes the same amount of energy to deorbit a satellite as it did to put it into orbit in the first place. Only the sign has changed. The only difference is you fire the thrusters in the opposite direction.

Granted, it's hard to put an arbitrary value on a human life. I consider my own life to be very valuable, so helmets and life preservers are a good investment.

I imagine my ex would buy me a helmet and a life preserver (I pay her alimony). I'd probably decide she could buy her own if she wanted one (I pay her alimony). Everyone values a particular person's life differently based on their own criteria.

But insurance is always a bad deal mathematically. The average person always pays out more in premiums than they collect - especially if they focus on the cost of the premiums more than the clauses about receiving benefits. None the less, buying things like car insurance, home insurance, health insurance, etc is usually a smart choice.

But people do tend to put more emphasis on avoiding risk than on achieving gain.

 

[DaveC426913]

Surely there is a difference between increasing risk and reducing risk.

The way I worded it, you can see that it's the same argument.

We pay a small amount of money, knowing that, despite the high likelihood of the event not occurring, it is still worth it, just in case it does occur.

The vast majority of us will ride our bikes every day for the rest of our lives, and never find the helmet making itself useful. Yet we pay the money. Same with life jackets and smoke detectors.

Why?

Because "almost zero" is most definitely not the same as "zero" when the stakes are high.

 

[DaveC426913]

OK so when I part with my dollar and get my ticket, my chance of winning is aaaaaalmost zero. Once I look at the numbers, ok then it's exactly zero.

Sounds fun, where can I sign up .

See my comment about bicycle helmets, life jackets and smoke alarms.

 

[Jimmy Snyder]

But insurance is always a bad deal mathematically.

The point of insurance is not to maximize profit. It is to minimize risk.

 

[Office_Shredder]

All these calculations early in the thread for how much money you really waste on a lottery ticket don't take into account that some of the money spent on lottery tickets goes back into making the prize pool larger. I pick Maryland here only because I found this first on their website

http://www.mdlottery.com/benefits.html

60.3% of the money brought in by revenue was spent on prizes to players, so you're really losing 40 cents on each ticket that you buy on average

New Jersey lottery:
http://www.state.nj.us/lottery/money/4-0_where_money_goes.htm

57% goes back as prizes, so again we see you only lose about 40 cents on each ticket you buy.

The point of insurance is not to maximize profit. It is to minimize risk.

All the arguments against the lottery is that on average you lose money buying a ticket. On average, you lose money buying insurance. So either you accept insurance is a raw deal, or you accept that the single argument: "it doesn't earn you money on average" is a bad one.

Insurance exists because large swings in our money supply hurt a lot more than small ones. Why can't lottery tickets work the same way? A small change in my money supply is not noticeable; a large one is

 

[Jimmy Snyder]

All the arguments against the lottery is that on average you lose money buying a ticket. On average, you lose money buying insurance.

When you buy insurance, you reduce risk that exists. When you gamble, you create risk where there was none.

 

[Danger]

Human brains (along with many other mammals) can easily be taken advantage of by a variable ratio reward schedule. I'm not a neuroscientist so I don't know the exact mechanism behind it, but we go crazy when something rewards us on a variable ratio schedule.

If you've never felt the emotional pull of the variable ratio reward schedule, consider yourself lucky. There's almost a physical feeling of illness to not "press the lever" (or buy the ticket, in this case, or fight a boss in a MMORPG for another example). Buying that lottery ticket relieves that sick feeling and promotes "what-if" daydreaming.

Of course, I can get addicted to things easily. That's why I've never had a sip of alcohol, I'm afraid of getting addicted. As a teenager, I was addicted to a MMORPG. I also believe I have a gambling addiction of sorts, but I do that in moderation.

Again, I don't think it has anything to do with being bad at math, no more than a heroin user is necessarily "bad at biology."
You're not factoring in taxes. The Maryland lottery has a game called Multi-Match whose tickets actually had a positive expected value once the jackpot got above a certain point, but once taxes were factored in, the EV went negative. Yes, I bought a few tickets anyway.

