Science!

[novapsyche]

Why play a losing game? Study uncovers why low-income people buy lottery tickets: Carnegie Mellon research points to poverty's influence (thanks, dsgood)

Although state lotteries, on average, return just 53 cents for every dollar spent on a ticket, people continue to pour money into them — especially low-income people, who spend a larger percentage of their incomes on lottery tickets than do the wealthier segments of society. A new Carnegie Mellon University study sheds light on the reasons why low-income lottery players eagerly invest in a product that provides poor returns.

In the study, published in the July issue of the Journal of Behavioral Decision Making, participants who were made to feel subjectively poor bought nearly twice as many lottery tickets as a comparison group that was made to feel subjectively more affluent. The Carnegie Mellon findings point to poverty's central role in people's decisions to buy lottery tickets.

[...] "State lotteries are popular revenue sources that are unlikely to go away anytime soon," said George Loewenstein, a study co-author and Herbert A. Simon professor of economics and psychology at Carnegie Mellon. "However, it is possible to implement measures that can actually benefit low-income lottery players and lead to fairer outcomes." Loewenstein noted that one such potential method for addressing income inequality, which has shown promise in other countries, is tying lottery tickets to savings accounts.

Comments

[pgdudda.livejournal.com]

"...return just 53 cents for every dollar..."

In that case, I figure the state owes me about $20, as I've never actually won any money on a lottery ticket. ;-P

[novapsyche.livejournal.com]

I think they mean for every dollar invested. :P ;)

Also, how many lottery tickets have you bought? $20 could mean anything--just one dollar a ticket? I have witnessed people buy $10 or more at one time on the lottery, and depending on how much you put down on each bet (obviously) affects the return. So, if you've only bought one ticket, but put $20 on a losing bet, that would not be the same as buying one ticket on successive days with only $1 on each ticket.

The type of ticket is an important factor as well. I think, personally, that there is a significant difference in scratch-off tickets as opposed to ball-drawn lottery tickets. The latter is like playing bingo; it is an overall experience that one can rationalize as money paid for anticipation spread out over a span of time. But scratch-offs (and I realize I'm speculating) resemble finding a $100 bill on the street, or gold in a pan--it's an instant discovery and a quick thrill.

(Apologies for the edits if you get email notification--I was testing LJ's editing function. A user who has the ability to edit a comment can do so at any time, but once a reply has been made, the comment cannot ever be edited; it does not revert to editable status even if the reply has been deleted.)

[pgdudda.livejournal.com]

Well... I've shelled out at least $40 in Powerball tickets, probably more, and never won a penny.

(Actually, it looks like the odds of winning anything in Powerball are roughly 1 in 36, so maybe I'm not doing so badly after all... :-P )

[bonerici.livejournal.com]

still doesn't explain why people who are poor do stupid things also from that report

Participants, who were recruited at Pittsburgh's Greyhound Bus terminal

which means as far as I can tell both the control group and experimental group were dirt poor, so you are comparing two sets of people who already buy lots of tickets.

Basically I figure people who don't understand Expected Value buy lottery tickets. You tell them the expected return on a dollar is 53 cents and they are like "Dur?" If you educate these same people they'll quit buying tix, that's what I think. And there's a correlation between lack of education and buying tix.

The study tho it doesn't tell me anything other than if you get poor people and make them feel even poorer they will buy more lottery tickets than they usually do, which explains what exactly?

[novapsyche.livejournal.com]

You're making a lot of unsubstantiated assumptions. Not all poor people play the lottery; this is obvious and it is a horrible caricature of those who occupy the bottom rungs of our class society.

I agree that there needs to be ways to control for education and geographical location as well as for other behaviors that show a tendency toward risk-taking (i.e., casino attendance, speeding tickets, etc.). And, obviously, the results in this study will need to be confirmed by others.

The study tho it doesn't tell me anything other than if you get poor people and make them feel even poorer they will buy more lottery tickets than they usually do, which explains what exactly?

Again, you're making a lot of unfounded assumptions about the tendencies of an entire class of people. My first question to you would be: Have you ever been poor? Next, how many people below the official poverty line have you ever known in your life, and how many do you currently associate with? Last, do you think your class bias has anything to do with how you're interpreting these results?

[bonerici.livejournal.com]

I've never had much money most of my life and neither have most of my friends. It kills me to see poor people buy lottery tickets. Yes, I'm sure I have a class bias, and it probably leads me to make all sorts of assumptions, one of them being that if you take wealthy people and make them feel poor, they won't start buying a lot of lottery tickets. That could be wrong.

[novapsyche.livejournal.com]

What does "not much money" mean to you? Poverty-level? Lower-middle class? Middle-class? What? How do you define these terms?

[bonerici.livejournal.com]

I'm awfully sorry, but I would really not rather answer this question in too much detail, I hope you understand.

[novapsyche.livejournal.com]

I don't, actually. Why is this uncomfortable for you?

[bonerici.livejournal.com]

I don't like sharing too many personal details on livejournal? I get this paranoia that everyone in the world might be reading it.

[novapsyche.livejournal.com]

Fair enough. I merely asked so that I can get a better feel as to what "not much money" means to you. You brought up your background and history; I asked for specific details.

[novapsyche.livejournal.com]

Another question: When you see someone buy lottery tickets, do you assume they are poor?

[bonerici.livejournal.com]

Not really. But I do assume that those who buy lottery tickets think it's good way to make money. I don't think people buy lottery tickets "for fun."

[novapsyche.livejournal.com]

I disagree; see my responses to pgdudda above.

[bonerici.livejournal.com]

Well that might be why I don't understand very well why people buy lottery tickets in the first place. It doesn't seem exciting and joyous, it only seems stupid and a waste of money. Of course, I'll spend plenty of money to go play my games that I enjoy, I guess if lottery is your "game" then it's not too different from playing golf, only instead of a hole in one you get the lotto winner.

I also despise slot machines by the way. I consider them just as evil as the lottery.

[pgdudda.livejournal.com]

I'll play Powerball when the jackpot gets up over $100 million. I have no real expectation of winning, but I figure I can chip in $2 to help make somebody outrageously rich. And it's fun to fantasize about what I'd do if I actually won. *grin*