Study: Poor spend more on lottery tickets...

[TheMightyFavog]

http://consumerist.com/2010/05/poor-people-spend-9-of-income-on-lottery-tickets.html

A recent study found that poor folks - households earning under $13,000 per year - spend about 9% of all their income on lottery tickets.

Jonah Lehrer:


"The study neatly illuminates the sad positive feedback loop of lotteries. The games naturally appeal to poor people, which causes them to spend disproportionate amounts of their income on lotteries, which helps keep them poor, which keeps them buying tickets."

[Subdivisions]

1. Isn't it quite the shame when the only hope you have left

hangs on the very slim chance that you'll win the lottery?

[proudohioan]

14. Playing the job hunt game is starting to feel a lot like playing the lottery anymore!

[Dont TS Me Brah]

2. wow that's about $100 per month on lottery! Shocking.

at least a lot of the money goes to schools.

[Donnachaidh]

4. does it?

Have you seen some of the SALARIES of the folks running the lotteries?

I'd love a REAL breakdown on who gets what, state by state.

[Dont TS Me Brah]

8. in my home state of FL, the FL Lottery donated 1.28B to the EETF in 2008-2009 nt

[proudohioan]

Oh thank you!

I have been wondering the same thing here, especially lately, when all we hear about are budget cuts and teacher layoffs. Something about the lottery proceeds going to the schools just doesn't pass the sniff test, IMO.

I would LOVE to see a breakdown of who is getting what.

[jberryhill]

71. Money is fungible

It's not as if any state ever reduced their general budget after introducing a lottery.

The "lottery funding the schools" routine simply frees up money to be spent on mischief. The general budget allotment to schools gets cut, so it's not as if the schools get "more money".

It is a conflict of interest to use that money to teach children math.

[MrsCorleone]

59. I second that. Would love to see where the money is really going. nt

[Obamanaut]

11. No it doesn't. I think you will find that the school budget allotments

by legislatures started going down as lottery dollars began to arrive into the coffers. Lottery income was just a replacement, with the former amount being used elsewhere.

[Bluebear]

12. Which schools, do you think? The poor ones? Ha ha ha.

[gmoney]

20. That's a lot of crap...

Basically, it just REPLACES money from the general fund that would normally go to schools. If somehow lottery sales doubled overnight, the state funding to schools would stay the same.

Kind of like if I tell myself "all MY federal tax dollars go to preserve national parks" -- the money is fungible. I suppose that I can believe it if I want to, or even tell other people that.

And yes, it's one of those "proceeds benefit" schemes, too, where after the cost of prizes, and printing the tickets, and administration, and fees, and salaries, and advertising, and fees to the stores selling tickets, etc. etc., then money goes to the state. Probably.

Not quite as bad as the Sean Hannity Freedom Concert Scam, but lots of folks are getting money out of the lottery before any money sees its way to the state or the schools.

[Dont TS Me Brah]

21. then that's the state's fault, not the intention of the lottery system. nt

[gmoney]

62. it's marketing hype, yes. helps people rationalize gambling.

If the message was "lottery proceeds go towards funding state prisons" (which they indirectly do) I think some people might think twice before putting their money down.

[Statistical]

91. Or even better lottery procede help to escalate the misguided war on drug.

Your are right they chose "helping schools" for a reason. Often people know when they are making a bad choice (like spending 1/5th takehome pay on gambling) however a little justification helps ease it.

"I mean I am helping the schools so that makes me a good person right?"

[pampango]

65. It certainly is the state's fault. They sell the lottery as benefiting schools. It's an "easy" way

to raise money. They then redirect general state funds that were going to spent on education to other uses.

[jberryhill]

72. It is the direct intent of everyone involved

The line about funding schools is just salesmanship.

[Zynx]

85. In Wisconsin it goes to property tax relief. Admin costs are not huge.

[Donnachaidh]

3. that HOPE thing -- you know, the one used in campaigns?

Poor people sometimes only have THAT.

:puke:

[Kolesar]

6. And bad math skills.eom

[Donnachaidh]

15. yeah, damn those poor people and their bad math skills

:sarcasm:


:wow:

unbelievable.

