Why Lotteries Are Rational

A George Mason economist argues that lotteries are perfectly rational because, while they make no sense from a purely economic risk-reward ratio, people get substantial pleasure out of fantasizing about winning.

Well, yeah.

FILED UNDER: General,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

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  2. floyd says:

    While their kids “fantasize” about shoes, warm meals and a place to sleep!!

  3. >while they make no sense from a purely economic
    >risk-reward ratio

    Not always true. In some of the progressive jackpot lotteries (Powerball, Megamillions, etc.) there are times when the jackpot grows large enough that the expected return is greater than the cost of the ticket (e.g. $300,000,000 jackpot with a 1:100,000,000 chance of winning means the expected return on $1 ticket is $3).

  4. Dave Schuler says:

    Non-facetious question: doesn’t this lower the bar on “rational” a little too far? Using this standard can’t you make the argument that all sorts of irrational acts are, indeed, rational?

  5. James Joyner says:

    Using this standard can’t you make the argument that all sorts of irrational acts are, indeed, rational?

    I don’t think so. The point is that rationality is measured on more than a pure economic exchange basis. “Entertainment” is a spending category that meets a legitimate human need that most of us can reasonably afford to satisfy.

    For example, is it “rational” to spend $9 for a movie ticket to see something in the theater that you could watch on DVD a few months later for $2? Or, especially, $28 for a family of four to see the movie vice that same $2? Many people make that choice every day on the grounds that seeing it early, seeing it in a crowded theater with an audience, etc. is worth that extra money.

    Would it be rational to spend a large chunk of your family’s income on lottery tickets hoping to cash in? No. But, surely, most people can afford $1 a week or whatever to fuel their fantasies. Indeed, I’d argue that $1 was better spent that way than on, say, a vending machine cola.

  6. floyd says:

    James;Vending machine colas don’t breed disaffection for the work ethic.

  7. By this standard, Jeffrey Dahmer is perfectly rational. I agree with Schuler: This renders the term “rational” devoid of meaning.

  8. James Joyner says:

    By this standard, Jeffrey Dahmer is perfectly rational. I agree with Schuler: This renders the term “rational” devoid of meaning.

    Yes and no. Yes, Dahmer was “rational.” But, no, it doesn’t render the term devoid of meaning. Rather, it acknowledges that the word has multiple meanings.

    Economists and social scientists use “rational” in terms of cost-benefit analysis, not sanity. The Wikipedia definition here is close enough:

    In economics, sociology, and political science, a decision or situation is often called rational if it is in some sense optimal, and individuals or organizations are often called rational if they tend to act somehow optimally in pursuit of their goals. Thus one speaks, for example, of a rational allocation of resources, or of a rational corporate strategy. In this concept of “rationality”, the individual’s goals or motives are taken for granted and not made subject to criticism, ethical or otherwise. Thus rationality simply refers to the success of goal attainment, whatever those goals may be. Sometimes, in this context, rationality is equated with behavior that is self-interested to the point of being selfish. Sometimes rationality implies having complete knowledge about all the details of a given situation. It might be said that because the goals are not important in definition of rationality, it really only demands logical consistency in choice making.