The $500 Million Powerball Jackpot And Why It's Not Worth Buying A Ticket

BI ^ | 2-11-2015 | Andy Kiersz

[blam]

Andy Kiersz
February 11, 2015

The Powerball lottery drawing for Wednesday evening has an estimated jackpot prize of $500 million.

While that's a huge amount of money, buying a ticket is still probably a losing proposition.

Consider the expected value

When trying to evaluate the outcome of a risky, probabilistic event like the lottery, one of the first things to look at is "expected value". The expected value of a randomly decided process is found by taking all of the possible outcomes of the process, multiplying each outcome by its probability, and adding all of these numbers up. This gives us a long-run average value for our random process.

Expected value is helpful for assessing gambling outcomes: If my expected value for playing the game, based on the cost of playing and the probabilities of winning different prizes, is positive, then in the long run, the game will make me money. If expected value is negative, then this game is a net loser for me.

(snip)

[Tijeras_Slim]

He’s not my boss anymore... but that’s another story. ;)

[Tenacious 1]

Really? He did all those calculations to explain that per the statistics, buying a lottery ticket is not a good investment? He needs more work.

[huldah1776]

Haven’t looked at the statistics for those who use their winnings wisely and make more money or go into business, but this was heartbreaking...

http://www.businessinsider.com/lottery-winners-who-lost-everything-2015-2

view as single page link is in light blue on the right (I hate clicking)

[MAKOTHEDOG]

Well a fiver is cheaper than a movie ticket and I get more enjoyment out of the 2 hours dreaming about what to spend the money on.

[Tenacious 1]

It would cost you to $350,000,000 to buy every single number. After taxes, you would take the loss. BUT, if you sunk $350M into a one time draw, the value should go up to a point that there is something close to be made.

Now, one of you REALLY smart FReepers calculate the curve and see what the JP has to get to to make buying every single number work out profitable.

Then we’ll figure out the logistics. Then we’ll go find $350,000,000 and split the winnings.

LOL

[Pearls Before Swine]

No one so far has addressed the economic reason to buy a ticket. Sure the expected return is negative, but that isn’t all there is to it. If it were no one would ever but insurance. Here if you win at least you’re happy. If you win with insurance you are generally unhappy. The economic term is skew preference.

[CommerceComet]

My brother-in-law always went on about how most lotto winners were broke in a couple years... I told him that was because they gave money to their in-laws, and that I wouldn’t make that mistake.

LOL.

If I were to ever win the lottery, I wouldn't let anyone except my wife know and I'd swear her to secrecy. It wouldn't change my lifestyle much because I really don't have any expensive tastes. However, a lot of charities would be very happy at the substantial ANONYMOUS gifts.

[Jim from C-Town]

‘it would be awful.’

Yes. I can hardly wait.

[Tijeras_Slim]

It would cost you to $350,000,000 to buy every single number.

I don't think someone with that kind of cash fits the lotto player profile.

[PeteB570]

You might win.

I’ve got two quick pick tickets in my pocket that are guarantied to have none of the numbers on them that will be picked tonight.

[Bubba_Leroy]

I would not want to win a $500 Million lottery. Seriously.

The nutcases would come at you from everywhere. You and your family would have to live the rest of your lives in a guarded compound. It would be like getting elected president but without any secret service protection.

I wouldn’t mind winning a couple of million though. Enough to never have to worry about money again but little enough that not to make the national news.

[Tijeras_Slim]

Had another guy at work go on and on about only idiots play the lotto... Asked me what I would do if I won... told him I’d buy every house around him for a block and fill them with Katrina refugees, beer and boom boxes.

[shawnlaw]

I used to think that if I won (I have 14 picks) I’d end up face down in a gutter dead and broke. I’ve been broke and recovered nicely and I’m not afraid of dying as long as I have a good time getting there ; )

It would be entertaining to turn down those asking for a hand out and more entertaining to establish a foundation to direct gifts to worthy public and private charities. The parties you get in invited to can be pretty awesome!

[Sgt_Schultze]

I bought 10 tickets, all with the identically same number series. I figure the odds of winning are so slight, and the number of players is likely to be large, if I am one of the lucky winners, I’ll get 10 shares of any split.

[GeronL]

lol... go section 8 on his butt....

[KC Burke]

I would force myself to deal with the inconvenience.

[Squantos]

Or your idiot cousin Squantos in Texas......:o)

[GeronL]

public charities?

lol

[CharlesWayneCT]

Uncle Sam is the only real winner of lotteries.

Everybody takes their after-tax earnings, and puts in in a huge pot.

Eventually, someone takes 60% of the pot, and the Feds take 40%.

So it’s like everybody is just giving Uncle Sam 40% of their money.

[Tijeras_Slim]

I’ll buy you a Lorcin or Jennings.