A friend plays the state weekly. A couple times a year, she hits. We joke about her taking us out to lunch. Usually the prize is just about the value of a complete Big Mac Meal. For one.
The marginal utility of the purchasing price is zero, the marginal utility of 1.5 billion dollar times the odds of winning is positive and non zero.
It therefore is perfectly rational to play in a potentially life changing lottery for any amount of money you literally don't miss. Don't get lost in math.
It therefore is perfectly rational to play in a potentially life changing lottery for any amount of money you literally don't miss. Don't get lost in math.
Strawberry Blonde and a pair of Harbeth M40s.
Some Plain Vanilla for my wife.
For all I know, I'm a mega millionaire now, my wife bought a ticket. Has not checked it.
That’s just enough to keep most poor people addicted enough to put every cent they don’t need to pay rent with into the lotto. They keep “winning”, right? So they buy scratch offs every day.
They would be just as well off buying one and only one ticket for the biggest jackpot, and saving the rest - all of it. Let the state keep their $3 teaser prizes that cost an average of twenty bucks apiece.
I saw a comedian the other day saying that there are about as many number combinations as there are houses in North and South America.
So basically someone takes a billion dollars, hides it in a random house somewhere in the Americas and you pay $2 at one guess of that address. Those are your chances.
So basically someone takes a billion dollars, hides it in a random house somewhere in the Americas and you pay $2 at one guess of that address. Those are your chances.
You do know what inflation does to the "present value of an annuity"... certificates of confiscation as we used to say in grad school.If you do play and win take the annuity. Just saying...
Tom
In any event, lottery winnings are treated as ordinary income, so if you're a NJ resident you wind up with about half. If you take the lump sum, you can invest it in equities and treat the realized gains at a much lower tax rate. If you opt for the annuity, the stream of payments are always treated as ordinary income and taxed accordingly.
A smart colleague I worked with 40 years ago used this analogy for the lottery. Imagine you go to the airport and get on a plane for NYC. Once you land you jump in a cab and tell the driver to just drive around the city randomly. At some point you tell him to stop, get out of the cab and randomly walk around for a bit. When it feels right you go into the nearest building, ring a bell or walk up to a door at random and knock. When the door opens you expect to be greeted by a person whose exact name and birthdate you wrote on a slip of paper and tucked into your wallet before you left home.
I go to a casino maybe once a year. I don't expect to win any money and I put a limit on how much I will gamble. That way, whatever I do lose to the casino, I write off in mind as the cost of going out for the evening and having some fun.