[mike777]

http://news.yahoo.co...-160916556.html


jackpot has surged again — to an unprecedented $640 million.



Pot just hit 640 million so I figure it must be time to buy my ticket.

I think Helene in her new job said this sounded like a sure thing so, if I heard her correctly,.....how could I argue with the stats lady.

[barmar]

If you could be sure that you would be the only one playing your numbers, it would definitely be worth it. There are about 176 million different combinations, so it's worth buying 3 tickets when the jackpot is over $530M (but when you take taxes into account, this break-even point is over $700M).

However, the news this morning said there were 3 winning tickets sold, so they'll each only get around $213M before taxes, or about $130M after. So when you include splitting the prize with other winners, the expected value of a lottery ticket can be less than you pay for it, even with this huge jackpot.

[kenberg]

Except for some low level charity things where I typically don't even check to see if I won, I don't think I have ever bought a lottery ticket in my life. My wife mentioned that a guy on NPR was suggesting strategies based on what patterns of numbers people usually choose. This would not increase of winning but it might increase your chance of not having as many co-winners to share with if you do hit it.

Still it is not worth it. Winning 640 million or 300 million or even 100 million is, as a practical matter, the same thing. How many yachts, or how many senators, do you really want to buy? I look at it as "If I win I could buy anything I want, and that holds as soon as the jackpot gets over 100 million, and probably long before". But the chances of winning are too remote to seriously consider it.

I guess that we may as well accept that this is how states are going to raise money. Maybe the state should go into the drug business instead, I hear that there is a lot of money to be made there.

[Gerben42]

There should be a cap on lottery prizes, more than say $10M is just not getting anywhere. Better make 64 people happy with $10M than making one person waste $640M.

I would still not play... I am not into negative EV games somehow...

[barmar]

But if people didn't have the hope of winning 10's or 100's of millions, they would be less likely to play. It's the huge jackpots that get millions of people to wastespend their money on the lottery.

[awm]

I think its a mistake to apply EV to the lottery. With such large prizes the nonlinear value of money becomes a factor. If I'm willing to play for a 640 million prize, I'd be willing to play for 10 million also even though the EV is obviously very different.

Or in my case, not play either way.

[barmar]

Well, in general the lottery is a sucker's game. The overall chance of winning any prize is only 1 in 40, and most of them are very small prizes -- it's far worse odds than any casino game.

If you're in decent financial shape, I suppose you can say "Well, it's only $1, I'll never miss it, and it would be nice if I won something." But most of the people who play the lottery on a regular basis are poor, living paycheck to paycheck. They're really throwing away money that they can't afford, on worse than a pipe dream (there's a reason it's often called a "stupidity tax"). Probably many of them are also alcoholics or drug addicts, but at least those substances suppress some of the misery of their lives.

The only time you can every really justify playing is when the jackpot is so high that the EV approaches the ticket price. But after splitting the prize, paying taxes, and reducing the prize if you choose a lump sum instead of an annuity, even last week's huge jackpot isn't really close.

[Fluffy]

 kenberg, on 2012-April-01, 05:41, said:

Still it is not worth it. Winning 640 million or 300 million or even 100 million is, as a practical matter, the same thing. How many yachts, or how many senators, do you really want to buy? I look at it as "If I win I could buy anything I want, and that holds as soon as the jackpot gets over 100 million, and probably long before". But the chances of winning are too remote to seriously consider it.

This is a common way of thinking yet I am pretty sure that by the time you get that much money and spend a little you woulld soon realice you wish you had more. Just hanging up with other rich people and seeing them spending twice as you would make you not as happy as you would if you could waste as much. Stupid way of thinking?, yes it is!, and you would like to think you wouldn´t be that way. I also like to think I would be an honest politician, but the reality is that I would end up doing the same as others.

I think everyone thinks he would want to be more rich, the problem is nobody looks below, I am wealthier than about 70% people in my country just because I don´t have a mortage, and I am wealthier than 90% of the world (everyone who can read this probably is also), yet I would never call myself rich.

There might be a point where you truly have more than you can spend, but a 10 lotterys wouldn´t even get close.

[Phil]

I've worked with and known a lot of wealthy people throughout my career. Money is about keeping score, and the more you have the better you are at the game, and the myth is much more important than the reality and its true if you have 10 MM or 100 MM or 1 BB. There are people that are completely satisfied with their wealth, and simply see it as financial security, and never as points on the board.

At the end of the day, things like yachts aren't really that important to people, it gets used maybe 20 times a year? However, something like an 80' yacht sends a clear message to others, and that message is "I'm better than you", which translates to, "I worked harder than you, or I'm smarter than you", both of which are positive attributes.

Back to lotteries. The taxation policy seems completely unfair to me since it is effectively a zero-sum (or .8 sum) game. Its not like the 700 MM losers of the lotteries are taking a deduction of their losses off of their taxes. I suppose in theory, a winner could gather up all of his losing lottery tickets from past year and offset his tax liability from that, but this would have a de minimus effect.

[kenberg]

I have always regarded having enough money as very important and having more than enough as very unimportant. My definition of "enough" has not much changed over the years. When I was a grad student with a wife and child, I did not have enough. That was very clear to me. Now it is different. If someone wants to give me some money I will take it, I still work some and I don't work for free, but I am not actively seeking ways to increase my wealth. When I need a tree cut down I hire someone, but I mow my own grass. Not because I can't afford to hire someone, I just prefer cutting it myself. Taking a bridge cruise seems like a colossal waste of time, I guess I could afford it if I felt differently.

I was happy growing up, at least pretty much so. My parents loved to fish, we would rent a cabin in northern Minnesota where we used a pump to get water and used outdoor toilets. I played with the son of the owners when I wasn't out fishing. The boat was powered by a three and a half horsepower outboard made by Champion (motto: If we don't have it it can't break"). My mechanical education began with caring for this simple motor. When older, I bought my own car and dated rich girls and poor girls, indifferent to which. I still remember biking out to this girl's lake home to use their inboard Merc to water ski. On the way out, she mentioned that they were thinking of selling their house in Florida because it seemed like three houses were too many. Yeah, my father was just saying the same thing .

Maybe it's lack of imagination, but I have not changed that much. So I don't buy lottery tickets. I sort of cringe at the state encouraging people to do something that I regard as brain dead stupid, but no one puts a gun to their heads.

[barmar]

I'm like Ken. I don't have a family to support, and I make more than enough to live on and treat myself to the niceties that I enjoy. I grew up in an upper middle-class family; we could afford everything we needed and live comfortably, and my parents could pay for our college educations (I got a small loan just because the government used to give them away to everyone regardless of need), but we didn't overdo it and weren't spoiled rotten. I took a pay cut 6 months ago when I took my job at BBO, because I thought this would be an interesting place to work for.

If I won the lottery, it wouldn't make a huge difference in my life. I'd probably fly first class instead of economy when going on vacation. But I don't want a boat, I don't want a big house (I could afford to buy a house now if I wanted, but I choose to live in a 1-bedroom condo because it simplifies my life).

But I also recognize that I don't fit typical profiles. I'm a computer nerd. I don't care much about appearances or status, I'm much more interested in comfort. I don't care about being able to afford nice clothes, because I try to avoid wearing them as much as possible.