Lottery tickets and poverty

There’s a fascinating interview with George Loewenstein over at Sci-Am describing a very elegant experiment that shows how a sense of poverty prompts people to buy lottery tickets:

We randomly assigned subjects to either feel relatively poor or relatively rich by having them complete demographic questions that included an item on annual income. The group made to feel poor was asked to provide its income on a scale that began at “less than $100,000″ and went up from there, ensuring that most respondents would be in the lowest income tier. The group made to feel subjectively wealthier was asked to report income on a scale that began with “less than $10,000″ and increased in $10,000 increments, leading most respondents to be in a middle tier. The group made to feel poor purchased twice as many lottery tickets (an average of 1.27) than those made to feel relatively wealthier (0.67 tickets, on average).

Lottery Tickets and Credit Cards: The Dangers of an Irrational Brain: Scientific American

New Hampshire, where I live, gets much of its tax income from gambling (the state lottery) and from the state-run liquor stores. It’s unfortunate that a government puts itself in the position where it benefits from encouraging people to drink and gamble. Of course libertarians would argue that individuals are free to decide whether to do these things or not, which is true. The libertarian position often seems to assume however that it’s someone else who has to behave responsibly: it’s okay for government to encourage people to do things that harm themselves, while it’s not okay for individuals to respond to such encouragement. Or at least that’s how I interpret their position.

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