What Happens If You Win the Lottery?
The lottery, in its modern form, is a hugely popular way for states to raise money for things like public schools, parks, and roads. Its popularity stems partly from the fact that it’s a painless alternative to raising taxes, but also because there’s a real chance that you could win the big prize. But if you’re lucky enough to win, what will happen to your life and the lives of those around you?
In the seventeenth century, when the first European lotteries appeared, towns used them to finance defenses, build town fortifications, and help the poor. In England, the practice soon spread to Protestant colonies that were already regulated by a system of property law that forbade gambling. By the eighteenth century, lottery profits helped pay for everything from settlements and warships to Harvard, Yale, and Princeton. In America, the Continental Congress even tried to use a lottery to raise funds for the Revolutionary Army.
State governments’ dependence on lotteries for revenue grew in the nineteen-sixties as population growth, inflation, and the cost of the Vietnam War left many states short on cash. With a strong anti-tax populace, it became difficult for politicians to balance budgets without hiking taxes or cutting services. In order to placate an increasingly skeptical electorate, the appeal of the lottery grew, as it seemed to offer a solution that didn’t require them to face voters’ ire.
But the truth is that lottery revenue does reduce the amount of tax dollars available for other purposes, which means that if you buy a ticket, you’re indirectly subsidizing your state’s budget deficit. To keep ticket sales healthy, lotteries must pay out a respectable percentage of the proceeds as prizes, which leaves less of the total amount to be devoted to state revenues. Consumers may not be aware of this implicit tax rate, but it’s one that’s likely to remain in place if we continue to rely on lotteries for revenue.
While the purchase of lottery tickets cannot be accounted for by decision models that assume maximum expected value, it can be explained by more general utility functions. In particular, people can use lotteries to indulge a desire for risk-seeking behavior, as well as to satisfy fantasies of wealth. While the hedonistic pleasures of lottery winnings can be addictive, they can also lead to problems that are harder to address. Rich and poor alike have found that playing the lottery can have consequences far more extreme than expected, including serious mental health issues, drug addiction, family discord, and even murder. Those who have been able to successfully quit gambling, in contrast, have often been able to achieve better long-term outcomes. A recent study of lottery participants found that most who quit the game reported a lower risk of developing an addiction to gambling. This suggests that the problem of lottery addiction is largely psychological, rather than physiological. The study also found that people who are more impulsive and impatient with their own decisions tend to be more attracted to the lottery than those who are not.