The Right Coast

Editor: Thomas A. Smith
University of San Diego
School of Law

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Saturday, December 1, 2012

The Bad Luck of Winning - NYTimes.com

But it’s not. On the contrary, lotteries may well be the single most insidious way that state governments raise money. Many of the people who buy lottery tickets are poor; lotteries are essentially a form of regressive taxation. The odds against winning a big jackpot are astronomical — far worse than the odds at an Atlantic City slot machine. The get-rich-quick marketing — by government, let’s not forget — is offensive. One New York Powerball ad shows a private jet emblazoned with the words “Kevin’s Airline.” The tag line reads: “Yeah, that kind of rich.”

Oh, and let’s not forget the fate of the people who win. They may be “that kind of rich” on the day they hit the jackpot, but, more often than not, they don’t stay that way. People who suddenly fall into extreme wealth — whether because of an insurance settlement, a professional sports contract, or a lottery win — rarely know how to handle their new circumstances.

via www.nytimes.com

Hmmm, well, yes, but I suspect it's baloney. Reuven Brenner, who has actually looked at lottery winners empirically, or at least gathered such systematic studies as exist, suggests that people who win big jackpots get the benefits you would expect from increased wealth. Their lives get better mostly: they labor less, travel more, see their grandchildren more, buy nice houses, and so on. I suspect there are enough lottery catastrophe stories to fill the tsk tsking of the pundits, but on balance, winning millions of bucks is actually a pretty swell thing to have happen to you. I also don't think it's particularly irrational to buy lottery tickets, unless you buy so many that it's a material drain on your finances. I suspect most working class people who buy them figure quite correctly it is their only chance of leapfrogging into the category of the very wealthy. I don't buy them myself as I find I can fantasize about being rich quite easily without having a lottery ticket to support my daydreams. Here would be an impressive anecdote. Some censorious pundit turns down a financial windfall because of the bad effect it would have on his life. Don't hold your breath. --TS

http://rightcoast.typepad.com/rightcoast/2012/12/the-bad-luck-of-winning-nytimescom.html

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Comments

Thanks for the quote, that refers to the 1991 Cambridge book. After Washigton passed the UIGA (prohibiting - selectively and very foolishly - internet gambling), Cambridge asked me to update the book: Came out in 2008 , under World of Chance. What I found was: 1. older people disporportionately buy lotteries (if you did not make it until 60 - what chance you get to the good life, unless you win a lottery?) So not surprisingly, this age group is also disproportionate among winners. So not surprising if you win at 55+ - you stop working; 2. Yes, of course media will report on the "tail cases" - of a gambler wasting money, committing crimes, then jumping out if a window. Exactly because these are rare. The story of older people taking a bus from Manhattan to Atlantic city for a day of cheap entertainment and cheap meals; of widows playing Bingo - though the NYT if it bothered to look up in its archives wrote about this - is not particularly fascinating front page news. Everyone quotes Dostoyevsky's Gambler - forgetting that that Dostoyevsky himself was a heavy gambler, wrote his best books (including the above) when heavily in debt (fear of bankruptcy is often the Mother of Invention)- yet he took responsibility for helping his brother's family too. When he married his secretary, he stopped gambling, she put the finances in order. Dostoyevsky creative spark died too with the greater financial stability ...Anyway all this is rather marginal stuff these days - take a look at my last pieces which touches on what should be the main topics these days.

http://www.american.com/archive/2012/november/the-1930s-all-over-again
best, Reuven Brenner

Posted by: Reuven Brenner | Dec 1, 2012 11:12:18 AM