The lottery is a classic example of a market-based mechanism for allocating resources, in this case government funds. It is easy to organize, widely accessible, and relatively low cost. State lotteries are also popular because they do not entail any of the political and moral issues that might arise with other methods for raising money, such as imposing a flat tax or raising property taxes.
The history of the lottery is long and varied, dating back to Moses’ instructions on taking a census in the Old Testament and the distribution of Roman property through lotteries. It helped finance Europe’s early colonization of America and then spread to the American colonies, despite Protestant proscriptions against gambling (which was not prohibited in the Massachusetts Bay Colony until 1745). The popularity of the lottery grew during times of economic stress, when states needed additional revenue to support their social safety nets but faced resistance to raising taxes or cutting services.
In a typical lottery, a pool of prizes is set, and ticket purchases are made to win a prize. The prize value, or “pot,” is usually a percentage of the total amount of money raised through ticket sales. The proportion of proceeds that go to the winner depends on how many tickets are sold, with larger prizes requiring more sales. A common lottery formula is to have a single jackpot prize, with smaller prizes ranging from tens of dollars to thousands of dollars. The pot grows until someone wins, at which point it begins to diminish again.
While the monetary prize is the main draw, lottery games promote other benefits of playing, such as the entertainment value and/or a sense of good fortune. For a given individual, these non-monetary gains may outweigh the disutility of a monetary loss, and thus buying a ticket can be a rational decision.
A recurring theme in Cohen’s book is the parallel between this obsession with unimaginable wealth and a gradual decline in financial security for most Americans. Starting in the nineteen-sixties, income inequality widened, pensions and job security declined, health-care costs rose, and the national promise that hard work and education would pay off in a big way became a thing of the past.
Lottery defenders often argue that the profits from lotteries are a modest drop in the bucket of state budgets, and that players understand and accept that their chances of winning are slim. But the truth is that lottery sales are highly responsive to economic fluctuations, and play increases as incomes fall, unemployment rises, and poverty rates increase. Further, lottery promotions are disproportionately visible in neighborhoods that are racially and economically diverse. And if you don’t believe me, look at the demographics of the people who buy lottery tickets: Men play more than women; blacks and Hispanics play more than whites; and younger and older people play less.