In America, we spend upward of $100 billion on lottery tickets a year. While this money helps states raise funds, it is hard to deny that the lottery also offers an ugly underbelly: a sliver of hope that we could get rich quick. In an age of increasing inequality and limited social mobility, lottery advertisements imply that wealth is a mere flip of the coin, and the odds are good you’ll win.
While the purchase of lottery tickets cannot be accounted for by decision models based on expected value maximization, this behavior can be explained by risk-seeking. Additionally, more general models based on utility functions defined on things other than lottery outcomes can account for lottery purchasing as well.
Lottery is not the only form of gambling, but it’s certainly one of the most popular. Many states run a variety of lotteries: the Powerball, Mega Millions, and other state games; and local lotteries in cities like New York and Boston. While there are some differences in how lotteries work, they all have the same basic structure: prizes are awarded by random drawing from a pool of tickets.
Lottery winners usually split the prize with others who picked the same numbers, so choosing significant dates (like birthdays) or sequences that hundreds of people play — such as 1-2-3-4-5-6 — doesn’t improve your chances, Glickman says. Instead, he recommends buying Quick Picks or using random numbers. This will increase your chance of winning, but it will also decrease your share of the jackpot.