Very nice post, Shredder. I'm an alcoholic, and can't seem to quit smoking even though said smoking allows me only a few months to live. Gambling is governed by the same section of the brain (the "addiction centre" in the hippocampus, hypothalamus, amygdala, or whatever; sorry, but I'm not a neuroscientist either) as my problems are. What non-gamblers and recreational gamblers don't seem to understand is that an addicted gambler gets a blast of endorphins while placing a wager. The thrill is not in winning; it's in placing the bet and awaiting the outcome.
As for the tax thing... (There are no smilies to express my feelings... )
All lotteries that I know of in Canada are tax-free in that the winner(s) aren't susceptible to income tax resultant of the lottery. What nobody seems to understand is that the lottery itself is a tax. The government owns the gambling devices, and the house always wins. We have enough of that crap already. We have to pay GST (Goods and Services Tax) on tobacco and alcohol products, even though over 90% of the price of the originals is already tax. How the hell can you legitimately tax a tax?

 

[DaveC426913]

In a class I teach, I always get asked why we don't deorbit all satellites after we're done with them. It takes the same amount of energy to deorbit a satellite as it did to put it into orbit in the first place. Only the sign has changed. The only difference is you fire the thrusters in the opposite direction.

What?? This is not true.

To deorbit a satellite, all you have to do is make a very small adjustment to its orbit; the atmo will do the rest.

What you're describing is how much energy it would take to bring the entire satellite plus all its discarded bits back to the launchpad with a final velocity of zero (gentle, powered touchdown, not even using parachutes) - which is an outrageous idea.

omg, I hope you don't teach science.

 

[DaveC426913]

All these calculations early in the thread for how much money you really waste on a lottery ticket don't take into account that some of the money spent on lottery tickets goes back into making the prize pool larger. I pick Maryland here only because I found this first on their website

http://www.mdlottery.com/benefits.html

60.3% of the money brought in by revenue was spent on prizes to players, so you're really losing 40 cents on each ticket that you buy on average

Sorry. This is completely illogical.

I may buy a ticket for a dollar, but I don't get that 60 cents back! Sure, technically someone is, but it's not me.

 

[Office_Shredder]

Sorry. This is completely illogical.

I may buy a ticket for a dollar, but I don't get that 60 cents back! Sure, technically someone is, but it's not me.

I never said you would get 60 cents back. But for example on the first page you see people saying that the expected gain on a lottery ticket is -70 or 80 cents and that's not true

Also Danger, that's not my post

 

[Danger]

Also Danger, that's not my post

Oops...
My apologies to both you and Jack. That's what I get for trying to watch STTNG, drink copious amounts of beer, and respond to threads all at the same time.
I stand chastized, but I'm damned well going to finish this beer anyhow.

 

[BoomBoom]

I started many years ago buying just one ticket for each drawing using the same numbers everytime. Over that period of time, I've won almost as much as I have paid in (most of which came in a 5 out of 6 winner for $1,000).

I feel like since I am using the same numbers, that I am now compelled to keep playing, because my worst nightmare at this point would be to NOT buy a ticket and then see my numbers come up!

 

[Danger]

I feel like since I am using the same numbers, that I am now compelled to keep playing, because my worst nightmare at this point would be to NOT buy a ticket and then see my numbers come up!

And we now witness the birth of a new addict.

