Everyone was caught up in the Powerball frenzy of the last few weeks. As of this writing, it appears that 3 people will split the grand prize and many others will get a smaller piece of the prize. While it is fun to play and imagine life after winning that much money, the question is, why do we do it?
After all, the odds are greatly against you. You have a better shot of earning 8% annually over the long term by investing in the stock market. This means that in 20 years, by investing $5,000 you could have close to $25,000. Whereas if you play the lottery, the odds are that your $2 ticket will be worthless in a few short hours.
Yet we still play. Why is this? There are a handful of reasons and being fascinated by human psychology, we can better understand why. Here are the reasons why we play the lottery even though most of us are certain to lose.
Reasons We Play The Lottery
We Can’t Fathom The Odds
This is a big reason why. When the odds say you have a 1 in 229 million chance of winning, we are unable to actually understand this. Yes we see winning as a long shot, but we cannot fully grasp the odds.
All we see is the number 1. That means we have a shot, even if it is a minute one. Instead of looking and understanding the odds of winning, we mentally change this to a hope or a fear. This is why we play.
We play because we are hopeful, “what would I do with $300 million?” and we play because we are fearful, “if I don’t play, I can’t win $300 million” or “I can’t win if I don’t play”.
Another reason we play is instant gratification. In today’s society, everything is at our finger tips. We want things and we want them now. Why do you think Amazon Prime is so popular? And why do you think Amazon is starting to offer 1-day and same day deliveries? It’s because we want our stuff now!
The same idea holds true with the lottery. We want to be rich, but very few of us want to put in the work to get there. Can we become millionaires? If we spend smartly and save, over time we can be a millionaire.
But most don’t want to be a millionaire someday. We want to be a millionaire today. This is why we play the lottery. We don’t have to wait, we can reach that status today.
We Lie To Ourselves
Related to the point above about not understanding the odds, we also trick ourselves. When we have to match 5 numbers and we hit 3 we think we were close and this encourages us to play again.
The same logic is held if we were off by a few numbers. We think we were close, so we play again.
In reality though, we never are closer that next time we play. Our odds the next time we play are the exact same the first time. They aren’t better because we were closer the last time we played. The next game has nothing to do with what just happened.
It’s A Small Price To Pay
Lastly, we don’t do very well with conceptualizing small numbers into larger ones. What I mean by this is that we play $1 here or $2 there. After losing and waiting a week, we play again. After all, it’s only $1 or $2.
But over time, that amount adds up to a good sum of money. But we never see or think about the large sum. We instead just look at the $1 or $2 we spend at a time.
It’s the same thing with saving our money. We think that over the long run, saving $5 here or there doesn’t add up. But it does. Those that are financially successful understand this concept and save, regardless of the amount.
So there are the reasons why we play the lottery. For the most part, the reasons are due to our human nature. We never evolved to calculate large odds. And with society shoving instant gratification in our faces all of the time, it is only natural that we don’t want to wait to be financially well off.
Am I telling you to never play the lottery? Not at all. I just want you to understand that most likely, you aren’t going to win. Play for fun. But don’t play hundreds of dollars each month. You could invest that money instead and improve your finances greatly over time, the way most millionaires do it.