If You’re Happy and You Know It, Buy a Lottery Ticket
It is well known that gambling is one of the most irrational of pastimes. In a casino, when you lay cash on the table, or feed coins into a slot machine, you are agreeing to be had. Yes, people win individual bets and the slots dispense winnings and even jackpots from time to time. A casino where no one ever won a dime would not long survive. But in the not-so-long-run, as the adage goes, the house always wins. Suemedha Sood provided the details a few years at the BBC:
In all casinos, the games have a built-in “house edge”, the profit taken from each bet. Although it varies from place to place, lottery-type games such as keno or slots typically have the worst odds, with the house advantage getting up to around 35%. Players’ odds are better in card and dice games; for instance, blackjack only has a house advantage of around 1% to 2% for skilled players and a house advantage of up to around 20% for unskilled players, while craps has a house advantage as low as less than one percent for skilled players and up to around 16% for unskilled players. Casinos don’t typically disclose odds, but frequent blackjack players have reported facing better odds in Belgium, while in the Dominican Republic, keno reportedly has even worse odds than other parts of the world.
At the end of the day, the house always wins because casinos are businesses. They have to turn a profit to stay alive. While the ecosystem of a casino serves the end goal of taking gamblers’ money, players can come out on top by quitting while they’re ahead. That, of course, is easier said than done.
The worst gamble of all is playing the lottery. The gigantic Powerball jackpot in January was tempting enough to separate me from a $10 bill in my wallet—the first time I ever bought a lotto ticket. But the odds of winning the top Powerball prize on any given week, as Nick Stockton reports, is 1 in 292 million. Those chances aren’t good. In fact, they are “barely better odds than having your name randomly pulled from a hat filled with the names of everyone in the United States.” Still, people continue to play Powerball, a game in which you get to predict which five white balls numbered from 1 to 69 and which yellow “powerball” from 1 to 26 will pop out from the machine. Yet the all-but-insurmountable odds do not seem to put very many people off.
A new study in the journal Psychological Sciencehelps to account for the strange irrationality of gambling. (The full text of the article is available here.) People who are enjoying a certain kind of a “positive mood,” the three authors report, seem to be under the influence of “unrealistic optimism” and spring for lottery tickets with more enthusiasm. How do they know this? Rather than recruit volunteers for a simulated risk-taking experience in a laboratory, A. Ross Otto, Stephen M. Fleming and Paul W. Glimcher consulted a trove of data showing trends in lottery gambling in New York City from 2011 and 2012. The researchers looked at 24 months of day-to-day lottery-ticket purchases in 174 Big Apple neighborhoods and searched for variables that seemed to correlate to increased sales in given days.
Here is what they found. People gamble more when local sports teams score an unexpected win and when the weather is especially sunny following a “streak of cloudy days.” The findings were remarkably consistent across the city: rich and poor, white-collar and blue-collar, uptown and downtown, Manhattanites and outer-borough residents seemed buoyed by fair weather and sporting success and opened their wallets for lottery tickets as a result. The effect wasn’t subtle. “[O]n a day in which multiple sports teams unexpectedly win,” the authors write, “approximately $160,000 more is spent on lottery gambling relative to an average day.”
The upshot? “Taken together, our results reveal a remarkable malleability to human risk taking.” There’s a silver lining lurking here. While huddled inside on a cold, dank day, or while nursing your favorite team’s tough loss, you can take some comfort in the thought that your foul mood is giving you a dose of reality that will make you less likely to waste money on Powerball. The reward of the doldrums is an uptick, however temporary, in your ability to make rational decisions.
Steven V. Mazie is Professor of Political Studies at Bard High School Early College-Manhattan and Supreme Court correspondent for The Economist. He holds an A.B. in Government from Harvard College and a Ph.D. in Political Science from the University of Michigan. He is author, most recently, of American Justice 2015: The Dramatic Tenth Term of the Roberts Court.
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Follow Steven Mazie on Twitter: @stevenmazie