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I am a statistician and I buy lottery tickets

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Re: I am a statistician and I buy lottery tickets

#31

Post by frobozz »

brianwillis wrote: post #11

Looking back, there seems to be a correlation between the times in my life when I've bought lottery tickets, and the times in my life when I've felt hopeless. If I ever feel trapped by circumstances, depressed, lost, or I don't have optimism for the future, the less logical part of my brain will somehow rationalise the remote chance of winning millions as a perfectly justified excuse for buying a ticket. The author o…

I buy lottery tickets occasionally when I feel a bit down about money - doing so is a win-win.

If I win a prize greater than my stake, then that's great.

If I don't, then it reminds me that I can still afford to throw away a few pounds every now and then without it being a significant loss.

Re: I am a statistician and I buy lottery tickets

#32

Post by Zakharov »

paulsutter wrote: post #16

Insurance has an interesting comparison to lottery tickets. In a lottery ticket, the expected return is usually about 50%. Which is exactly the same as insurance (the premium is about double the expected payout). Yet people regard insurance as prudent, and lottery tickets as foolish. Me included (as long as its a risk you cant easily cover). But our explanation, that "Lottery tickets are foolish because they have a n…

It comes down to the utility of money, or roughly speaking, how happy the money will make you. $20,000 is a lot more valuable to someone with $10,000 than someone with $50,000. In other words, having $10,000 is worth, say, 10 utility, having $30,000 is worth 20 utility, and having $50,000 is worth 25 utility.

Starting with $30,000, buying insurance which has a small chance of saving you $20,000 gives you a +10 utility gain if it pays off. Buying a lottery ticket which has an equal chance of giving you $20,000 gives you a +5 utility gain if it pays off.

Re: I am a statistician and I buy lottery tickets

#33

Post by Ironballs »

Kari Enqvist, a professor of cosmology, said something very insightful in an interview about gambling in general:

"Insurances yield a peace of mind and lotteries yield dreams, the values of which cannot be measured in mere terms of probabilities or money."

In my view, lottery tickets are not meant to be rationally justifiable, nor should they be required to be. Yet, I don't fancy the idea of committing to such vain pursuits comfortable at all, but I can understand people who act upon their dreams, and will not berate those who do.

Re: I am a statistician and I buy lottery tickets

#34

Post by dchest »

MichaelApproved wrote: post #12
dchest wrote: post #4

Earlier quoted context omitted.

Exactly. I'm entertaining myself every time I release some software and imagine that I'll sell millions of copies :)

That's not >free< You probably spent many hours writing that software.

No, the dreams are free, as I make software for a living anyway.

Re: I am a statistician and I buy lottery tickets

#35

Post by saraid216 »

anonymouz wrote: post #19
vibrunazo wrote: post #10

I had a statistics professor at college who were addicted to gaming. There were stories about him losing a lot of money, car, job and wife because of his addiction. I thought it were just a joke, you know, statistics professor addicted to lottery? Duh, I wouldn't fall for that. Until one day, to demonstrate that a specific class of combinations were too rare, he challenged a girl in the first row that if she rolled a…

Unfortunately an addiction can rarely be battled by simple rationality. So even if he can calculate his chances of winning perfectly well, and theoretically understand that it is a poor use of his money, he may still have to give in to his addiction.

I doubt that his students understood that gambling is something you could be addicted to in the first place.

Re: I am a statistician and I buy lottery tickets

#36

Post by saraid216 »

wilfra wrote: post #30
MichaelApproved wrote: post #9

Earlier quoted context omitted.

He doesn't think imagining winning the lottery is fun, it actually is fun for him. He's actually entertained and is comfortable spending money for a little imaging and escapism. What's wrong with that?

Nothing is wrong with that. When I go to Las Vegas, I play craps for the same reason. But I didn't make a massive blog post that implied I could beat craps, get it on page 1 of HN and after 20,000 words and numerous graphs and tables announce to the World that it's ok that I donate some money to Bellagio once a year because it's my money and the waitresses are hot and it's fun. I wouldn't do that because no amount of…

> get it on page 1 of HN

True fact: not all submissions to HN are by their authors.

Re: I am a statistician and I buy lottery tickets

#37

Post by wilfra »

staunch wrote: post #7

There is that Stanford math PhD that won four lotteries. http://www.forbes.com/sites/kiriblakeley/2011/07/21/meet-the...

That's really interesting. Seems pretty obvious she cheated in some way.

If something only happens once every 'quadrillion years' that's pretty much evidence right there, but given all of the other suspicious things as well...ya - I think there is basically no chance those were legit wins.

Re: I am a statistician and I buy lottery tickets

#38

Post by saraid216 »

dhechols wrote: post #29

> So why do I still buy lottery tickets? Definitely not for the expected monetary return on investment. I think of it as a discretionary entertainment spend. I get literally hours of enjoyment from fantasizing what I’d do if I won. Why not spend it on hookers and blow instead? THINK OF ALL THE FUN YOU'LL HAVE. :|

...because hookers and blow are expensive and have a lower money-to-fun ratio?

And, honestly, I wouldn't actually have fun with hookers and blow. But that's just me.

Re: I am a statistician and I buy lottery tickets

#39

Post by gojomo »

WA wrote: post #27

"The odds against winning the big prize are 45,379,619:1" I have a hard time imagining how low these odds are but once my math professor gave us an interesting analogy. One person drives from Los Angeles to Las Vegas and throws a quarter out of the window at any point in time. You then follow this person along the same route. You win the grand price if you manage to stop your car such that your front wheel stops at t…

The imagery of this explanation adds to the lottery-aversion on a subconscious level, as well: it reverses how a lottery is usually portrayed. Instead of 'only a dollar' entry cost and 'millions' if you win, this analogy associates entry with a long and costly task (some or most of a cross-country drive) and winning with a single quarter. Clever!

Re: I am a statistician and I buy lottery tickets

#40

Post by michaelt »

paulsutter wrote: post #16

Insurance has an interesting comparison to lottery tickets. In a lottery ticket, the expected return is usually about 50%. Which is exactly the same as insurance (the premium is about double the expected payout). Yet people regard insurance as prudent, and lottery tickets as foolish. Me included (as long as its a risk you cant easily cover). But our explanation, that "Lottery tickets are foolish because they have a n…

  But our explanation, that "Lottery tickets are foolish 
  because they have a negative expected return" isn't 
  exactly credible if we think insurance is a good deal.
It's my experience that if you offer homeowners the opportunity to gamble all their properties, double-or-nothing on a gamble biased 60:40 in their favor, no-one will take you up on that. Even though the gamble has a positive expected value.

My theory is the marginal utility [1] of your first home, which you stand to lose, is greater than the marginal utility of a second home, which you stand to gain.

[1] http://en.wikipedia.org/wiki/Marginal_utility

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