Popular though they may be, lotteries, with their billion-dollar jackpots, come uncomfortably close to being taxes on those who can least afford them. Millions of lower-income people funnel a disproportionately large amount of their paychecks into lottery tickets despite prohibitive odds, numerous studies have found.
But protecting people by ending lotteries isn’t a practical solution: If anything, gambling and state-run lotteries are growing enterprises in the United States and many other countries. Therefore, it may be time to focus more attention on the ways that some lotteries have already been transformed into something that truly benefits ticket-buyers: by nudging people to save more or, even, to engage in safer sex.
While the state lotteries in the United States don’t achieve those particular goals, they already do some good. Roughly 40 percent of the lottery income is used to finance education, environmental protection and other causes. But the state lotteries pay out only about 60 cents on the dollar in prize money, much less than slot machines in Las Vegas. This means that playing the lottery regularly can be a huge drain on personal resources. The lottery experience may be so much fun that it seems to be worth the expense. But it’s quite possible that lotteries are taking advantage of psychological biases like a common tendency to overestimate the slim odds of hitting the jackpot.
What if we could harness people’s love of lotteries to help them?