A Rational Man’s Case for the Lottery

FOR over three decades, I have bought tickets for virtually every Powerball and Mega Millions lottery drawing. Why?

The odds of winning the jackpot in this type of lottery are astronomical: one in 292,201,338 per play for Powerball and one in 290,972,336 per play for Mega Millions. And most of the money bet on these numbers games does not go to the jackpot. Lower-tier prizes get approximately 17% of the proceeds, and “administrative costs” take about 15%. Thirty-five percent of the proceeds go to fund “public programs” -- which is another way of saying that tax dollars which would normally fund services like public education and environmental conservation programs are diverted to local politicians’ pet projects, which in turn helps reelect them. Less than one-third of lottery ticket sales goes to the jackpot prize.

Of course, the face value of the jackpot prize can be substantial. Since 2015, the average Powerball jackpot win has been between $440 and $490 million. From 2017 to 2025, the average Mega Millions prize has been $450 million. But if you elect to take the lump sum, you receive less than half of the face value of the prize. And then there are taxes. Winning a jackpot immediately catapults you into the highest federal marginal tax bracket of 37%. And depending on where you live, you could owe additional state and local taxes of up to 10%.

You may say: Okay. With all that money I’m willing to pay my fair share of taxes. And you’d think even with a few million dollars after a present-valued, tax-depleted jackpot prize you’d be set for life. Not so fast! A quick Google search shows “financial experts estimate that nearly one-third (33%) of all big lottery winners eventually declare bankruptcy” and “some reports claim that up to 70% of winners lose all their money within a few years.” These losses are apparently caused by bad spending, family and friends pressuring winners for money, and financial scams.

When I studied economics, a fundamental theoretical concept was that of the “rational man” or homo economicus. The basic economic assumption is that people will act rationally and make intelligent, logical and self-interested decisions to maximize their own benefit or profit. I didn’t believe in the rational man theory then, and I don’t believe in it now.

So: Why do I regularly play the lottery? Well, first I usually win something. Maybe it’s only $10 or $20 a month, but it’s still a small thrill. Second, about twenty years ago I won $10,000. That was a big thrill. Third, there’s always a chance, no matter how small, that I’ll win a jackpot. As the ads say: You’ve got to play to win.

And if I do win a jackpot, I promise to be a rational man.