That's how this **** works; it's insidious. Back to the VLT's here, or the slots in Vegas: You would not believe the number of people of my acquaintance who don't understand how the machines work. I've seen some idiot plop $500 into a terminal, walk away due to lack of money, and then get irritated when the next person to sit down at the same machine hit big. "That's mine!", they inevitably wail. "If I'd put in another Looney, I would have won that!" (Yeah... and if a bullfrog had wings, it wouldn't bump its *** so much. ) It doesn't matter a damn what has transpired before; every single card draw, handle pull, keno pick, or whatever ends up the same way, as a number that is spit out by the on-board computer, and has the same odds of winning as if it was the first time. The machines have 2 pseudorandom number generators running in tandem. At the exact microsecond that you close the switch by pulling a handle, touching a screen, or whatever, the microprocessors poll themselves and decide upon a verdict as to what should result to the gambler. I could come along after you've lost $1,000 and win $1,000 with the push of a single button. The machine is not 'due' to hit any more than it was the last time. Addicted gamblers can't suborn themselves to that reality; they have to try because they feel that it is their right to win. They figure that a machine that has been dry for a couple of days is overdue for a huge payout. It doesn't work that way.

 

[leroyjenkens]

I started many years ago buying just one ticket for each drawing using the same numbers everytime. Over that period of time, I've won almost as much as I have paid in (most of which came in a 5 out of 6 winner for $1,000).

I feel like since I am using the same numbers, that I am now compelled to keep playing, because my worst nightmare at this point would be to NOT buy a ticket and then see my numbers come up!

That seems to be the most common lottery story. An incredible number of people, who play the same numbers each week, had their numbers come up the one week they didn't play.

 

[Danger]

Law of averages, Leroy.
The universe is an evil place, within which we are lucky enough to exist.

(I'll maybe elaborate upon that further if/when I reintroduce myself to sobriety. For now, blissfully pissed is working quite comfortably. )

 

[BoomBoom]

And we now witness the birth of a new addict.

Well, I wouldn't consider $3/week to be a huge gambling problem. Lord knows, I waste much more $$ on far more frivolous things. To me, for that small price of admission, a slim chance is better than none...and besides, the money goes to a good cause IMO.

 

[BobG]

What?? This is not true.

To deorbit a satellite, all you have to do is make a very small adjustment to its orbit; the atmo will do the rest.

What you're describing is how much energy it would take to bring the entire satellite plus all its discarded bits back to the launchpad with a final velocity of zero (gentle, powered touchdown, not even using parachutes) - which is an outrageous idea.

omg, I hope you don't teach science.

The atmosphere is really, really thin where geosynchronous satellites orbit. Geosynchronous satellites are about 36,000 km above the Earth. Atmospheric density tables go up to about 1500 km. After that, the atmosphere is so thin, it's not worth calculating atmospheric drag.

But, true, once the satellite gets down somewhere around the altitude of the space station, atmospheric drag is going to be the device sucking energy out of the orbit instead of thrusters (but it's still the same amount of energy regardless what the source is).

(Usually, the question is asked in reference to why we push geosynchronous satellites higher once we're done with them instead of deorbiting them.)

 

[Danger]

Well, I wouldn't consider $3/week to be a huge gambling problem. Lord knows, I waste much more $$ on far more frivolous things. To me, for that small price of admission, a slim chance is better than none...and besides, the money goes to a good cause IMO.

It's not the amount that he's spending that worries me; it's why he's spending it. He makes it sound as if it's an obligation rather than a recreation.
I won't fault anyone for gambling any more than I would accept someone trying to fault me for my drinking and smoking. All of the aforementioned are out of our conscious control.

 

[BobG]

When you buy insurance, you reduce risk that exists. When you gamble, you create risk where there was none.

What risk? The dollars gone. It's not at risk any more. Same as the money you spend on insurance is gone as soon as you mail it into the insurance company. You won't have a chance of losing more dollars just because you already spent one dollar.

In one instance, you spent money to reduce risk. In the other, you spent money to create a chance of benefit.

I would still revise my statement about insurance being a bad deal mathematically. Insurance companies actually pay out more money in claims than they take in from premiums. The profit comes from the sporadic nature of paying out a large amount of claims. Money taken in each month is invested and it's the increase in value of the investments that provides the profit.

 

[hamster143]

As lisab said, its a tax on people who are bad at math and statistics.