[Quantess]

18. Well...it's true, isn't it?

You can't argue that it's not a poor return on an "investment".

[RaleighNCDUer]

24. It is not an investment - it is a lottery.

And these are not stupid people buying the tickets. They are desperate people who know the pittance they spend will make virtually no difference in their lives, while a win - no matter how unlikely - will make a huge difference in their lives.

[Quantess]

33. Yes, I know it is for entertainment purposes only.

That's why the "poor math skills" comment was legitimate.

[HiFructosePronSyrup]

34. If it's for entertainment like you say, then "poor math skills" is moot.

It's not poor math skills to waste money on entertainment when you're poor, just bad decision making.

It's poor math skills if it's "to make a huge difference in their lives" as Raleigh claims.

[unblock]

51. actually, their math skills are better than perhaps even they realize.

those who are baffled by the wisdom of poor people are usually sucked in by the superficial appeal of mathematical analyses that start with the premise that every dollar is of equal value.

so, for instance, a 100% chance of $50 is "worth" the same as a 50% chance of $100. this is true enough in small quantities and generally true for most of us who are comfortable enough with our financial situation. if one dollar more of less isn't going to change your life, then the difference between finding $10 vs. finding $11 lying in the street won't be of much consequence either.

but in the real world, there are a number of situation where this isn't the case, and poverty is one of them.

$1 lost won't change your life, but $1,000,000 won certainly will. the usual math works fine IF the $1 you lost was worth exactly one one-millionth of a dollar, BUT THAT'S NOT THE CASE because individual dollars here and there lack the power to really change your life but $1MM does.

if you convert the dollars to "utils" or however you want to measure the real value of the money, then the analysis will show that poor people are indeed quite logical in their thinking, given that they are in a terrible situation that makes having enough money to escape have value disproportionate to the amount of money it takes to do so.



a similar phenomenon works with shares of companies being taken over -- individual shares are supposed to represent, say, one one-millionth of the company, but when 51% of the shares taken together have something that the individual shares by themselves do not -- control of the company. and so there's a premium to be paid for the 51% stake

[Statistical]

54. No they aren't because it isn't a on time purchase.

For the people in the study it is 9% of income. That adds up to significant amounts of money over a lifetime.

So the price is

$1200 per year * 54 years (adult lifespan) = $64,800 in principle for the 1 in 10,000th chance of striking it rich.

It is worse when you consider the time value.

$1200 invested a year compounded over 47 years (18 to 65) with a return of just 9% is $827,579.

Now $800,000 at retirement isn't going to make you rich but it certainly will supplement social security.

[JVS]

77. Where can I get 9% annual interest?

[Statistical]

89. A diversied portfolio. stocks, corp bond, treasuries. n/t

[Hannah Bell]

67. unlike the geniuses putting their extra cash in the stock market casino.

those bright bulbs = "investors"!

[Chulanowa]

5. And those who win are usually back in the hole by a few months

The whole thing is a scam. Poor people become poorer, and the folks who actually hit the jackpot have made these huge plans, without the realization that having a few million dollars is nothing. Nothing. And it's all encouraged by the state itself.

[BlueIris]

42. Yep. And most lottery winners wind up saying they wish they'd never won. nt

[Obamanaut]

7. 9% of $13,000 is $1,170. That's a lot of potential groceries, at

$22.50/week.

We go to one of the three food outlets in our town, and the first place we check is the buy one/get one free display. One can fine some good bargains there.

$22 in lottery tickets is foolhardy, considering the one in a brazillion chance of winning.

[RamboLiberal]

13. Some of that is played on the daily numbers

Pick 3, Pick 4's. I've worked in some poorer neighborhoods and been behind the people playing(I'm usually buying tickets for the office pool when the Powerball or MegaMillions get in the 200+ range).

Here in my state though prior to the state lottery they played the numbers through the local numbers runners.

And some are still down the local bar playing the illegal video poker machines. Or going to the new casinos.

Been a move in PA to make it legal for the poker machines in the little local bars.

[sendero]

48. Typical casinos..

... pay out about 90% of the take. Typical lotteries about 50%.

