Lottery Tickets, Risk vs Reward – A Middle Class Rant VI

Human psychology is both tremendously fascinating, and mind numbingly scary. Although, there are probably a million different examples that would illustrate the fascinating delusions of the human psyche there is one in particular that I’d like to talk about…the risk vs. reward calculation that goes on (consciously or unconsciously) in the human mind when they purchase a lottery ticket. Ok… let me set the scene; the average lotto 6/49 payout is about 3 million dollars, a single ticket costs $2 and the odds of winning are 1 in 14 million. Just to put this into perspective your chances of being hit by lightening in Canada are 1 in 2.5 million. So, if you believe you’re going to win the lottery than you must also believe that you’re going to be struck by lightening at least five times in your life. However, the human psyche doesn’t work like that and despite the overwhelming odds 3 million dollars is a lot of money to most people, and because the tickets are only $2 people are willing to play regardless of the near impossible odds of winning. I can understand and relate to their logic “$2 for a chance at the impossible” it’s worth the risk. However, what I truly find fascinating is the predictable and dramatic increase in ticket sales as the jackpot gets larger. This phenomenon is often colourfully reported in the media with headlines such as “$40M Lotto 6/49 prize sparks ticket frenzy”. These ticket buying frenzies force me to ask the question; who is buying all these extra ticket? Regular lottery players buying more tickets? Or is it irregular players that have been lured by the prospect of winning the $40 million? My guess is it’s probably a combination of the above, but the real question is still unanswered, at what point does the human mental logic chip kick in and say “$2 for the chance at winning $3 million – no thanks… but given the same impossible odds of winning $40 million - now that’s worth 2 bucks.”