Friday, March 29, 2013

The Wisdom of Willy

While I was fumbling for the keys in my pocket this morning, two NJ Lottery tickets fell out. I had forgotten about them. I don’t buy them often, but every now and then – usually at moments when I see a couple singles in my wallet while buying some small item – I’ll plunk down two bucks for two Pick-6s. I prefer the Pick-6 because the payout is always over a million dollars and sometimes is as much as 20 million: life-changing amounts, unless you already have 20 million. Also, the odds of winning are merely akin to being struck by lightning, as opposed to the Power Ball odds of being struck by a falling Boeing 787. I doubt I’ve ever spent as much as $50 in a year on them (more commonly $20). Was either of today’s rediscovered tickets a winner? No. In fact, somehow not one of the 12 numbers matched a single number from the drawing. This seems improbable enough that I think it ought to pay something – but it doesn’t.

Game theorists will tell you that playing the lottery is irrational. (Ruder ones actually will call it “a tax on stupidity.”) In a strict mathematical sense, of course they are right. The chance of being a winner is too low to take remotely seriously. The more you spend, the more you lose. While game theorists disapprove of all gambling against house-odds for similar reasons, they see state lotteries as the worst legal type of gamble. You’re better off (or, rather, less bad off) betting in Las Vegas or Atlantic City. State lotteries pay out as prizes only 30% of the cash collected. A private casino slot machine typically pays back between 82% and 98%. A roulette wheel pays 35-to-one on a wheel with 37 (French) or 38 (American) numbers.

What of the handful of people who do win big lottery prizes? According to a recent Tru.TV documentary The Lottery is Cursed, sudden riches can ruin their lives. Twelve such tales are described here: .

Yet, the theorists miss something. What they miss is this: $20 per year will not impact my life in any noticeable way. (I can skip a lunch, if I really want to make up the difference, which probably would be good for me anyway.) A lottery win would make an enormous impact. For the cost of a truly negligible amount of money per year, the chances of winning a fabulous amount are better than zero – not appreciably better, but better. People do get struck by lightning, after all. (On the other hand, if you’re spending more than you can afford to throw away, I agree with the number-crunchers.) $1 is the price of a dream, and people pay for dreams all the time – that’s why there is an entertainment company called DreamWorks. Not all decisions can be (or should be) made purely by calculating relative probabilities.

As for the curse, I’ll risk it. While the cautionary tales on Tru.TV are edifying, I think it is possible, with a little wisdom, to evade the curse’s clutches. Remember the words of Willy Wonka: "But Charlie, don't forget what happened to the man who suddenly got everything he always wanted...He lived happily ever after."

A little known but very good gambling flick set in the 1950s: The Big Town (1987). Matt Dillon to Diane Lane when she says she can change: “the odds are against it.”

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