Loving a Bad Bet 1 Loving a Bad Bet: Factors That Induce Low-income Individuals to Purchase State Lottery Tickets

Playing the state lottery is clearly inconsistent with expected value maximization; lotteries only return approximately 50 cents on the dollar, on average. Moreover, low-income individuals spend a higher percentage of their income, and possibly even a higher absolute amount, on lottery tickets than do wealthier individuals. However, little research has explored what factors encourage or discourage lottery ticket purchases. In a series of controlled experiments, we examine the influence of different factors on the attractiveness of playing the lottery. Experiment 1 examines the hypothesis that people buy tickets, in part, because they view the decision to purchase a ticket myopically, meaning that they make one decision at a time, rather than broadly bracketing the decision – i.e., considering the aggregate consequences of purchasing multiple tickets. Experiments 2 & 3 address the question of what makes state lotteries so appealing to low-income populations. In Experiment 2 we find that people are more likely to purchase tickets when they are implicitly primed to perceive that their own income is low relative to some standard, suggesting that the lottery is viewed as a means to correct low standing on the income hierarchy. In Study 3 we find that people are more likely to purchase tickets when they are subtly reminded that all income groups have an equal chance of winning. This suggests that part of the lottery's allure for low-income individuals is that it guarantees them fair odds relative to other income groups. We discuss the policy implications of these results for deterring low-income individuals from playing the lottery and the use of lotteries to promote positive behaviors, such as saving.