11.15.2012

Are Lotteries a Tax on the Poor?

Yesterday, certainly not for the first time and likely not for the last, I looked back and forth between my lottery ticket and the computer screen announcing that night's selections with a sense of disappointment which grew with every number I read. However, despite my disappointment, I still believe I received a benefit from my purchase. Against that backdrop, it might not surprise readers to hear that I disagree with the idea of some that lotteries are taxes on the poor and/or stupid.

For one, it is clear that participating in a lottery is a personal choice. While taxes on certain forms of consumption could also be described as the result of a personal choice, most taxes people pay are more or less involuntary (unless one wants to be over-technical and state that working - and therefore paying payroll deduction tax - is also a personal choice). Even if one were to be clever and claim that the voluntary nature of lotteries is what makes them a tax on the stupid rather than not a tax at all, those who disagree could rely on utility theory to disagree.

Personally, I get at least 15 minutes worth of daydreaming in whenever I buy a lottery ticket. I gain an icebreaker question at happy hours and when interviewing someone (what would you do if you won the big jackpot tonight?). I get a very welcome diversion. And, doing a very simple bit of cost/benefit analysis using my hourly wages, the utility I gain outweighs the outlay for the ticket I purchase (as would any wage over $4 an hour).

Now, in fairness, there are people out there with gambling problems, and like others with addictions I am not sure the typical cost/benefit analysis plays out with them. However, people like that would find a way to sate their cravings whether a legal, organized lottery existed or not. For those, like me, who see it as a two-dollar-a-week diversion, no harm, no foul.

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