Are Governments Promoting a Vice?
The lottery is a form of gambling in which people draw numbers at random for a prize. Some governments outlaw it, while others endorse it and regulate it to some extent. Some states even promote it as a way to raise revenue. But a lot of money is spent on these tickets, and the odds of winning are shockingly low. This raises questions about whether state governments should be in the business of promoting a vice and, if so, how much we should expect to pay for it.
In the US, people spend upward of $100 billion on lottery games each year. Governments have promoted them as ways to raise revenue for education and social services, but they’re also one of the most popular forms of gambling in the country. Despite the fact that the odds are astronomically low, many people continue to play.
I’ve talked to a lot of committed lottery players, people who buy tickets regularly and often spend $50, $100 per week. Their behavior defies the stereotypes that you might expect, that they’re irrational and they don’t know the odds are bad. They have all sorts of quote-unquote systems that don’t stand up to statistical analysis, about picking their children’s birthdays or ages in order to increase the chances of those numbers being drawn, about going to “lucky” stores or times to buy tickets, and so on.
It’s not clear that the state can do anything to change these incentives, but it may be able to help people understand the odds. Some states have done so by printing the odds on each ticket and making it more clear to everyone that they’re not good. Other states have tried to get a better grip on what’s happening by requiring lottery companies to provide more information about how much people spend and the number of prizes awarded.
The origins of the lottery are a bit murky, but the idea of giving away valuable goods by random process dates back centuries. The Old Testament instructs Moses to take a census of the people of Israel and then divide their land by lot, while Roman emperors used lotteries to give away property and slaves. The first recorded public lotteries in the modern sense of the word began in the Low Countries in the 15th century, when towns held them to raise funds for town fortifications and help the poor.
Lottery isn’t a foolproof mechanism for raising public revenue, but it can be more effective than other forms of taxation in some cases. It’s important that we continue to evaluate its costs and benefits and make adjustments when needed. We also need to be sure that we don’t end up with a situation in which a small percentage of the population is paying for a large chunk of the state budget. That would be a tragedy for all of us. The postwar era was a time when it seemed possible that we might achieve some sort of reasonable arrangement between the wealthy and the middle class in terms of taxes, and this seems like an especially important moment to revisit that issue.