RolfAndreassen comments on A clever argument for buying lottery tickets - Less Wrong

1 Post author: RolfAndreassen 04 November 2011 11:19PM

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Comment author: machrider 05 November 2011 01:43:38AM *  0 points [-]

Let's try a different angle:

Then, with 4% interest on my $160k yearly, it would take me about 5.5 years to accumulate that million dollars, or 11000 hours.

So over 5.5 years, you theoretically earned $1,220,000. A million in savings plus $40k living expenses for 5.5 years. Effective hourly wage is $110.90.

At an effective hourly wage of $110 your expected lottery ticket return is 1.0 hours, not 1.1

Comment author: RolfAndreassen 05 November 2011 02:02:11AM 1 point [-]

Ah, but now you are neglecting the additional value of having the million dollars now, instead of 5.5 years from now. At 4% interest this neatly cancels out the additional $220k.

Comment author: machrider 05 November 2011 02:05:44AM 0 points [-]

I don't believe so, but maybe someone smarter than me can explain this. The magic 4% of a million = 40k value indeed should factor in, but it shouldn't dominate the expected value to the degree that you're making it.

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