In a small-town American setting, locals gather for an annual lottery. The prize is a shot at instant riches, but the truth is that most people who play the lottery have little chance of winning the big jackpots. Instead, they win smaller prizes. And even these prizes aren’t as large as they seem, because lottery organizers deduct a percentage for organizing and advertising the lottery and also give state or corporate sponsors their own share of the pool.
The fact is that the lottery is a form of gambling, and it’s an inextricable part of our culture. There’s a reason that lottery ads feature billboards with the Mega Millions and Powerball jackpots; they dangle the promise of instant wealth in an age of inequality and limited social mobility.
Lottery commissions try to send the message that winning the lottery is just a fun way to spend your spare change, but that glosses over the fact that the lottery is a massively regressive form of taxation. Moreover, it sanitizes the underlying issue, which is that too many people are tempted by the promise of easy wealth and that there’s a perverse incentive to play the lottery for that very reason.
Lottery purchases cannot be accounted for by decision models based on expected value maximization. Lottery math shows that tickets cost more than the expected gain, and those who maximize expected utility would not buy them. However, the purchase of lottery tickets can be explained by more general models that account for risk-seeking behavior and can incorporate a preference for lottery outcomes alongside preferences for other things.