The record $1.5 billion jackpot has been won, and Powerball mania has died down for now, but Americans are still stuck with a Powerball economy powered by the “lottery mentality.”
A week ago, Americans were in the grip of Powerball mania. A record-making $1.5 billion grand prize coaxed even those of us who never buy lottery tickets to spend at least $2 for a chance — however small — of becoming an instant billionaire.
The media did its part to hype the $1.5 billion prize, and helped sell even more tickets. Fox News stood head and shoulders above the rest. Fox Business host Charles Payne pleaded on the air with a colleague to endorse playing Powerball. “Fox and Friends” guest, and seven-time lottery winner Richard Lustig urged viewers, “Buy as many tickets as you can afford.” And “Fox and Friends” guest John Shapiro assured viewers that playing would “make you happier,” even though you won’t win.
If you bought a ticket, you had a 0.00000034 percent chance of winning. The odds were about 1 in 292,201,338 that you’d take home the prize. You had better odds of getting attacked by a shark (1 in 11,500,000), dying in an airplane crash (1 in 354,319), being struck by lightning (1 in 25,350), getting a hole-in-one (1 in 23,376), or dating a supermodel (1 in 88,000).
So why do we do it? It’s not because we don’t know the odds, it’s because the odds are so infinitesimal that we can’t grasp them. So, they become meaningless.
It’s because of what’s really on sale: hopes and dreams. In the face of incomprehensible odds, logic and reason go out the window, as Rebecca Paul Hargrove, who created hugely successful lottery empires in Florida and Georgia, and is currently president and CEO of the Tennessee lottery. “If you made a logical investment choice, you’d play a different game,” Hargrove told writer Adam Piore in August 2013, “It’s not an investment. It’s entertainment. For a very small amount of money you might change your life. For $2 you can spend the day dreaming about what you would do with half a billion dollars—half a billion dollars!”
Hargrove was onto something powerful. All but the wealthiest of us have at some point dreamed about what it would be like to experience that kind of financial security — to suddenly have enough money to pay all of our bills, settle all of our debts, and have the freedom to do whatever we want without worrying about the cost.
Of course, we can dream all we want for free, but, with apologies to Blondie, in this case dreaming ain’t free. The possibility of that dream coming true costs $2, and then some. Americans spend about $70 billion on lottery tickets every year — an average of $285 for every adult in the country. Yet, half of us never even play the lottery, and most of us who do only do so occasionally; 70 percent of the tickets are bought up by 20 percent of the players.
Carnegie Mellon University economics professor George Lowenstein writes that buying a lottery ticket isn’t about buying even the tiniest chance of winning huge amounts of money. It’s about a buying a license to fantasize. “Such dreams ares especially attractive,” Lowenstein writes,” in these days of limited income mobility, when buying a ticket for many people is their only possible (if not particularly realistic) ticket to easy street.”
Lowenstein writes that buying lottery tickets is “fairly harmless,” as long as it gives you some pleasure, and you don’t buy too many tickets. But the economic malaise that Lowenstein downplays as “limited economic mobility” is precisely what makes us buy lottery tickets. A recent study in Colorado reported that people with a maximum annual household income of $15,000 were almost as likely to play the lottery as the population as a whole.
For millions of Americans stuck in low-wage jobs with no benefits, and few opportunities for upward mobility, an infinitesimal chance at changing their economic outlook is better than none. We have what Chrystia Freeland, writing at the New York Times in 2011 called the “lottery mentality.” We play the lottery, despite the odds, because we see powerful evidence that ordinary people just like us can and do win, and it’s the only way most of us are ever going to have chance at any kind of wealth.
Those lottery tickets are, for many of us, a ticket out of what feels increasingly like a Powerball economy, in the lottery is the new American Dream. Lowenstein says that feeing poor “makes the idea of lifting the poverty a more salient motive,” and makes lottery tickets more attractive.
Plenty of Americans are feeling poorer than ever before, economic “recovery” notwithstanding. Recent studies reveal that more than 60 percent of Americans have no savings or less than $1,000 in savings. Over half, 56 percent, have less than $1,000 in savings. Even at the middle-class level, it’s getting worse. A JP Morgan study concludes, “the bottom 80 percent of households by income lack sufficient savings to cover the kind of volatility observed in income and spending. “
In real terms that means most of us, 63 percent, don’t have sufficient savings to pay for, say, a $500 brake job. Half of us can’t cover a $400 emergency expense. That all means that an increasing number of us, even surrounded by the trappings of middle-class living, are one minor disaster or one missed paycheck away from economic free-fall.
Fewer of us can even believably call ourselves middle class, thanks to four decades of wealth transfers, stagnant wages, and offshoring jobs. The middle class is no longer the majority. The share of Americans living in middle-class households has dropped from 61 percent in 1971 to 50 percent.
Many are just barely clinging to middle-class status. In 81 percent of American counties, the median income is about $52,000 — less than it was 15 years ago, despite an 83 percent growth in the economy and rising corporate profits in that same period. More than half of Americans now make less than $30,000 per year — less than a livable wage for a family of four.
We don’t buy lottery tickets to win. We buy to have hope. That’s something that used to come from good jobs, with good wages and benefits, and used to be easier to come by than any lottery jackpot.