Hooray, we're figuring out all of the tricks to push people into "thinking myopically" and buying what we want them to buy.

Here are the triggers; here's how people make mistakes in buying decisions, and how to exploit that. Here's how to frame your sell (Get them to focus on loss! Remind them of their poverty!), here's how to get them to buy more tickets instead of just one.

Lottery tickets aren't too bad; they're harmless for most people buying them, there's a fun little kick of "what if...?", but (as the article points out) as revenue for the state, they are a regressive tax; poor people pay a much larger percentage of their income into lottery schemes than people who are better off, and of course some of them pay enough to really harm themselves, going for the "Hail Mary" solution to their money woes but just bleeding themselves slowly instead.

Winning isn't actually a positive result, either -- the article doesn't get into stats on attempted suicide, etc. for lottery winners, but they're not good.

Is there anyone out there using this kind of research to actually help people? Or to let people who're just playing a fun game, play it; but still protect the people who are grabbing at a false life preserver?

“It’s not an investment. It’s entertainment. For a very small amount of money you might change your life. For $2 you can spend the day dreaming about what you would do with half a billion dollars—half a billion dollars!”

You're not making a bet with negative expected value, you're purchasing an entertaining daydream to help you through your miserable day.

The negative expected value in dollars is enough by itself, but the "how happy will I be?" calculations are even more depressingly bad. The utility of money is usually measured on a log scale, because your first thousand dollars does a lot more for your happiness than your first ten thousand. By that measure going from ten thousand dollars in the bank to ten million wouldn't make you a thousand times happier, it would make you twice as happy. At least until you get used to it (see: Hedonic treadmill [1]). There's a surprising number of bankruptcies caused by lottery winniners, too [1]. Also the whole stressed friendship thing.

So... yeah, playing the lottery gets you negative respect from me and I think that's justified.

1: http://en.wikipedia.org/wiki/Hedonic_treadmill 2: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1324845##

And I'm tired of people telling me that it's irrational to play the lottery, it isn't.

When I hear that people act irrationally when it comes to probability, I feel like it should be replaced with the assertion that people tend to act irrationally when they have not been trained to think methodically in a particular situation or because of circumstances rely on primitive approximations. The first assertion sounds like an immutable property of human nature, when it is more of a cultural and educational issue.

For a second there I thought the article was about one of the below:

- Starbucks

- BMW

- A diamond ring

- iPhone

I don't really understand the point of this article. Is he trying to expose the "morons" who play the lottery for being just that? Maybe the $2 or so bucks means nothing to people playing. Maybe the excitement of the lead-up to the drawing and the checking of the numbers is more fun than $2 in my pocket. You can barely even buy a soda with $2 now.

If those jackpots swell over $200M, betting $1 to win against 1:175M odds is a good bet. If I could bet $1 to win $15 and I had a 1 in 10 chance of winning, I'd do it every time.

In the end, the lottery funds go towards the city/state, and usually education. It's a fun form of charity.

What am I missing here? $2x86 million gives me a 50% chance of getting $590 million? 172 < 295!

With lottery is the same, I pay to increase the variance of the money we win.

Even in the case of you making six figures a year, 100,000 dollars, a $2 million dollar win is still 20 years of your life earnings all at once.

It doesn't matter that the chances are 1 to 175 million, because someone did win, that's all that counts. The only guaranteed result is not to play, that will ensure that you do not win 100% of the time.

"The lottery is a tax on the innumerate"

// pessimistic mode off

Of course, there are worse things in life than being irrational, and a variety of human beings' irrational instincts form incredibly useful heuristics for long-term value maximization (on both individual and societal levels) which might otherwise be difficult to attain, given the limitations of the rational brain: love, patriotism, et cetera.

It sounds like the unpredictability of the results is something you value, perhaps because it's exciting. That's a pretty irrational thing to value, but not intrinsically harmful in small doses; people put down money for plenty of ridiculous forms of entertainment.

But you could own up to it. :b

In lottery, we pay to increase the variance of the money we win.

http://lesswrong.com/lw/hm/new_improved_lottery/

In fact, as mentioned, why not just keep an eye out for winning lottery tickets on the ground? Because you have an ~epsilon chance of getting a winning lottery ticket, and you also have an ~epsilon chance of finding a winning lottery ticket on the ground.

I get that. When I play poker for 5 hours and come out even at the end of the night or slightly behind, I consider it worthwhile because I had fun for 5 hours.

But since you're a human being, I'm fairly confident that your utility function is sublinear (has a shallower slope the more you have). Playing for variance doesn't make sense in this case.

They state in the article: You will have to plunk down your $2 at least 86 million times. Williams...could have simply said the odds of winning ... were 1 in 175 million

It might cost you > $172MM, but aren't the odds 1 in 86 million? Or am I being obtuse?

If you are not reading a formal thesis, you should not interpret statements formally. Doing so will only lead to a lifetime of frustration. The author probably agrees with you. The vast majority of the audience probably understands that the author is simply being brief and does not have the "audience attention span" budget to more formally describe the assertion that you take issue with.

My interpretation of the author's intent with the statement "humans can't handle large numbers" is "Large numbers of humans have been presented with large numbers of problems involving large numbers. In practice, the vast majority of them fail. Thus, humanity at large does not handle large numbers well." I.e. "humans" refers to the current mass of humanity, not the theoretical possibilities of an individual.