“The lottery’s only objective is to maximize the funds you pay for educational activities.”

Salil Mehta:

One should remember that the only objective for the Lottery, anywhere in the world, is not to make you rich. Contrary to their advertisements, the objective is not to show you a good time. Wasting your money is never a good time. The lottery’s only objective is to maximize the funds you pay for educational activities. The lottery does this by taking all of the proceeds, then first diverting nearly 45% of it towards educational benefits, and also towards store commissions and advertisements designed to trick you into spending more into the system. Say you played 292 million times with hypothetically a $1 ticket, and then won exactly one time. In this case your reward would not be anywhere close to $292m. The funnel would start at a gross level of just 55% of $292m (or a loss of $131m on your ticket purchases since 45% was skimmed straight away to the government). And then your net amount would still be less than this 55% gross payout, since this reward is again taxed as income. There is nothing sexy about this arrangement; it extorts a non-tax deductible dollar from you and many others, who could least afford it. And each time putting offering 55 cents into a community savings jar, until one day that amassed jar is given to basically just one person at random (but not before the government comes back to tax that jar as “income”). The whole scheme is an educational tax for those who instead could use a free education in probability theory.

A loser’s lottery [StatisticalIdeas]

April 26, 2016  |  

“We can no longer just tell children raised poor to study harder.”

Inequality Begins at Birth [NYRB]

Inequality in America begins at birth, or, for those born to women who are ill during pregnancy or do not have adequate prenatal care, even before. Through no fault of their own, up to one quarter of American children start off well behind, and another quarter live in families that earn only twice the poverty line—about $48,000 a year for a family of four. Armed with the unambiguous findings of twenty-first-century neuroscience, we can no longer just tell children raised poor to study harder and find jobs as they grow up.

This Jeff Madrick essay on inequality is profound. I urge you to read it (and re-read) twice.

June 30, 2014  |