Blogs | November 12, 2013

Why do I buy lottery tickets?

Nathalie asks: Why do I buy lottery tickets?

Ian answers: Nathalie, you know the odds of winning even a small prize are very small. Yet you still buy. We can get very academic and look at the many studies of why you – and many others – buy lottery tickets but the explanation I favour is that it is fun. And it is also fun (for me at least) to try and figure out why buying lottery tickets is fun.

It’s fun to think about living the (distant) dream
A person I know buys a lottery ticket and every time has the expectation they will win. The hope and excitement is born when they buy, and, so far at least, dies when their numbers fail to come up.
Academics in Europe studied emotions associated with buying lottery tickets in an experiment published in 2009.
One of the things the researchers wanted to explore was if people prefer buying lottery tickets where the result is known at some time in the future rather than instantly (such as with scratch cards). The researchers found people enjoyed the thrill of waiting for the result – like my ever hopeful acquaintance. What they found was the feeling of hope and excitement not only existed at the time the ticket was bought but increased noticeably as the announcement of the result came closer.

It’s no fun not joining in
Buying a lottery ticket is not always something you do on your own. Think of syndicates at work or groups of friends who all chip in a small amount every week to buy a ticket as a team.
In these cases, people may join in partly because of peer pressure but also out of an urge related to loss aversion. Imagine if your friends struck it lucky and you had not. You would feel awful – even though it was a rational gamble to not join in given the odds of winning are so incredibly small.

It’s fun to transform the impossible
As they say, “you’ve got to be in it to win it”. So the only way you can win the lottery is to buy a ticket. Buying a ticket transforms your chances from impossible to possible – even if the possibility is very slight. In fact, Nobel Prize recipient Daniel Kahneman refers to buying lottery tickets in his book Thinking, Fast and Slow as “the ultimate example of the possibility effect”.
However, it is not a large endorsement of buying. It is more of a warning about our tendency to overweight very small possibilities.
Much of Kahneman’s discussion about the possibility effect examines how difficult it is to understand the difference between the unlikely and the practically impossible. Many children are convinced they will be professional sports players or pop stars, just as many adults buy insurance in case a relatively inexpensive product breaks down when there is little chance of it happening.
But when it comes to lottery tickets, it’s fun to move from impossible to highly improbable.

It’s a funny world
These are three reasons that spring to my mind as to why you play the lottery. There could be many others too.
But my view is that as long as you do not get carried away with it by spending more than you can afford, it could well be a spot of harmless fun. Enjoy. And if you win, remember I encouraged you to carry on buying.

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Ian Bright
Ian Bright

Senior economist at ING
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45 blogs

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