As happens on a fairly regular basis, a lottery has been in the
news. The latest example results from a record jackpot of $654
million.
Lotteries are instructional for a number of reasons. Believe it
or not, Adam Smith discussed them in The Wealth of Nations
(published in 1776):
In order to have a better chance for some of the great prizes,
some people purchase several tickets, and others, small shares in a
greater number. There is not, however, a more certain proposition
in mathematics than the more tickets you adventure upon, the more
likely you are to be a loser. Adventure upon all the tickets in the
lottery, and you lose for certain; and the greater the number of
your tickets the nearer you approach this certainty.
The chances of winning the lottery are not significantly
affected by whether or not you have a ticket. The chances of
winning the latest lottery were said to be one in 170 million.
There’s no practical difference between zero and .00000001.
Lotteries are an indication of the moral depravity of
government. They are essentially a tax levied in proportion to a
person’s ignorance of probabilities. They are a scam perpetrated by
the government. Lotteries make probability ignorance a crime and
the ticket price is the fine.
You could argue that buying a ticket is voluntary exchange, but
it is exchange based on cynicism and deception. When it comes to
lotteries, governments follow W.C. Fields’ sage advice, “Never
smarten up a chump,” as well as, “Never give a sucker an even
break.” Lotteries are nothing more than a state-sanctioned numbers
racket. The state adds insult to injury by outlawing privately
sponsored lotteries.
Most taxes and fees are in some proportion to some quantity.
Income taxes are a function of your income, gasoline taxes are a
function of how much gasoline you purchase, property taxes are a
function of the value of the real estate you own.
Government revenues generated by lotteries are a function of
what quantity? The answer, of course, is ignorance. If ever there
were a bad bet, especially in terms of magnitude, it’s lotteries.
The percentage taken by the “house” is many times higher than any
casino game.
Getting rich by winning the lottery is profoundly different from
just about any other way of doing so. Most people who are rich have
become so by taking some action—hard work, using their talent,
being creative, for example. By contrast, winning the lottery
involves none of these factors. Winning has absolutely no
connection with the rest of reality. The money received is not
“earned” in any way. It involves nothing but dumb luck, emphasis on
dumb.
It’s a truism that money cannot buy happiness, but numerous
stories about past lottery winners lead to the conclusion that
lottery money can buy unhappiness. There seems to be something
unnatural about receiving such a large amount of money in such an
unreal way.
It could be argued that lotteries give hope to millions of
people. Hope, however, is not inherently good. Some kinds of hope
do more harm than good. Winning millions of dollars in a lottery is
a false hope. It is not one based in reality. There is an
opportunity cost to that kind of hope. It deludes and distracts
people from hopes and ambitions that do have a basis in reality.
Hoping to win the lottery enables people to live in denial.
Large lottery jackpots are taxed at the highest federal tax
rate, allowing various levels of government to get you both coming
and going. For some bizarre reason, possibly guilt, in California
lottery winnings are not subject to the state income tax.
Government sponsorship of lotteries should be proof that
government does not have the citizenry’s best interests in mind.
Government’s heart is clearly not in the right place.
Don’t be a loser or a chump. Don’t buy lottery tickets. It’s the
kind of thing Shakespeare was referring to when he wrote, “It’s a
tradition more honored in the breach than in the observance.”
