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NancyLebovitz comments on On Lottery Tickets - Less Wrong Discussion
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Comments (26)
I've never been sure whether lottery tickets are a completely irrational choice for poor people-- it what they really need is life-changing amounts of money, and they see no hope of accumulating much of anything by saving (too many emergencies and close associates with urgent needs), then a lottery begins to make sense, possibly even for buying moderate luxuries with a small win.
The relation between personal wealth and personal utility is a complicated one, so your observation obviously has some merit. Ad-hoc extreme example: if I owe someone ten billions by next week or they will kill me, and I have no hope of escaping or borrowing the money, spending all of my little money on a lottery is rational since nothing else has the sky-high potential ROI I need (my function here hovers around a flat zero utility, for up to 9999999999 money).
Is the situation of poor lottery players sufficiently similar? My guess tends towards 'no'. Yes, the poorer you are the harder it is for you to 'normally' raise yourself to a decent standard of living - but since lottery tickets usually have a fixed nationwide price (unlike other comfort goods like alcohol and drugs), there is also the matter that the poorer you are the bigger the sacrifice you are making to buy those tickets. And I think that the latter factor outweighs the former.
Also, keep in mind that if we're discussing what is rational for someone to do, observations to the effect that "but they don't think like that" are beside the point - if they hold wrong ideas because of their environment/education/whatever, they're still wrong ideas.
Why do you think that similar situations do not happen in real life? Real people have been killed for not paying their debts.
Sure, but they're extremely rare exceptions - the overwhelming majority of lottery players are not indebted to murderers (and a significant chunk of those who do, I suppose, still have much better options available e.g. run to the police accepting whatever prison sentence may await them).
EDIT: Rephrased the question in the preceding comment to make it clearer that I was thinking of ordinary lottery players.
Now I agree.
You're better off saving the same money (unless it's literally your last money and you can only buy a ticket, and won't be in similar situation later on a regular basis, in which case you should contribute that money to Poor People's Last Money fund actually to more efficiently allocate them for your risk-seeking preferences).
You don't understand how difficult it can be for poor people to save money. They may not have access to banks. They may not have a safe place to conceal money. They could theoretically save a few dollars a week for a year and buy something nice instead of buying lottery tickets, but emergencies would trump the project.
In a recent NPR piece about micro-finance, the point was made that poor people in third world countries frequently want/need a place to store money at least as much as they need a chance to borrow. Presently, they may be storing their savings as animals (which can die) or jewelry (which can be stolen).
This may be more about psychological issues, but I remember an NPR interview with an ex-bank robber. The interviewer asked what you'd do with thousands of dollars (tens of thousands?) you'd stolen, with an implication that you'd save it somewhere. (In a bank?) She and the ex-robber had trouble understanding each other, but I think (and I speak as a fairly middle-class person) that from the bank robber point of view, that's the sort of money you spend. Storing it isn't even something to imagine.
When I look at what I've just written, it's clear that I'm conflating several different sorts of situation, and probably don't have enough information. On the other hand, the Poor People's Last Money Fund doesn't exist, and would probably be hard to organize, though something of the sort exists informally as mutual aid.
Should the emergencies trump this project? Should the fund be given away for the emergencies? If it should, then it's good to have it. If it shouldn't, then it remains intact.
You are getting dangerously far into the No True Scotsman territory, although of course your point is valid where it does apply.
No, she's not - you're assuming things about poverty that simply aren't the case. This list may be useful in thinking on the matter.
"Poverty" may nicely compress many details, but isn't particularly useful in this instance, as we are discussing the specific point of technical ability (as opposed to psychological feasibility, desirability of implementing such a plan, etc.) of a hypothetical rational low-income person to accumulate money in some form. It's not that impossible a requirement to make considerations depending on it irrelevant. Creative solutions exist: you can probably hide cash under a tree stump of something.
Noteworthy: