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So I just bought my ticket, and I have two questions.
1. So the store guy told me that they get 3% of any winnings sold at their store.
Why would they do it like that? ????? me, I am entering into a transaction with negative Expected Value, so they give me a big bonus, such that the negative risk will account for the loss in value.
But, the store should be making normal business decisions when it decides to carry lottery tickets or not. Wouldn’t it be better to just give them 2.5% of all lottery sales?
2. Do you think the lottery could ever get high enough that you have a positive expected value? The chance of winning is 60x59x58x57x56x60= 39,322,886,400. Which means that if it got up to about 40 billion, you would actually have a positive EV (not accounting for the possibility of shared winnings.)
3. Now, a response to all those who make fun of lotteries and call it a tax on the stupid. Playing the lottery makes economic sense.
The reason for this is, the idea of risk. Risk is that in one outcome, money will be worth more to you than in the other outcome.
For example, we buy insurance against the risk of a fire in your house. The insurance companies make money, because they charge you more (on a present value basis) than they will pay you on average. Because, if your house burns down, money will be more valuable to you, because you will be out a house. So the money you are paying now is actually less valuable to you than the money you will get–even though you are paying more money.
To put this in numbers. Imagine your insurance premium is 100, and the expected losses are 98. But, if you lose your house, 98 will be worth more to you–it will be worth 101. So you are trading 100 for an expected value of 101.
The same is true here. If you win the lottery…
I’m not sure this makes sense. Because if you win, the money will be worth less. So not only are you trading 1 for an EV of .50, but the .50 you get will be worth less than that, because .50 is worth nothing when you have millions.
But it makes sense intuitively. So I’m stuck.
For once I agree with you
Your math is wrong. The odds for Mega Millios is 1/(C(56,5)*46) or 1:175,711,536 making a positive expected value (ignoring shared jackpots) a common occurance.
Your numbers are wrong but more importantly the order doesn’t matter so we’re dealing with combinations rather than permutations.
The first 5 balls are from a pool of 56 and the last is from a pool of 46.
I didn’t win 🙁
PBA: To point number 3,I don’t think the lottery and insurance policies are comparable, two different things with two different models and variables.I understand why so many people call the lottery a tax on stupid people.I will say though if you don’t play you cant win. The bigger the risk the bigger the reward.
I have feeling I won the jackpot ill check it now.
I have feeling I won the jackpot ill check it now.
Nope, got two out of the five and one off the mega.
Almost a millionare.
Regarding your third point lets take a hypothetical lottery where the chances for a $50,000,000 jackpot are 1:100,000,000. Most lottery players would treat the EV as $.50 (actualy most lottery players are too stupid to know what an EV is). However, if they actually had $50,000,000 it would be worth less to them so the EV really should be computed against what the perceived value of the jackpot would be if they actually had that much money. I’ll get back to you on how to calculate “perceived value” as one cannot just go to a billionaire and ask him how much $50,000,000 is worth.
Nobody Wins jackpot up to $476 millions dollars i feel like so much less of a loser knowing nobody won the big prize
You’re buying the right to actually dream until Friday night (till Motzoei Shabbos until you can find a way to check the numbers b’hetter).
Insurance policies work by one taking a small hefsed now (premiums) to prevent a big hefsed later. Lottery is taking a small hefsed now for a potential revach later. One is attempting to remain a muchzak in what you have. The other is an attempt at an increase.
Also the risk in insurance policies is based on actuarial tables to be realistic. One calculates what the aggregate risk in all of his potential customers and sets the rate at what is theortically a couple of points more than what he expects to pay out. Risks are calculated by the customers in a similar way (albeit without consulting actuaries) and they elect to buy the policies, or not. The odds of winning the lottery are off of any actuarial table. No one invests based on any EV having any realistic values. Your purchasing a dream, that’s it.
goq,
it’s up to 500 million (500,000,000)
The Goq- Correct. Most people take the immediate payout which for a 500 million lottery is approximately 300 million. After taxes you are left with approximately 150 million.
I promised i would buy everyone in the cr a keurig if i win im upping the ante gonna throw in 500 k cups too!
idk what ur talking about, but just hearing the word permutation gives me nightmares of college math…which surprisingly i got an a…it does help having a frum professors!!
oh and all u need is 1 ticket to win…
I have a different question
if you won what would you take 19.2 million for 26 years, or 359 million lump sum
does anyone know how to figure it out with the TVM and inflation?
