The economics of American lotteries \ stacker news ~econ

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The economics of American lotteries www.economist.com/graphic-detail/2024/04/02/the-economics-of-american-lotteries

2155 sats \ 14 comments \ @kr 4 Apr econ

In the poorest 1% of zip codes that have lottery retailers, the average American adult spends around $600 a year, or nearly 5% of their income, on tickets. That compares with just $150, or 0.15%, for those in the richest 1% of zip codes. In other words, the poorest households spend roughly 30 times more on lotteries than richer ones, as a share of income. The pandemic appears to have made things worse. In 2021 the poorest 1% of households—flush with stimulus cheques—spent $100 more on lotteries than they did in 2019. The richest 1% spent just $10 more.

My dad always said it was just a regressive tax.

79 sats \ 0 replies \ @riberet19 4 Apr

In my country, the lottery was created with the aim of being an indirect tax, so your father is right.

17 sats \ 0 replies \ @c137Heather 5 Apr

My uncle always said lotteries are a tax for people who are bad at math.

17 sats \ 8 replies \ @Undisciplined 4 Apr

My dad always said it was just a regressive tax.

Except that it's voluntary, so not actually like a tax at all.

6 sats \ 7 replies \ @Scoresby 4 Apr

Sales tax is voluntary by the same standard.

17 sats \ 6 replies \ @Undisciplined 4 Apr

No. Sales tax is the state intervening as a third party in what would otherwise be a voluntary transaction. The lottery is just a service offered by the state that people willingly take part in. The state is inherently one of the parties to the transaction, not an intervening third party.

60 sats \ 5 replies \ @Scoresby 4 Apr freebie

That's a good distinction: intervening versus one side of the transaction.

If my municipality runs the water system and bills me for accessing it: not a tax.

If the municipality maintains the roads and charges me for it by adding a cost to gasoline - tax.

The indirectness seems to be important in what we call a tax.

Toll road - tax or not a tax?

Even better: if the state sent me a bill every time they dropped a bomb on some shmuck half a world away - not a tax.

If they make my employer give them some of my income to pay for it - tax.

68 sats \ 4 replies \ @Undisciplined 4 Apr

If the state prohibits other people from running lotteries, then it does become something like the situation with state utilities: not a tax, but a different type of property infringement. I would put a toll road in this category, since it's the state's road.

To be clear, I don't like any of this stuff, but the state offering a luxury good (lottery) instead of it being privately provided is very different from a tax.

60 sats \ 3 replies \ @Scoresby 4 Apr

Taxes suck. So do must of the ways states generate income because they are tricky.

I'm okay with calling state-run lotteries taxes because it amounts to the same thing: squeezing their citizens for money. Whether it's by taking advantage of the citizens who are too dumb to resist (lottery) or too afraid to resist (income tax) is the same to me. It's the same kind of move as calling inflation a tax.

51 sats \ 2 replies \ @Undisciplined 4 Apr

It's the same kind of move as calling inflation a tax.

Yeah, that's a little bit inaccurate to, since we don't have a right to a particular amount of purchasing power.

taking advantage of the citizens who are too dumb to resist (lottery)

I don't want to grant this, because so much of the justification for using state power is that they need to protect us from ourselves, because we're so stupid.

In a free society, people would spend their money stupidly. Some of that would be on things like lotteries. Absent state protectionism, there would be a lot more competition though and the odds would be much better.

We are either free people, in which case our choices are our own, or we aren't and our choices are someone else's.

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17 sats \ 0 replies \ @jgbtc 4 Apr

It's also a stupidity tax.

0 sats \ 0 replies \ @Cje95 4 Apr

I've always chalked it up to an additional tax on the poorest people and often a curse if they win. So many winners end up blowing through their money within just years. People try to pass it off by saying how the lottery helps fund the public school system but really is gambling like this how we want it funded?!?!