Lotteries suck.

[Hannah Bell]

68. the numbers racket used to belong to independent gangsters; now the state runs it to benefit

the capitalists (lower taxes).

thus capitalism destroys independent businesses.

[Commie Pinko Dirtbag]

16. Crap. Spending $22.50 a week on lottery borders on addiction. -nt

[Forkboy]

9. Well yeah. This is the only hope many poor feel they have.

[KamaAina]

10. Also in this month's issue of DUH! magazine: "Water is wet".

On newsstands now! :eyes:

[Statistical]

30. I didn't find it a DUH situation.

I had no idea poor were spending that MUCH of their income on lottery.

I mean $1200 a year. $1200 a year can buy a lot of useful things.

[Hempathy]

36. I did.

the lottery is basically just a "stupid" tax.

[Statistical]

38. So you equate poor with stupid?

You sure you are on the right forum?

[KamaAina]

43. No, it's that I've lived in both poor and affluent neighborhoods,

and I couldn't help but notice where the lines for Lotto were longer: a LOT longer. Generally wealthier people only get involved when the jackpots get up around $200 million.

[KamaAina]

44. Well, that much is true.

It was the headline that could have been clipped from the pages of DUH! :-)

[Viva_La_Revolution]

52. We're not!

I never buy tickets, most people I know don't... a very few buy way too many. screws the average for all the rest of us.

[depakid]

55. I used to see moms with kids in tow buying sheets of scratch offs at the local mini-mart

and as often as not, those kids had on worn out shoes.

At one point in my life, I held the opinion that lotteries were simply taxes on the innumerate (which in fact they are) but after enough such observations, I recognized that there was a lot more going on than that.

[DrDan]

17. Lottery tickets are a tax on the mathematically-challenged

forget who said that - but so true

[FLPanhandle]

28. I use that line all the time. n/t

[DrDan]

40. unfortunately - those that need to understand the most, don't

[Lyric]

60. So is the stock market.

[DrDan]

81. I'll take my chances on the stock market before purchasing a lottery ticket

[Lucky Luciano]

86. No kidding. At least you can short the market. You can't short lottery tickets!

[DrDan]

87. don't give anyone any ideas . . . .

[frebrd]

19. Well, they're too poor.......

to gamble in the stock market like most people seem to do.

[RaleighNCDUer]

25. You got it.

I lost a fuckload more from my 401k than these people lost on lottery tickets.

[FLPanhandle]

32. Unless your 401K is valued at zero, I doubt it.

Those non winning lottery tickets are worthless.

[newscott]

22. That's why it is called a regressive tax on the poor.

[spin]

23. The one person I knew who won the Florida lotto ...

was an engineering supervisor for a large national company. He was far from poor and he was smart enough to realize that he had little chance to win the Lotto.

I buy one $1.00 ticket for each lotto. I realize that I have no chance to win, but also that I have absolutely no chance to win unless I have a ticket.

[EFerrari]

26. Well, the lottery is a better bet than the government. n/t

[Oregone]

27. While I understand all the arguments against the lottery...

If you do not have a regulated, legal option setup that the state can partially benefit from, an illegal, unregulated option will be ran by criminals.

[angstlessk]

29. I heard you had a better chance of being hit by a meteor while standing in line

to purchase a lottery ticket than you had of winning the lottery....and that is not the mega ball crap!

[Statistical]

31. Well that is obviously false and easily proven

Someone wins the lottery almost every single week (multiple lotteries in the country).

Show me a story of a person hit by meteor while standing in line.
Then show me a story from every single week for the last year. :)

[angstlessk]

35. touche...but the odds are against winning...and for a meteor to hit the line.

odds of winning 1 in 7,000,000 ...being hit by a meteor According to astronomer Alan Harris, "... any person's lifetime odds of being killed by an asteroid impact are about 1 in 700,000."

[Statistical]

37. Agreed both are astonomical.

One of them literally. :rofl:

[Tailormyst]

50. Ahh but the few minutes of daydreaming over what you would do if you won.

THAT is what they are buying. Dreaming of getting hit by a meteor doesn't have quite the same effect.

