When the Odds Don’t Matter
I’ve been throwing an idea around in my head. At what point do the odds cease to matter and the chance of big money becomes the main motivator?
Investing Theory
The whole goal of investing is to place yourself in positions that come out to positive odds. That is, with enough data sets you would achieve a profitable outcome, as the winning results would create more revenue than the losers create losses. However, I’m not so sure it’s so economically simple.
Are Negative Odds Winners?
Consider the Powerball, Mega Millions or whatever large lottery you have in your jurisdiction. The cost is $1, and your expected return is anywhere between $.60-$1.30 depending on the size of the pool. Even with the worst of odds, your loss per ticket is roughly $.40, a small price to pay for pools that start at a whopping $15 million.
Big Money, Long Odds
With an expected loss of $.40 per play, and the chance to win as much as $15 million, an amount that would make anyone financially secure for an eternity, it begs the question: at what point do the odds cease to matter? Clearly, most people will go through life and lose on every single ticket. A lucky few will win smaller prizes, and an incredibly small number of people will win the jackpot. But do the odds really matter when the possible result is enough to make you financially secure? Can you put a price on security?
I’d love to hear your opinions. Mathematically, playing the lottery is never advised. But can you really apply mathematics to an outcome that would have such a profound impact on your standard of living? Especially when it boils down to $.80 a week? (2 tickets weekly)
