After the recent Powerball jackpot numbers were announced a week ago, three winning tickets from Tennessee, Florida, and California split the prize. The record amount of $1.584 billion comes out to, after taxes, a $327 million lump sum per winner. With money like this at stake, itâ€™s no wonder even Americans who donâ€™t usually gamble sprinted to their nearest convenience stores. But with peak ticket sales in Florida at 200,000 tickets sold per minute, there are some red flags that should be raised about the lottery. Most people know that their chances of winning are next to zero â€” so why do they play? As it turns out, statistics and psychology have at least a partial answer. Here are some helpful tips that may round out your knowledge of the lottery, how likely you are to win and reasons the lottery is so successful at selling tickets.
Not all lotteries are created equal
Have you ever gotten a scratch-off ticket in a birthday card from a cheap relative? As it turns out, scratch-offs are a much better gift than actual lottery tickets in most cases. The odds of winning, which are legally required to be printed on the scratch-off ticket, are usually lower than 1 in 5 (including â€œbreak-evenâ€ prizes) for Texas tickets. In addition, for the â€œ$100,000 Mega Bingoâ€ $5 scratch-off sold in Texas, the odds of winning the grand prize are 1 in 1,700,000.
For some perspective, buying one of these tickets gives you a 171 times greater chance of winning than buying a Powerball ticket does. But as stated above, the chances of winning smaller but still significant prizes with the scratch-offs are even higher than this.
So why do people play at all?
There are several human quirks and biases at work in playing the lottery–biases, by the way, which are well-known by the lottery designers.
The most notable is called the availability heuristic, which highlights humansâ€™ impulse to look at examples of notable events when making decisions, instead of the statistics that lead to those events. In other words, the well-publicized jackpots are highly visible and memorable, leading people to erroneously believe they happen more often and are therefore more common. You donâ€™t see footage of the tens of millions of frowning faces.
This concept leads into the next factor that clouds lottery statistics: the halo effect. When someone wins a large jackpot in the lottery and that win is inevitably televised, it suddenly seems very possible, even likely, that a win is just around the corner for you or someone you know. Lottery ticket sales usually see a bump after a large win is publicized, even if the subsequent jackpot is much lower than the winning amount. This suggests the halo effect, that after seeing that a win is possible, ticket-buyers consistently increase their buying rates appropriately.
For poops and giggles
I was one of many who clutched their ticket while watching the winning numbers get drawn on January 13. I had no expectation of winning, but for some reason felt the need to buy a ticket. New Yorker writer John Cassidyâ€™s suggestion explains why some people bought one, and I agree with his reasoning. He says it comes down to â€œwarped loss aversion.â€ For some, like me, the mental pain of missing the miniscule probability of winning a huge amount of money was worth more than the $2 it costs to buy a Powerball ticket. It hurts more to not play than to lose.
So, the next time a lottery jackpot jumps to nine digits, remember these tips and facts and stay savvy; itâ€™ll make my odds of winning just a tiny bit better.