I suspect the real problem with the lottery is that people are familiar with the amounts of money necessary to purchase a ticket and recognize that it won't bring them much happiness or satisfaction... but they're not familiar with the amounts of money typically given away in a lottery jackpot, and they imagine that it will make them much, much happier than it is actually likely too.
Even people who know that the lottery has a negative expected financial value buy tickets. They'll accept a resource loss if it leads to greater utility, and people tend to perceive the slim chance of winning lots of money to be sufficiently valuable that they'll take an expected loss to have the chance.
The irrationality comes not from dismissing the statistical loss of money, but from believing that winning offers much greater utility than it will.
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But if they're wrong, then they'd have always been wrong, and Karl should have just been liberal, rather than becoming more so when surrounded by liberals.
But that means that people cannot change their mind and realize when they are wrong.