The Regressive Nature of Lottery Play

During the 17th century, it was common for towns in the Low Countries to organize lotteries to raise money for a variety of municipal purposes. This practice is thought to be the origin of the modern lottery.

Many people use lotteries to fund large purchases that are impossible or impractical for them to afford on their own, such as a new car or a vacation. Others purchase them as a form of gambling, believing that they have a higher probability of winning than other forms of gambling. But the odds of winning the lottery are very low and, even if they win, the average person will not come close to breaking even.

The regressive nature of lottery play is especially evident among the poor, those in the bottom quintile of the income distribution, who spend a larger percentage of their disposable income on tickets than other people. These individuals may feel that they need the money to get out of poverty, and that they cannot achieve financial security through traditional means.

For these people, the entertainment value or other non-monetary benefit of winning the lottery might outweigh the disutility of a monetary loss and make purchasing a ticket an appropriate decision for them. Other types of lotteries, however, might not provide such a high utility and could be considered a form of gambling, such as military conscription or commercial promotions in which property is given away by random selection.