Once again, the delightful Matt Levine’s Money Stuff:



Of course nothing in this newsletter is ever investing advice, but I will say as a personal matter that I tend to take a Pollanesque approach to the lottery: Buy lottery tickets, not too many of them, mostly when the jackpot is enormous. Not everyone agrees. Fox News’s advice is apparently “BUY AS MANY TICKETS AS YOU CAN AFFORD,” which is … not correct.

But the Internet is also full of scoldy advice to the effect that you shouldn’t buy any tickets at all, even when the Powerball prize is $1.4 billion, or #NUM. (Here is a blog post suggesting that instead of buying a lottery ticket you “buy yourself a cup of coffee and sit down to do some freelance writing for blogs that pay for guest posts,” which is actually worse advice than Fox News’s.) This Business Insider video is typical of the genre, and the error is always the same: conflating money with utility, or just assuming that utility is linear with money. Now, look, I don’t know what your utility function looks like. But for me, being two bucks poorer (with probability .999[lotta 9s]) would not impact my quality of life at all, while being $1.4 billion richer (with probability .000[lotta 0s]1, and yes I know there are taxes and a lump-sum haircut) would impact my quality of life really quite a whole lot. I could buy a big house, and The New Republic. This is not an argument for playing every week, or for buying as many tickets as I can afford, but I for one have a deep intuitive feeling of the positively skewed utility of wealth. (Here is a paper on the subject.)

Elsewhere in Powerball news, I enjoyed this New York Post article about how you can’t guarantee that you’ll make money on the Powerball by buying one ticket for each number combination, even with a $1.3 billion jackpot. This too is a popular type of scoldsplainer, and the Post dutifully plods through the math (taxes, lump-summing, risk of splitting), but then it goes the extra mile by pointing out how tedious it would be operationally:

The hardest part, though, would be the physical act of buying 292.2 million lottery tickets.

There are no special arrangements for mass ticket buying, so a market-cornering lottery player would need to have a lot of time and pencils to fill out slips at the local bodega.

So many beautiful arbitrages work great in theory, but in the real world are undone by a lack of time and pencils.

Elsewhere in legal-ish gambling news, a New York state appeals court will let DraftKings and FanDuel keep taking bets — sorry, sorry, “deposits” — from players in New York during their dispute with Attorney General Eric Schneiderman about whether daily-fantasy-sports gambling is gambling.


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