The lottery is the most popular form of gambling in America. Lottery games generate a huge amount of money for state budgets and have helped pay for everything from roads to prisons. But just how meaningful those revenues are and whether it’s a good trade-off for people to spend their hard-earned dollars on such irrational games merits scrutiny.
Despite the low odds of winning, many people feel an inexplicable urge to buy lottery tickets. They’re convinced that the prize will somehow improve their lives, even if the chances of success are incredibly slim. But that feeling reflects a flawed logic. It’s based on the theory that the entertainment value of the ticket, or some other non-monetary benefit, will outweigh the disutility of a monetary loss.
In Europe, the first lotteries appeared in 15th-century Burgundy and Flanders as towns tries to raise funds to fortify defenses or help the poor. Francis I of France encouraged the spread of lotteries in the 17th century and they became extremely popular. Lotteries became a common source of public revenue in colonial America, funding canals, schools, churches and colleges including Harvard, Dartmouth and Yale.
In a typical lottery, prizes are determined by the number of tickets sold and the percentage of tickets that match a set pattern such as three in a row or numbers that end in the same digit. In the United States, lottery commissions rely on two messages. The first is that the game is fun and is a great way to scratch and reveal those “wows” and “ahs.” Coded in this message is the idea that playing the lottery is a small risk for a big reward, which obscures the regressivity of the games.