Dangers of the lottery pool
Posted at 10:54 AM on March 14, 2012
by Bob Collins
(12 Comments)
Of the many mysteries in the world, few are more mysterious than why co-workers "pool" their money to buy a $1 lottery ticket. Nothing good can happen, especially if you win.
In Elizabeth, New Jersey this week, it took a jury to sort out who owns the $38.5 million jackpot. They determined that Americo Lopes cheated the people who sent him off to the convenience store out of the jackpot, after he'd claimed the ticket that won wasn't the one he bought on their behalf.
"They robbed me," Lopes said in Portuguese.
Under the pool arrangement, each man put in $2 for a total of 12 sets of numbers. On the day Lopes says he won the jackpot, the winning number was one of 12 sets purchased.
Was it worth it?
According to Durango Bill's Applied Mathematics website, the odds of hitting a jackpot are 1 in 175,711,536. Under the pool arrangement, it was 12 in 175,711.536.
Comments (12)
not to nit pick, but I think that you mean 12 in 175,711,536 not 12 in 175,711.536.
Unless their odds actually improve significantly more then I thought they would.
$2? Must have been for Powerball. After they raised the price to $2 I stopped buying. Still trying to find a replacement though. NorthStar Cash didn't get me anything, so I will see if Gopher5 wins me something tonight...
Is it possible to claim I am "buying local" for lottery tickets??
I've heard lotteries called "taxes on people who are bad at math". Have any studies been done on the demographic or economic status of primary lottery players?
I suspect the lottery to be a highly regressive "tax".
@TomK, according to
http://faculty.chicagobooth.edu/emily.oster/papers/powerballnote.pdf
"There are a number of papers that analyze lottery regressivity as a whole, and nearly all find that, on average, lotteries are regressive"
Though the same paper's thesis is that lotteries become more progressive as the prize increases and using the CT lotto as its only data set, "An
out-of-sample extrapolation of these results suggest that the lottery becomes progressive
at a jackpot around $806 million"
Dreams are important. And you can't win if you don't play.
But don't buy more than one ticket. Statistically, your odds of winning increase infinitely if you buy one instead of buying zero.
If you buy more than 1, the "tax on people who are bad at math" thing comes into play.
Not buying a ticket doesn't necessarily mean a zero chance.
You could find one on the street, you could receive a mysterious letter in the mail with a ticket, the lottery system could mistakenly award the wrong person.
All long shots, but still essentially zero. Just like buying a ticket, except you still have $1 in your pocket.
Jim, dreams are import, but what happens to a dream deferred? Does it dry up like a raisin in the sun? or does its net present value decrease-and then run? Does it decay exponentially like rotten meat? Or crust over- like a backed- bond? Maybe it just sags like a poorly-thought out investment. Or does it amortize?
In other words, that 1$ is already your capital and its net present value is determined by what you do with it- if you buy a lotto ticket, the expectation value is ~0. if you put it in a bank, ~1. If you want you can give me that money you are giving the state with a lotto ticket and I'll give you better odds, say 1 in 170,000,000.
TomK and Chris: Gimme a break. My reasoning was developed to persuade a magically realistic latin spouse to keep it down to a buck a week.
The $1 spent on a lottery ticket is, basically, $1 worth of entertainment. That is, dreaming about a fortune. And people think in order to dream about a fortune you have to have a CHANCE to make it, right? It's no fun dreaming about a fortune if you don't have any chance of having it come true. (You can always work for it, of course, but what fun is that?)
Where the people who engage in this particular arrangement went wrong is they spend $2 for the same entertainment they could've had for 10 cents.
and that's how OTHER people get rich.
Someone just posted this on a blog and thought it was fitting:
"The chances of you dying on the way to get your lottery tickets is greater than your chances of winning."
Bob - "Where the people who engage in this particular arrangement went wrong is they spend $2 for the same entertainment they could've had for 10 cents."
Granted, I can be rather obtuse, but I don't understand the "10 cents" reference.
Me neither.
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