16 Jan 2016

## Potpourri

==> For those in the Houston area, I’m going to be at the Mises Circle on January 30. Other speakers include Ron Paul, Lew Rockwell, and Jeff Deist. Details here.

==> Speaking of the Mises Institute, they’re trying to get updates from any alumni who have been through Mises U.

==> A lot of people were passing around this FEE piece by Daniel Bier on Powerball, which was fine as far as it went. Yet it too overlooked the pretty simple (but important!) point I made: That if the pot gets so big that “now it’s a good bet,” everyone else can do the same arithmetic and would also buy a ticket, if that were actually the full story. In other words, the probability of splitting the pot with someone else goes up, the bigger the pot gets. And sure enough, there were three winners. If you look at the history of Powerball jackpots–assuming I’m interpreting the results correctly–the jackpots with multiple winners tend to be large. For example, in 2015 the biggest jackpot was the only one that was split (three ways). In earlier years the pattern isn’t perfect but it’s pretty close. Of course, ideally you’d really want to test to see how many tickets were sold, as a function of jackpot size, but I think looking at the actual splits is pretty good to make the point that the probability of splitting is clearly not independent of the size of the pot.

==> This was a really good–and hilarious, near the end–Glenn Greenwald piece on the U.S. media’s treatment of the Iranian government seizing American sailors.

#### 2 Responses to “Potpourri”

1. Guest says:

Powerball is no more risky than equity’s. Also the feeling of hope for 3 days is near priceless. Powerball is something the economist and statisticians will never grasp.

Furthermore, if prizes were equal to MORE than 50% of all ticket sales, the prizes and odds would be much better. Instead, government gets half right off the bat. Furthermore, income tax, sales tax, property tax, gets half of the half. This does not even take into account the 3 dollars used to purchase the ticket was taxed. So it really requires 4 dollars of gross income to purchase a 3 dollar ticket.

The Government has made Powerball a losers bet. Wall-Street hates competition.

2. Harold says:

“Also the feeling of hope for 3 days is near priceless.” This is rather sad really. It is perhaps similar to why some people are religious. I have heard people say they do not like the idea of death being final, so they prefer to believe in God. Fair enough, but not very evidence based. The lottery is similar. People prefer to believe they will win when the reality is they are much more likely to be struck by lightening. I think it is sad that people are so driven by greed or desparation that they suspend intelligent faculties for remote hope. For some of these the price of a ticket represents a real sacrifice, but belief in an almost impossible dream makes their current position bearable.