[Statistical]

39. The scarier part.. it is 9% average.

Not all low income households play the lottery and some that do spend much less than 9% of income thus there are many households who are above the average spending 12%, 15%, 20% of income on lottery tickets.

[Lydia Leftcoast]

41. A dollar a week isn't going to make anyone rich or poor, and the only lottery players

who strike me as stupid are the ones who will drop $100 or more when the jackpot goes into the $100 million range.

I actually saw someone doing that in Oregon, where the lottery machines are self-service, insert five different playing slips, each with a potential cost of $20, into the machine. And I thought, "Man, you just increased your odds from 1 in a hundred billion to one in a billion."

[Statistical]

45. 9% of your annual income on lottery will keep your poor though.

Average household with income <$13,000 spends an average of $645 a year on lottery tickets.

Essentially taking a 9% paycut.

[Lydia Leftcoast]

46. Tell that to someone who literally has no other hope of getting out of poverty

$645 a year might buy more groceries, but $645 a year put into savings isn't going to make anyone rich in the foreseeable future.

The world looks a lot different when you're really poor.

[Hannah Bell]

80. when you're making $13K/year you're already poor. & saving $1000 a year won't make you not-poor.

let's see, in 10 years they could save $10K.

unless they had a health problem, a car accident, a childcare problem, etc.

in which case they'd be broke.

buying lottery tickets doesn't make people poor.

[Statistical]

90. By that logic cut minimum wage by $0.60.

Won't make people anymore poor right. 2000 hours * $0.60 = $1200.

Also we shouldn't raise minimum wage $0.60 either because $1200 more won't do the poor any good.

[Hannah Bell]

92. "won't do the poor any good" is different from "keeps them poor".

what keeps them poor is making $13K.

no one writes stupid articles middle class people buying lottery tickets.

[Lucky Luciano]

94. Yes, but that extra $1,000 or so would be much vetter

Spent on healthy groceries and healthy meals instead of mcdonalds happy meals/dollar menu dog food.

[Hannah Bell]

95. yes, well, so would the $100,000 a year rock stars spend on coke.

but they have the money, so no one harps at how they should "eat healthy".

what business is it of yours what someone else eats?

[Lucky Luciano]

100. Fine - no business of mine, but I will be less sympathetic to their

Condition if they are blowing critical funds like that.

[Hippo_Tron]

96. That $1000 in an emergency

Is a lot better than having to borrow $1000 from a loan shark at ridiculously high interest in an emergency. It doesn't matter how poor you are, the expected payoff of the lottery is not high enough to make it rational to buy a lottery ticket. If you're a gambling addict, however, the high that you get from playing the lottery is definitely worth it.

I agree with you 100% that poor people aren't poor because they play the lottery. I also don't believe that poor people are mathematically challenged and are unaware that the odds are astronomical. Compulsive gambling is an addiction and it's one that spans all socioeconomic classes. The lottery is one of the cheapest forms of gambling and those without the means will get their fix playing the lottery. Those with means will piss away even more money by taking frequent trips to Vegas.

[BlueIris]

47. Oregon has a lot of compulsive gamblers.

Some stats have it as high as 1 in 4 people.

[Lydia Leftcoast]

66. The video poker doesn't help

During a power outage that covered several blocks, I went out in search of the nearest affordable place to eat that wasn't affected.

It turned out to be a bar about five blocks away. The food was good, but it was disturbing to see two of the well-known local panhandlers putting coin after coin into the video poker machines.

[kelly1mm]

49. Lottery = voluntary tax on people who don't understand math. nt

[county worker]

53. I had a poor co-worker who won $36,000,000 in the CA lottery.

She made minimum wage and her husband was a gardener's assistant. The had been playing the same numbers for over a year on every payday. They had another couple as friends who also played the same numbers as my co-worker so at first it looked like they were going to split the winnings. A camera filmed the purchase of the tickets and the lottery commission took away the winnings of the second couple because they bought their tickets with food stamps.

[tammywammy]

56. How could she buy a lotto ticket with food stamps? n/t

[The Straight Story]

61. Store owners can and do trade things

Especially the ones I knew in Bakersfield, CA. No money? Give them foodstamps and you get alcohol or smokes.