The monetary value of playing a game of chance is easy to calculate, for each instance of playing the game you multiply the amount you could win by the probability of winning and the amount you could lose by the probability of losing.
<math skipped> There is no financial reason to play such a game, so you shouldn't think to play it for the chance of winning rather than the fun of playing.

No offense, but this is what happens when you couple excessive knowledge of mathematics with insufficient understanding of the real world: you're able to make incorrect conclusions from correct data. It is people like these who made the Great Financial Meltdown of 2008 possible.

Yes, the expectation value of payout of one lottery ticket (less the price of ticket) is typically negative.

HOWEVER, the expectation value is deeply irrelevant, unless you intend to invest the amount of money that is at least remotely close to inverse chance of winning a jackpot.

Odds of winning California Super Lotto are 1 in 41,416,353. One ticket is $1. Therefore, if you were to spend, say, $400,000,000 on tickets over your lifetime, you'd be able to use the expectation value to predict your expected winnings (-0.71 * 400,000,000) and, with some more advanced probability theory, to put some sigmas around that.

On the other hand, if you're only going to buy 1000 tickets over your lifetime, the expectation value does not tell you squat.

Instead, you should estimate your expected lifetime earnings, estimate relative desirability of different end-of-life financial outcomes, and then use probability theory to ask yourself "what strategy gives me the best expectation of outcome?"

For most people, the optimal strategy is to spend as much money on the lottery as they can without otherwise constraining themselves financially (maybe, 1% of after-tax earnings?), because that maximizes their chances of retiring rich (say, with $10,000,000 or more by the age of 65).

 

[turbo]

My wife and I spend 2-4 bucks a week on high-odds lottery tickets. No biggie. We don't have any loans (haven't for decades) and don't owe anybody anything. We get lottery tickets just for the entertainment. If we hit a good prize, OK. If we hit the Superball, we'll set up trusts for the grand-nieces and grand-nephews so they can all go to college, and we'll probably set up a trust to benefit low-income children and their families for a LONG time. We would still live here and garden. We'd probably like to buy a camp on a remote trout pond to the north of here, but what else do we need? We've already got what we need, and a camp out in the boonies would only be a "want" not a need.

 

[Danger]

My wife and I spend 2-4 bucks a week on high-odds lottery tickets. No biggie. We don't have any loans (haven't for decades) and don't owe anybody anything. We get lottery tickets just for the entertainment. If we hit a good prize, OK. If we hit the Superball, we'll set up trusts for the grand-nieces and grand-nephews so they can all go to college, and we'll probably set up a trust to benefit low-income children and their families for a LONG time. We would still live here and garden. We'd probably like to buy a camp on a remote trout pond to the north of here, but what else do we need? We've already got what we need, and a camp out in the boonies would only be a "want" not a need.

I am herewith offering myself up for adoption. I am, after all, an orphan... and a mere child by your standards.

 

[turbo]

I am herewith offering myself up for adoption. I am, after all, an orphan... and a mere child by your standards.

I see a border-issue at hand in the adoption process.

Despite our common interests, you cannot come here, and frankly, I cannot go to Canada anymore. This ain't the EU.

 

[russ_watters]

Instead, you should estimate your expected lifetime earnings, estimate relative desirability of different end-of-life financial outcomes, and then use probability theory to ask yourself "what strategy gives me the best expectation of outcome?"

For most people, the optimal strategy is to spend as much money on the lottery as they can without otherwise constraining themselves financially (maybe, 1% of after-tax earnings?), because that maximizes their chances of retiring rich (say, with $10,000,000 or more by the age of 65).

1% of your after-tax income spent on lottery tickets? Is that a joke?

If you add money to a typical 401k at $1000 a year and earn 8% return, at the end of 40 years, you'll have $260,000 with which to retire (a typical 401k is more like 5-10% - and includes free money from your company). If you do the same with lottery tickets, you'll likely have about $28,000, with still a rediculously small chance of having a whole lot more (around 1:1000). Why on Earth would you think the small odds of doing a lot better is worth the risk of being broke vs the reward of a comfortable lifestyle in retirement?