14 May 2010

B(u)y The Numbers

El que juega por necesidad, pierde por obligación.

The phrase above translates pretty much to "If you play from need, you lose by obligation," meaning if you're in a situation where gambling--like Pick 6 or Loto--is "needed", you will lose. A lot. Per force.

Now many of Us understand that playing the lottery is a fool's game. Statistically, you will consistently lose 47 cents for every dollar played, meaning you will be giving away 47 cents for every dollar you play when you decide to Pick 6 just for fun. And the people throwing away their money hand over fist are almost certainly the ones least able to afford it.

The seductive lure of lottery gambling is that "Anyone can win." That is true: anyone who plays can. The factual downside to that is that you are far more likely to go broke than to win. Here's the kicker: the government knows it...and encourages it.

First, the odds: In a Pick 6 game, with 42 numbers (1-42, like We have here) the odds of winning with the correct 6-number combination is calculated as 6/42 for the first number coming up being one of your picks, 5/41 for the second one to match, 4/40 for the third, 3/39 for the fourth, 2/38 for the fifth and 1/37 for the sixth. Simplify those fractions into decimals and you get a roughly 1 in 5,307,605 chance of winning.

The odds of being struck by lightning are roughly 1 in 410,000.

For a $2 million prize, you could buy $2 million in Pick 6 combinations and still have only a 37.7% chance of winning. Is this a fair game? Of course it isn't. And I repeat: the government knows it. Here's the hypocrisy: they make a huge hullaballoo about the balls and the machines and the live drawings and such minutiae, but the game itself is already rigged against you.

Now for the other part. Adding empirical evidence to a long-observed phenomena, a study by Emily Haisley, Romel Mostafa and George Loewenstein concludes that "...(P)articipants were more likely to purchase lottery tickets when they were primed to perceive that their own income was low relative to an implicit standard." And how are lotteries advertised if not as "catch up to others" fantasy-fulfillment, an illusory shortcut to prosperity that is actually an anchor to climbing out of poverty or marginal living.

As noted by Wired editor and blogger Jonah Lehrer: "The games naturally appeal to poor people, which causes them to spend disproportionate amounts of their income on lotteries, which helps keep them poor, which keeps them buying tickets." The government knows this. They count on it. And they keep counting on it to further their interests and that of their buttlicking cronies.

We may need to amend Mark Twain's famous quote from  "Lies, damn lies and statistics" to "Lies, damn lies, statistics and lotteries." By the numbers, don't buy the numbers.

The Jenius Has Spoken.

[Note: 19 May 2010: From Sharon Begley's keyboard over at Newsweek: How near-misses galvanize a person to keep gambling. Sad part: people convince themselves that a lottery pick "just 3 numbers short" was a "near-miss." It's much more like aiming to land in San Juan and actually touching ground on Phobos.]

[Update: 2 June 2010: I was told the local Loto (Pick 6) has more than 42 numbers, going as high as 46. The odds of hitting the big prize are 1 in 9,366,819. Adjust the level of futility accordingly.]

[Update: 10 July 2010: From Newsweek, how near-misses in gambling are pretty much as addictive as wins. And the obvious corollary: addicted gamblers are more susceptible to this "buzz".]

[Update: 13 July 2010: From The Economist, the best magazine about the world, comes this sobering study: More than 1 in 5 Americans believes buying lottery tickets is a good retirement plan. My Brethren are scoffing, thinking We can go 1 in 4 or even 1 in 3...]


Beato said...

The ludic fallacy (a phrase by Nassim Nicholas Taleb). Similar to this case is the one that went against the current. For each 'instant millionaire' there are a million instant losers...

Here is a link to his webpage:


Extending lottery chances to the stock market...The Black Swan was an entertaining read, have not read the Fooled By Randomness book yet.

Gil C. Schmidt said...

Thank you, Beato. I haven't read the two books you mentioned, but I greatly enjoyed "Against the Gods," about the developing relationship between math, probabilities and our fascination for chance. Thanks!