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The Lottery and Its Impact on the Poor

The Lottery and Its Impact on the Poor

The first European lotteries appeared in 15th-century Burgundy and Flanders as towns sought to raise money to fortify defenses and aid the poor. Francis I of France encouraged the practice, and lotteries soon spread to Italy. The Italians adopted the idea from a game called ventura that had been popular for centuries. People sat around a table, each had pieces of wood with symbols on them, and toward the end of dinner, the host had a drawing for prizes that participants took home.

But the lottery does a lot more than just draw on people’s aspirations to be rich. It entices people to engage in magical thinking and superstition, play on a hunch, or just throw reason out the window. “When the odds of winning are so low, people can’t comprehend them,” explains Carnegie Mellon economist George Loewenstein. As a result, they tend to overestimate those tiny probabilities—known in behavioral economics as decision weighting—and treat them as though they were much larger than they really are.

The lottery is also one of the few consumer products that remained popular even during the recent recession. It’s widely available at convenience stores, billboards, online, and on television. It’s not surprising that states want to promote the game and encourage people to spend money on it. But it’s important to consider the impact of the game, particularly on the poor and working classes. It appears that the lottery has a regressive impact on those with lower incomes, who spend more on it proportionally than do those in higher-income neighborhoods.