Why we play lotteries. And why it’s a good idea if done right.
Do you ever dream about winning the lottery?
Sure you’ll find people who think that buying lottery tickets is among the silliest decisions a person could make. And it is true that the odds of winning anything substantial are very much stacked against you.
There is no doubt that people should not spend money on lottery tickets that they can’t afford to lose. If you have a gambling problem, or are financially destitute, it is a terrible idea. And for anyone to stake his or her financial future on lottery tickets is beyond foolish.
But – and this is the important part – there are a couple of dimensions that these tut-tutted warnings miss, perhaps fueled by a class divide between those who commonly buy lottery tickets and those who choose to throw away money on other things like expensive wine or mansions.
As long as one thinks about the purchase of lottery tickets the right way — again, purely a consumption good, not an investment — it can be a completely rational decision. The biggest and most generally applicable reason buying lottery tickets is a non-terrible idea is this: It is fun to imagine one’s future after arriving at vast wealth.
Who doesn’t daydream about what sorts of houses and cars and airplanes one would buy with the half-billion-dollar Powerball grand prize? (It’s more like around $340 million in cash value terms; the larger number is if the prize is taken as an annual payment.)
Fantasizing about what you would do if you suddenly encountered great wealth is fun, and it is more fun if there is some chance, however minuscule, that it could happen. The $2 price for a ticket is a relatively small one to pay for the enjoyment of thinking through how you might organize your life differently if you had all those millions.