I am talking small store owners who know most the people in their hood. I traded old computer parts I had once - the owner needed them, asked me if I had any keyboards/hard drives and I did. So next time I came in we just traded.

[county worker]

75. It was at a 7-11 and the clerk sold them a ticket using food stamps.

[Dr Morbius]

57. I submit that it's worth noting that if the government didn't operate the lottery...

...the criminal element would. They did, back before lotteries were legalized. Now, I would if I could pass a law which requires funds obtained via lotteries be applied to economically struggling areas, like making it cheaper for businesses to start in these areas and paying for modernizing the roads. States initially claimed the lottery funds would not reduce the amount the states were spending on education; the lottery was supposed to be supplemental. But we all know how politics works; find a way to keep taxes low and benefits flowing and you'll get reelected. Apply lottery proceeds to the poor; they're the ones spending the most on it and what will happen is that they're actually going to see a benefit from the "poor tax."

But again, eliminating the lottery would result in numbers rackets. People need to fantasize about a better life, and the dream of spending a little every week and someday hitting it big is a very powerful dream, one which transcends cultures. It's like any time the government tries to prohibit something the people want: the people will find a way to get it. They tried making booze illegal; people made gin in their bathtubs. Marijuana has been illegal for over seventy years; if you want it, you probably know someone who knows someone who can get it. People, especially people who are struggling, want to gamble. It won't ever go away.

[Hippo_Tron]

98. Agreed, as long as there is a demand for gambling there will be a supply

If I ran a state government I would replace the lottery with some kind of inexpensive game of chance that pays out relatively close to what it takes in. Addicts could get their fix and not lose a substantial amount of money doing so.

[Better Today]

58. Yep, it's absolutely disgusting that states allow this type of gambling

and then gloss over the fact that it's just a form of gambling by promoting it as good for schools. Once again they intentionally set up a situation where the poor foot the bill for everyone.

[tammywammy]

76. Well, the people I know that buy lottery tickets

sure as heck don't care that it's "supposedly" for the education system.

[Manifestor_of_Light]

63. The people I know who smoke can' t afford it either.

Five bucks a pack gets pretty expensive.

One guy I know rolls his own with Bugler tobacco but I have no idea how much cheaper that is.

[haele]

64. Actually, I won $25K as part of a workplace lottery pool back in January -

They roll over the smaller winnings to keep our original $10 investment until a winning pot would give everyone over $100, then start over with another $10. Occasionally, I've bought a ticket on my own if there's a bit of un-budgeted money left in the wallet, if the spirit moves me and the bank account allows it.

I can understand why a poor person might buy a $1, or even $5 when they might have an extra dollar or so left over after their weekly budget. According to one of the guys at the 7-11 down the street, his average regular daily lottery player would usually win back at least a dollar after 5 one-dollar plays, and sometimes win back a couple hundred on one ticket about once a year or so. They're still losing, but they see winning a a couple dozen or couple hundred at once for a one-dollar play as something to look forward to, because that's what they usually need to get a little ahead.
The lonely left-over dollar at the end of the day is not enough to purchase much of anything or get ahead (unless someone has the motivation or ability to diligently put it away in savings), but it will usually be used to purchase entertainment; some people would rather purchase a lottery ticket as entertainment rather than rent another beer for the night.

I wouldn't call them stupid.
But then again, it may be because I have put around $40 (actually probably closer to $100 on second thought) in the workplace lottery pool over the past three years. Just for a bit of shared camaraderie, entertainment, and hope.Sure, that money could have been better spent - but then again, it could have been equally wasted on an evening out just to help myself and my spouse "feel better".
But hey, the meteor struck and the 12 of us won $25K apiece - actually, $18500 or so after taxes. Pure luck of course, and I'll probably never win that much again, but there is always that wistful little voice in the back of the brain, and it did give one a jolt and went a long way to pay off the bills (what we don't "waste" on the wish-list, of course).

Haele

[Hippo_Tron]

97. I agree with most of what you said

I don't think that people play the lottery because they're too stupid to realize they won't win, I think they play the lottery because gambling is exciting. But spending $1 on a lottery ticket every now and then is different than 9% of your income. That is the sign of a person who has a gambling addiction.

