A lottery is a form of gambling wherein people pay money for a chance to win a prize. Prizes may be money or goods or services. The term lottery is also applied to other situations in which the outcome depends on luck or chance. For example, the stock market is sometimes called a lottery because there is no skill involved in buying and selling stocks; the price of a share rises or falls based on a random process.
Lotteries have a long history, going back at least to ancient times. The Old Testament describes Moses distributing land to the tribes by lot, and Roman emperors gave away slaves and property as part of the entertainment at Saturnalian feasts. In modern times, the lottery has been used for military conscription, commercial promotions, and even to select jury members. The lottery is also a popular form of charitable giving.
In the United States, the first state-run lotteries were launched in the nineteenth century. These were intended, as Cohen explains, to “reach the masses by offering them prizes they could not afford.” They quickly became very popular. In fact, the Continental Congress voted to hold one in 1776 to raise funds for the Revolutionary War. Smaller public lotteries were also common, and they helped to build Harvard, Dartmouth, Yale, King’s College (now Columbia), William and Mary, and other American colleges. Privately organized lotteries were also widespread.
The growth of the lottery, according to Cohen, was fueled by a combination of factors. Growing awareness of all the money to be made in gambling collided with a crisis in state funding. As America’s population exploded and the cost of the Vietnam War climbed, many states found it impossible to balance their budgets without raising taxes or cutting services, both of which were extremely unpopular with voters.
People who play the lottery, Cohen argues, buy tickets with the hope that they will win the jackpot. But winning a large sum of money is not likely to make them happier, and it often leads to a decline in their quality of life. Many people who have won the lottery have ended up worse off than they were before they won, and others end up with a terrible burden of debt.
Rich people do play the lottery, Cohen explains, and they tend to spend less of their income on tickets than the poor. But they still spend a significant proportion of their income, on average. People earning more than fifty thousand dollars a year spend about one per cent of their income on tickets, while those making less than thirty-five thousand dollars spend about thirteen per cent. If the entertainment value and other non-monetary benefits from playing a lottery outweigh the disutility of a monetary loss, then it’s a rational decision for them to do so. Otherwise, they should spend their money on something more worthwhile.