Amazing: The Poorest Households Spend 9% of Their Income on Lottery Tickets

More

The Mega Millions jackpot makes this the week to talk about lottery economics, so here's a whopper: Households earning less than $13,000 a year spend a shocking 9% of their money on lottery tickets, Henry Blodget relays from a PBS report.* Are they clueless? Are they desperate? Are they economical? Maybe, probably, and possibly.

For the desperately poor, lotteries perform a role not unlike the obverse of insurance. Rather than pay a small sum of money in exchange for the guarantee of protection that you'll need in the future, you pay a small sum of money in exchange for the small probability that you'll win money to help your lot right away. It is, for lack of a better term, a kind of aspirational insurance.

As it turns out, the typical U.S. family spending spends nearly the same share of its money -- 10.8% -- on insurance and pensions, including mandatory insurance programs like Social Security. The poorest working families also pay Social Security. But approximately 10% of households, most of them in the bottom decline, pay net zero federal taxes (including Social Security) due to tax credits in federal income tax code that bring their total federal burden past zero.

wheredidthemoneygo

*Update: Some friends on Twitter are questioning the veracity of the PBS reporting. It could be wrong, of course. Still, the idea of a typical poor family spending $25 a week on lottery tickets doesn't strike me as literally incredible.

**Update II: Among the smart and skeptical responses to this stat, please see this post on the origin of the 9% figure. And don't miss the comment thread on this page between SteveInch and CTW34 with links to Consumer Expenditure Survey data. In brief, the CES reports that families making under $15,000 spend between 3% and 9% of their income on a "Miscellaneous" category, in which lotteries and games of chance are a subcategory.

>

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

The Death of Film: After Hollywood Goes Digital, What Happens to Movies?

You'll never hear the whirring sound of a projector again.


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

The Death of Film

You'll never hear the whirring sound of a projector again.

Video

How to Hunt With Poison Darts

A Borneo hunter explains one of his tribe's oldest customs: the art of the blowpipe

Video

A Delightful, Pixar-Inspired Cartoon

An action figure and his reluctant sidekick trek across a kitchen in search of treasure.

Video

I Am an Undocumented Immigrant

"I look like a typical young American."

Video

Why Did I Study Physics?

Using hand-drawn cartoons to explain an academic passion

Writers

Up
Down

More in Business

Just In