When I gamble, I do it because the pleasure I get from winning five dollars ("hah, take that, casino!") is slightly larger than the pain I get from losing five dollars ("oh well, who cares?").
I guess that truly rich people who gamble do it for similar reasons (though with numbers larger than five dollars). But poor people gamble because they (audaciously) hope to win enough money to change their lives. So I guess this explains why rich people play games with a high chance of getting a small payoff (blackjack, roulette) and poor people play games with a small chance of getting a huge payoff (slots, lotteries).
With the particular games you mentioned, you could also argue that rich people prefer more 'visible' games while the poor prefer 'invisible' games; Blackjack and roulette are done on or around a table with (possibly) many participants, whereas slots and lotteries are aimed to be a one-person experience.
The odds of winning the lottery may be 1 in 500 million, but for some people the odds of becoming rich by any other means is zero. If you define your goal as "becoming rich", and meet the above characteristic, then the lottery is no longer audacious or irrational.
inally, a third option would be for financial institutions to issue investment instruments that have lottery-like qualities (for example, offered in small amounts, available at many convenient points of purchase, provide a small chance of a large upside) but offer a positive rate of return, providing the pleasure of playing the lottery without the steep cost. In many other countries “prize bonds” or other savings instruments are available that pay lottery winnings in place of, or in addition to, regular interest. Regulations in the United States have stymied the development of such offerings.
This sounds like a really good idea. I can imagine such a program creating savings for people who wouldn't otherwise save.
In many societies, the alpha usually dominates the gene pool of the next generation. In some animal and human societies, only the alpha reproduces.
If you're poor, your kids are going to be even poorer, and their kids will be even poorer, eventually leading to a genetic dead end. None of your genes will become a permanent part of posterity unless you are an alpha. In this way, it makes sense to gamble 5% of your income, which would not make a transcendental difference anyway, for a chance of attaining alpha status. From that point of view, it makes perfect sense.
interesting. But I thought traditionally there are way more poor people than there are rich people, and that poor people have way more kids than rich people. In fact it's a little depressing that the poor will always be with us instead of being evolutionary losers and be a problem that will'take care of itself'.
Poor people having more babies than rich people seemed weird to me, but in reality, throughout history, poor people (or people with little status) make babies that don't really make it to adulthood at the rate of high status people (see Gregg Clark). Overall, in Malthusian societies, there's not enough food to go around, and the poor are the last to be fed.
I always (well, recently) thought it was because of discrete marginal utility functions.
For most people, the material difference between making $600/month or $570/month isn't much. You're still poor. You might get to splurge on one more restaurant meal a month, but that won't make you feel any richer.
The difference between having $0 in the bank and $60M in the bank is enormous, however. You've gone from poor to rich, and can do whatever you want with your life.
So for most people, the tradeoff is between certain poverty or a very small chance of escaping poverty. Squares with the article, too: by making people "feel poor", they were highlighting the contrast between their present life and the life they would have if they won the lottery.
Poor people tend to make bad decisions on things like that because of their perspective. $1/day doesn't feel like a lot of money even when you are only making $600/month. Especially when you have some fixed costs like gas that take so much out of your income.
I'm pretty sure Massachusetts is the most educated state in the country, and yet it has the highest per capita lottery expenditure (over $600 annually is spent on the lottery per MA resident!).
The science behind why people play the lottery is extremely well researched by private contractors. I worked in the space for a bit and it was pretty sad. The private contractors are very scientific about developing the most addictive products per demographic group(seriously, some scratch off cards are directly targeted at certain ethnic groups, ages groups, sexes, etc.). For instance, "Match 3" cards are aimed at poor, uneducated minority groups who find games with numbers too complex.
Yeah...I went to a casino the other day, and for the life of me I couldn't understand why there was anybody playing the tables. The atmosphere was nice; it was a good place to get a drink; but I couldn't see why anybody played.
It's the cost of entertainment. As opposed to slots, you get to interact with a live person (the dealer) who's there to keep you entertained, and you get to hang out with your friends. There's a little at stake, which keeps things interesting; blackjack and poker are pretty lame when nothing's at stake. And if you go to a low stakes table, you'll probably spend $15-20/hour for fun, and they'll comp you some free drinks too. Not much more expensive than seeing a movie.
I guess that truly rich people who gamble do it for similar reasons (though with numbers larger than five dollars). But poor people gamble because they (audaciously) hope to win enough money to change their lives. So I guess this explains why rich people play games with a high chance of getting a small payoff (blackjack, roulette) and poor people play games with a small chance of getting a huge payoff (slots, lotteries).