[leftstreet]

69. Have they studied how much 'middle' classers spend at casinos?

:shrug:

A gazillion gaming places here in the west

[justabob]

70. buying hope nt

[tango-tee]

73. That's it. Exactly. nt

[Lucky Luciano]

74. I get really annoyed when I run into a deli to make a quick purchase

...and there is some moron buying sheets if various kinds of lottery tickets. They spend a lot of time "strategically" selecting which games to play. Grrrr!!!

There are much better games to play where there is an actual edge to be had - eg poker.

[RandomThoughts]

78. Although there can be a bad effect there, there is also a logical effect there.

And there can be good side effects in metaphor.

If you have a dream, and that dream can not be achieved within your acceptable standards of behavior by normal means, then you have to go for the long shot.

It is not because it is thought of as possible, but because all other options do not achieve the needed goals. It also requires a belief in the impossible.

So if everything probable is ruled out as a possibility you have to look for the improbable.




Although I do not buy lottery tickets, as a concept that does apply to many things I do. However the difference is I do not spend money on lottery tickets, but instead spend effort and time on a similar metaphor. Any other way to spend such time and effort would be a waste since it would not have a path to achieve goals.

To spend time or energy in ways that would compromise and accept what I do not accept would be to go against personal views.

So the long shot it has been, and will be, within any effort that fits within my view of existence.

Golf Shot,

Four!!!!!!!!!!!!!!!!!!!!!

Four Lights.
http://www.youtube.com/watch?v=moX3z2RJAV8


And for humor. :D

Caddy Shack
http://www.youtube.com/watch?v=U0Hx5ka1FiA


And still moving!!!!!!!!!


15 miles to the Love Shack. Yea!!!!!!!!!!!!!!!
http://www.youtube.com/watch?v=leohcvmf8kM

[Hannah Bell]

79. poor people aren't poor because they buy lottery tickets, and buying lottery tickets doesn't keep

them poor.

and poor households as a whole don't spend 9% of their income on lottery tickets.

just another blame-the-poor narrative.

god i'm sick of them.

poor people are poor because our economy creates them.

half the workers in this country make less than $15/hour.

10% are unemployed.

20% are underemployed.

that's why people are poor.

[DailyGrind51]

82. The state-sponsired "numbers racket"!

[Dorian Gray]

83. My in laws

who are retired and on a fixed income, spend about $20-$30 a week (each) on lottery tickets. (Combination of Lotto and scratch off and Mega.)

I think I've bought four tickets in my entire life.

It seems like a stupid waste of time.

[madokie]

84. If you don't have very much income to begin with and you buy one ticket hoping for the best

that one ticket would be a larger percentage of your income than the person who has a lot of money and buys a ticket. So this begs the question, why bother with stating the obvious? Why is this worthy of a study?
We buy a couple numbers twice a week and so far we're pretty even on cash outlay. Theres always the outside chance that we'll hit the big number at some point too.

[FLPanhandle]

88. Problem is people don't buy just one ticket

There are poor people buying 25 tickets per week. That's a hefty chunk of money for folks with little to no disposable income

[madokie]

99. I'm not even sure thats true

I know a lot of 'poor' people and I know of none of them who buy anywhere like 25 tickets a week. If I may where are you getting this information?

either way have a great weekend anyway. :hi:
Welcome to DU

[undeterred]

93. Many of the people doing this are buying the daily lotto tickets.

The odds on some of the scratch offs are much better, of course, then winning a huge lottery. When I worked in a convenience store we would sell about $1500/week in these. The payout to winners was less than half of that amount. The store owner was "winning" some percentage of every single ticket.

The problem is intermittent reinforcement, which is pretty powerful. I remember a guy who came in and bought $100 in scratch off tickets with his 8 year old son. They came back a few hours later all excited that one of the tickets was a $50 winner, and there were 2 $3 winners. They cashed that in immediately and used it to buy more tickets.

Spend $100 and get excited about winning $56? He could have taken his kid a lot of places for that $44 worth of fun.