NCPA - National Center for Policy Analysis

FEELING POOR, BUT (MAYBE) LUCKY

August 5, 2008

Critics have long said that lotteries prey on the poor.  Now a new study conducted by Carnegie Mellon University seems to endorse that view, suggesting that feeling poor, even temporarily, drives us to take such long shots, says BusinessWeek.

The researchers recruited 79 subjects (median income: $19,994) at the Pittsburgh bus terminal, administering an income survey designed to make some in the group fee well-off and others feel relatively poor:

  • Half were asked to report their salary on a scale that went from $10,000 to $60,000; the other half was made to feel needier, by being asked to report their income on a scale that started at "less than $100,000" and climbed to more than $1 million.
  • Everyone was then handed five $1 bills for filling out the survey -- and also given a chance to buy Pennsylvania Lottery instant scratch-off tickets.
  • The "poor" bought 1.27 tickets on average; the "rich" 0.67.

The study is in line with what's happening outside the bus station, says Emily Haisley, co-author with Romel Mostafa and George Lowenstein of "Subjective Relative Income and Lottery Ticket Purchases," published last year in the Journal of Behavioral Decision Making.

As the economy falters, some states (including Pennsylvania) are reporting record lottery revenues.  "When people fall behind they become more risk-seeking, and playing the lottery is a way to try and catch-up," says Haisley.

Source: Christopher Farrell, "Feeling Poor, But (Maybe) Lucky," BusinessWeek, August 11, 2008.

 

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