If anyone wins, please let me know.
So Popa, it turns out that I was right! Thanx for getting me a haskama from the choshuve economist!!
Here’s an idea i’ve heard:
G-d def. doesn’t trust me with 500 million. But he might trust me with five – so i’ll play the regular lotto.
Oomis- I will let u know when I win. Sure.
Of course, oomis, because the first thing I’m going to do after I see that I have the winning numbers is log on to the cr. Probably to ask advice from the people here what to do with the money from a halachic and legal perspective. But now that you’ve asked, I will make an announcement here first.
squeak,
when you win, please contact me. I know a Nigerian prince who can make you really really rich if you’ll invest a cool hundred million or so with him.
charlie, I know a Nigerian Prince who can make you rich for only 50 million, your guy is a rip off
How many more weeks of no winners do we need for the jackpot to exceed the national debt?
42,
lol,
personally I wouldn’t care about the national debt if I won, I would move straight away to Eretz Yisrael
Why does anyone waste a buck on this?
How is Mega Millions different than PowerBall?
Charlie, yoi’ve got it backwards. If I win $500M the I am rich. It’s if I don’t win that I’ll need to help princes in Nigeria. But what you don’t know is that I am a Nigerian prince, and I am just waiting for one person to take my emails seriously…. I could really use help mocing my money to your country.
Aaaaaaaaah! 640 MILLION!
CA ill make you a deal if you win you give me one pct and if i win ill give you one pct deal????
fyi
you have 9 times the chance of dying this year from a tv falling on your head then winning this jackpot.
just some food for thought 🙂
🙂 Bump 🙂
Of the lump sum, or 640 million (take in mind the lump sum is also before taxes)
The probability of any given ticket winning is 0.00000057%.
No winners: 5.1%
1 winner: 10.2
2 winners: 15.1
3 winners: 21.4
4 winners: 19.0
5 winners: 13.5
6 winners: 8.0
7 winners: 4.1
8 winners: 1.8
I bought my tickets because I expect to get a better return on this inverment than I did with Bernie Madoff. At least I can’t lose as much.
I’ll have to wait till motzei Shabbos to verify than I won. Does anyone ou there want to claim it for me so that I can remain anonymous?
My mom was in a gas station way out in yenemsvelt in New Jersey and she decided that she may as well buy a ticket.
Right behind her was a whole flock of yeshiva bochurim who pooled together and bought 60 TICKETS!!!
Ah shood oif yiddishe gelt.
Thanks, you guys. And then I want to talk to you about that poperty in Florida that I am selling.
Everyone’s statistics are all wrong. The way I see it is, if Hashem wants me to win, I’ll win. And if Hashem wants me to lose, I’ll lose. So my odds of winning are 50-50!
Goq,
Did you win 250,000, one of the tix were sold in queens?
So my odds of winning are 50-50!
Faulty reasoning. Just because there are two possibilities does not make the odds of each possibility 50%.
I will either be eaten by a bear tomorrow or not, but that doesn’t mean that my odds of being eaten are 50%.
The Wolf
nope i didnt win sorry ca.
Yes you did, you just don’t want to tell me bc then you would have to give me 2,500 😉
One of the winning $250,000 tickets was sold on 14th Ave in Borough park
“After they win the jackpot, most of them self-destruct and they end up much more unhappy than they were before,” Dr. Tom Manheim, who offers financial therapy in Solana Beach, Calif. “It’s really kind of a sad state of our economywhere we think that money, once again, is going to bring us happiness and it doesn’t.”
To the Wolf;
The bear example is not the same bc there are no wild bears roaming around the neighborhood, so the chances of being eaten by a bear are zero. But since we don’t know the will of Hashem, from our point of view, the chances are 50-50. From Hashem’s point of view, the chances are either 100% or zero, since He decides and knows who will win. Ultimately, it is Hashem who will determine who wins the lottery, and not “chance”. To go strictly by the “odds of winning” is leaving Hashem completely out of the picture
write or wrong,
You’re still wrong, on two counts:
1. You don’t like bears? Fine. There are plenty of cats in my neighborhood.
I can either be clawed to death by a cat today or not. But that doesn’t make it a 50% chance. Just because there are two possibilities does not mean that the two possibilities have equal probabilities.
2. You’re correct that it’s HKBH who will determine who wins the lottery. But even so, if it were really 50%, then roughly half the people who play the lottery would win. Since they don’t, the chances are not 50-50.
The Wolf
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